Report: iTunes costs $1.3 billon per year to run

ITunes might be break even for music. That alone means they have "bread&butter" to fund the other large scale projects with.

The App store is totally Apple's.. They have to be raking a cut on that because it's enough to not bother with software at retail (let's skip the physical media anyway.. When was the last time you bought a game or program and DIDN'T have to download a large patch?)

iTunes subsidized the iPhone and iPads until Apple had the apps.. I'd venture many iPhones and iPads are filled with as many GBs of apps as music now.

Even if it cost $1.3 billion to run last year, they grossed something like $5 billion on iTunes last year. It is far from a break even business.

http://seekingalpha.com/article/211977-2010-apple-s-63-5-billion-revenue-year

I don't believe Apple is losing money from iTunes. With nearly 250 million activated Apple i.d's, I would imagine that people are faithfully still paying for content somewhere rather it be games, music, videos or T.V shows. Now that iCloud is next it should be interesting. Apple will charge $24.99 per year to upload and unlimited music and match it. Even if more then half bought this which you know people will, they've made there money back and then some. They will make hundreds of millions if not billions with iTunes match.

Makes sense! Apple has *always* been focused on selling hardware.

I wonder if there will come a point at which it'll become better than "break even". I know new content keeps getting generated on a daily basis, but surely a large portion of the storage/upkeep/curating costs are related to adding back catalog of material. Once that's done, I'd say there's a good chance that iTunes will move significantly from the that break even point.

I wonder how their t-shirt sales are going?

https://asymco.mycafecommerce.com/

I agree with the previous post... sounds like a pretty good business model when you take the entire thing into consideration.

I highly doubt that apple is losing money on iTunes. Why would they make a device that can only use content from their store if they weren't making any money selling the content. Hardware sales rarely ever make companies money. I think this Asymco has some numbers wrong somewhere. If iTunes wasn't making them money the intelligent thing to do would be to open up their devices to use content from other sources, which would ditch the cost of running iTunes and probably generate more hardware revenue. But, instead we see hardware being tied tighter to iTunes and more and more content and services being added. Based on the earnings numbers coming out of Apple this estimate seems ludicrous.

I'm sure other companies wish they broke even on their marketing . Because iTunes' only purpose is to sell iPods