iTunes costs Apple $1.3 billion a year

Posted by LydiaTGD

Maintaining iTunes and the App Store costs Apple a whopping $1.3 billion a year, according to numbers determined by Asymco blogger Horace Dediu.

Using published data made available at last week’s Worldwide Developer’s Conference, Dediu was able to conclude the total costs associated with iTunes and the App Store, which he says means  Apple runs the stores at "just above break even."

Dediu combined the average price of songs and apps within the digital stores and subtracted the money paid to devs as well as music labels to arrive at the $1.3 billion sum.

He estimates Apple spends $113 million per month, from a total income of $313 million (also per month).

The statistics support what Apple has been saying for years: iTunes and the App Store don’t really make much money at all.

According to statistics, Apple’s digital stores account for 15 billion song downloads, 130 million book downloads, and 14 billion app downloads.

There are 225 million iTunes accounts and 50 million Game Center Accounts. The App Store offers 425,000 apps in total, 90,000 of which are designed specifically for the iPad.

"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," Dediu said.

Apple continues to put money towards the digital storefronts like the $500 million data center built in Maiden, N.C. The company said earlier this year the facility will support iTunes and MobileMe. As MobileMe is phased out, the data center will likely support the newly announced iCloud service.

ITunes is currently the largest music and movie store in the world.