iTunes Costs Apple $1.3 Billion a Year to Operate

Posted June 14, 2011 at 1:52pm by iClarified | Please help us and submit a translation by clicking here | 4974 views

iTunes costs Apple $1.3 billion a year to operate, according to analysis done by Horace Dediu of Asymco.

Dediu looked at data published by Apple about the store. Using the average price of songs and apps and the split between developers/labels and Apple he was roughly able to calculate how much the company retains to run iTunes.

If we add the content margins from music and apps and assume the store runs at break even we can get an idea of what it costs to operate the store. The latest number is $113 million per month (from a total income of $313 million/mo.). It implies over $1.3 billion per year.

Much of that cost does go into serving the content (traffic and payment processing). Some of it goes to curation and support. But it’s very likely that there is much left over to be invested in capacity increases.

Read More [via Deepak]