May 03, 2003
Is Apple's iTunes Profitable?

According to record industry sources, 250,000 songs were purchased and downloaded on iTunes music store's first day, at a cost of 99 cent each.

Analyst Rob Enderle of Giga Information Group, a unit of Forrester Research, told Duncan Martell of Reuters, "For the launch of a service that is Apple only, those are good numbers." Apple hasn't yet released any figures on how much it spent to develop the online music store. This is why "at this early stage we do not have a good indication of the profitability of this service," wrote Dan Niles, an analyst at Lehman Brothers .

The Apple's online music store will be competing not only with free file-swapping tools like Kazaa and Morpheus but also with paid services offered by the record industry like MusicNet, Rhapsody and PressPlay. The service will be made available to Windows-based PCs, which account for 90% of the market, starting later this year, a step that is fundamental to profitability of the system. "The big revenue opportunity is when they move this off the Apple base," Enderle said.

Posted by Valentina Pasquali at May 03, 2003 12:27 PM | TrackBack
Comments

It's interesting that we're already talking about profitability with iTunes... and it's only a week after launch. This sounds like success to me... if not practical, political. You won't find me buying a $0.99 song... I get all the indie bands I want for $15/mo. at eMusic.

Posted by: Joseph on May 5, 2003 08:06 AM

No doubt emusic is big value in comparison, and offers music for those whose taste isn't confined to the Top 100 too.

http://birdhouse.org/blog/archives/000829.php

No doubt profitable - now Apple reports one million songs sold in the first week, and Apple stock is up $1 already.

I personally will procure a lot more legal music through emusic than through iTunes, but Apple is clearly onto something.

And a big birdie to the labels who insist the consumers only want to steal music -- clearly there are tens of thousands of people more than ready to buy if the price and user experience are right.

Posted by: Scot Hacker on May 7, 2003 02:32 AM

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Posted by: Home Loans on October 4, 2005 02:37 AM
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