Remember the distortions from Steve Jobs that Apple doesn't make much from the 99 cents songs. Check the facts, Apple makes 34 cents (34%) on each song. This margin is much greater than Apple gets from its iPods, and sadly many times more than the artists get.

http://www.theregister.co.uk/2005/02/28/downloads_price_rises/

I've whipped up a chart tracking the sales growth of the iTMS:

http://brainwrap.com/otherstuff/itms_sales.gif

A bit of a drop-off since January, but that's actually to be expected since I presume the post-holiday period brought an initial surge in new iPod owners going a little nuts with their new toys + iTMS gift certificate usage.

At the current rate, they should hit around 375 Million by the 2 year anniversary on April 28th, and should break 700 million by the end of the year--except that that assumes zero further increase in the sales rate.

With the additional iPods sold this year, and especially the shufflePods, they could possibly break 1 billion sold by the end of 2005.

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RealityCheck wrote:
Remember the distortions from Steve Jobs that Apple doesn't make much from the 99 cents songs. Check the facts, Apple makes 34 cents (34%) on each song. This margin is much greater than Apple gets from its iPods, and sadly many times more than the artists get.

Wow, talk about a distorition. The article says the wholesale price of the track is $0.65. That means Apple's GROSS MARGIN is $0.34. So what. Now you have to start factoring in Apple's overhead. Marketing (Pepsi promo, one line stuff, free track each week, all that), Distribution (server infrastructure, Akamai bandwidth, all that), Processing (credit card merchant fees, gateway fees), and Employees (who keep the catalog current, answer e-mails, maintain the software). All that comes out of the $0.34 per song. What is left over is what is called NET PROFIT - which is the only thing that makes a company any money.

Even someone who got a D in accounting should be able to tell the difference. Did you not take Accounting, or did you flag it?

...even if he's right, how in the world is this a BAD thing??

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RealityCheck wrote:
Check the facts, Apple makes 34 cents (34%) on each song. This margin is much greater than Apple gets from its iPods, and sadly many times more than the artists get.

Not that I should waste my breath, but that 34Ñž is their GROSS, not their PROFIT. After taking out bandwidth, store maintenance, credit card microcharge fees and other operational costs, their profit could be anywhere from $0.01 to $0.33, probably somewhere in between.

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t the current rate, they should hit around 375 Million by the 2 year anniversary on April 28th, and should break 700 million by the end of the year--except that that assumes zero further increase in the sales rate.

SO?

Who cares about the current rate of growth - continue the graph forward using teh exisitng exponential growth rate. Come on, it's all right there. 18 months or so of data - you can project growth from that - so do it and get back to us! (just a joke)

Yes there's lots of money in music downloads, 230 online music stores can't be wrong.

Apple said in its June [2003] quarter earnings conference call that the iTunes Music Store was close to break-even in its first quarter of operations.

http://www.ciol.com/content/search/showarticle.asp?arid=50181 (Reuters)

Steve/Apple have never said iTMS is not profitable (except the almost mentioned above), listening and comprehsnion is required to understand.

Apple have said iTMS profits are small (like compared to their other businesses), iPod drives the profit (not just the profit on the player, but the profit on the tunes iPod users buy that they wouldn't buy if they didn't have an iPod) etc.

By the way, there are only 36 days between Jan 24 and Mar 1, not 38 as stated in the article.

So that's 50 million songs in 36 days, or a rate of 1.38 million a day. This is an increase over the prior announced rate of 1.25 million a day.

Take it easy on RC. Based on prior postings, one can see that he gets easily confused, equating warranty dollars to Apple quality figures. So one shouldn't be surprised that he is also confusing gross with profit.

Compared to other music stores, Apple's costs per song sold are significantly lower because
1. they make the servers (Xserve) and the software that run the iTMS.
2. they benefit from the high volume of sales.

Also, if artists don't get a fair share of the alleged 0.65 cents charged by the labels, that's not Apple's fault. They should be demanding more from the labels since the labels no longer have any production and distribution costs.

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Guest wrote:

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t the current rate, they should hit around 375 Million by the 2 year anniversary on April 28th, and should break 700 million by the end of the year--except that that assumes zero further increase in the sales rate.

SO?

Who cares about the current rate of growth - continue the graph forward using teh exisitng exponential growth rate. Come on, it's all right there. 18 months or so of data - you can project growth from that - so do it and get back to us! (just a joke)

Wow, you're pretty rude for a guest.

