iTunes Could Cost Apple Over $2 Billion A Year To Run By 2012

iTunes is huge, and getting huger every day… but so are its operating costs. According to a new report by Asymco, iTunes is pushing almost a billion dollars a year to run.

Currently, Apple’s iTunes operating costs come in at $75 million a month, which is two and a half times what it cost to run iTunes just last year. Multiply that by twelve and you have the yearly budget.

Right now, iTunes is only $100 million shy of the $1 billion mark, but if you assume iTunes will continue to grow at 2009”s rate, iTunes might just cost Apple over $2.25 billion to keep afloat by the end of 2011. Somehow I’m guessing they’ll be able to afford it.

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[via 9to5Mac]

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John Brownlee is news editor here at Cult of Mac, and has also written about a lot of things for a lot of different places, including Wired, Playboy, Boing Boing, Popular Mechanics, Gizmodo, Kotaku, Lifehacker, AMC, Geek and the Consumerist. He lives in Cambridge with his charming inamorata and a tiny budgerigar punningly christened after Nabokov's most famous pervert. You can follow him here on Twitter.

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Posted in iTunes, News | Tagged: Apple, budgets, iTunes |

Charles
This post really needs revenue figures to put it into context (more than “they can afford it”
Chris
How about an estimate of how much Apple earns off iTunes as well. If it wasn’t profitable, they’d drop the product.
4phun
Doesn’t this make you realize all those iTunes wanabee stores that others are trying to establish are going to have to have extremely deep pockets to make them work?
Right now consumers, who have bought into Android for instance, have an uneasy feeling when they realize they will never have access to something exactly like the iTunes experience.
http://www.grinningidiot.com JAYnLA
This article is too vague to make any sense.
OlsonBW
Their report is BS because otherwise it would be big enough that investors would want it in the financial reports. They WOULD have caught on by now. So it is BS.
Nmahar
Could u give some detail on what these costs are for server? and what else…
king
This is why piracy works best. You can get almost the exact same kind of made sold on iTunes, but it doesn’t cost a billion dollars a year, well, I don’t think it costs anything significant really.
but you can calculate it easy, 160m credit cards, and 1 billion in costs. How much do the 160m need to spend each to cover the costs?
Looks like a $20 a year , will cover the costs and put a nice $1b+ in Apple’s pockets
mike
no way thats possible, basic economies of scale principles will ensure that itunes running costs eventually begin to decline. it would be interesting to see piratebay’s costs in comparison.
Sean Peters
I’m really confused about what you’re even talking about here. iTunes is a software package that lives on my Mac, and it doesn’t cost Apple anything to “run” it. Are you really talking about the iTunes Store? iTunes Store plus PIng? The mystery data center that supposedly is going to give us the ability to do iTunesy things “in the cloud”, someday? Or what, exactly?
Just saying “iTunes” by itself is pretty nebulous.
Brian Hogg
@king That math would work if every dime Apple made from sales via the iTunes store were profits. Apple gets, I’ve heard, in the area of 20-30% on music sales, and 30% on apps.
So if it costs Apple 1 billion to run iTunes (let’s assume for simplicity that that number includes everything, such as served, bandwidth, personnel, programmers, promotions, etc), they’d need to make 3 billion in sales per year to cover their costs.
Now, Apple being a hardware company, iTunes is seen as a loss-leader for its hardware sales, so Apple would need to earn that much across iTunes plus iPod/iPhone/iPad sales, I’m guessing.