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fartheststar wrote:
Wow, you're pretty rude for a guest.

He was pretty clear he was joking.

Vote early, vote often:

Start the betting pool now:

When will iTMS top the one billion mark?


My guess: April 12, 2006

More than guessing when the date for the big 1 billion downloads will come I am intrigued in knowing how you (and others) are going to account for let's say:
promotions (the Pepsi style)
downpricing on iPods
launch of you new iTMS markets
etc..

Mix any of the above and the only prediction I feel comfident making is that your guess will turn out wrong (I know a bit of a cheat there!).

iTMS hits 300 million downloads? Well, obviously the only way to go now is down. This experiment has failed. Apple stock will crater any day now. The iPod fad is over. (Just helping RC. Seems he's having an off day)

Forget guessing when iTMS will hit 1 billion. I want to know when I'm going to get a winning Pepsi cap. Last year I was really lucky...probably 70% of mine were winners. So far I'm 0 for 4 now.

The current rate is a little under 50 million/month; I'm guessing that increases to 75 million/month (+50%) within about 6 months - at which point the total download count would be ~600 million. My guess, therefore, is that we reach the One Billion mark in a little under a year.

For good luck, I'll guess my Nephew's 2nd birthday: February 24th, 2006.

I wonder what kind of promotion they'll whip up around the Billionth download . . .

Actually, it's 37 days total. 24-31 January = 8 days, plus 28 days in February this year, plus 1 day in March, so 8 + 28 + 1 = 37.

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Anonymous wrote:
More than guessing when the date for the big 1 billion downloads will come I am intrigued in knowing how you (and others) are going to account for let's say:
promotions (the Pepsi style)
downpricing on iPods
launch of you new iTMS markets
etc..

Mix any of the above and the only prediction I feel comfident making is that your guess will turn out wrong (I know a bit of a cheat there!).

That is why it is a guess rather than a straight forward calculation.

Promotions (al la Pepsi) are still a downloaded song. I believe Apple counts those in the 300Meg mark, so I'll assume they will also be counted in the 1G mark.

Downpriced iPods and opening of new markets is where the guesswork comes in. How much will the download rate increase from the current 1.3 million/day? Will the rate of increase continue or level off? What will the download rate per day be 6 months from now? A year? How will next Christmas season affect it? All this is guesswork. Hence the "betting" pool.....

And, I stand by my guess of April 12, 2006.

"Remember the distortions from Steve Jobs that Apple doesn't make much from the 99 cents songs. Check the facts, Apple makes 34 cents (34%) on each song"

Besides the fact that you're talking about gross, are you saying that 34% of 99 cents is a vast wealth?

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BlueDjinn wrote:
... A bit of a drop-off since January, ...

??? From 200-250, it took 39 days. From 250-300, it took 37 days. Should be a slight increase.

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Mace wrote:

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BlueDjinn wrote:
... A bit of a drop-off since January, ...

??? From 200-250, it took 39 days. From 250-300, it took 37 days. Should be a slight increase.

The TMO numbers are missing two additional official sales figures: 13 million, which was announced by Jobs at the launch of iTMS for Windows (10/16/03), and 230 million, which was announced by Jobs on 1/11/04 during his MWSF keynote address. The 250 million figure came a couple of weeks later.

Therefore, as I show in the chart:

http://brainwrap.com/otherstuff/itms_sales.gif

From 200 to 230 million = 30 million / 26 days = 1.15 million/day
From 230 to 250 million = 20 million / 13 days = 1.54 million/day
From 250 to 300 million = 50 million / 37 days = 1.35 million/day

Of course, whenever they make these announcements, they usually say "OVER" such-and-such number, so it's possible that the actual milestone was hit a couple of days earlier, and they were waiting to release the news for some maximum impact (ie, it's very unlikely that they hit *exactly* 230 million *just* as MWSF began).

So, I guess I should have put it this way: it's still up from the Jan 11 announcement, but there was an *even higher* nudge for about 2 weeks in January--people cashing in gift certificates from the holidays and such.

Ultimately, though, the exact curve isn't that important--what matters is the general trend, which is definitely up, up, UP!!

I think February is about right, therefore I believe Apple will hit 1 Billion songs on February 16, 2006; my wife's birthday.