Re: Why DRM Can Never Succeed — ps Enable

[Jeffrey Hergan]

On Feb 17, 2007, at 11:10 AM, Greg Titus wrote:

>
> On Feb 17, 2007, at 7:57 AM, Jeffrey Hergan wrote:
>> "Apple makes its money on ipod sales, not on song sales."
>>
>> I have a very hard time believing that is anywhere near true.   
>> Certainly there is decent profit from song sales, especially  
>> considering the vast quantity of songs being sold.
>
> Yearly net sales for 2006, from Apple's 10-Q:
>
> iPod: $3,427 million
> Other music related products and services: $634 million
>
> Apple's margins for hardware were around 30%, but they don't break  
> them down by product line. I'd expect the iPods to have even higher  
> margins than the Macs. Conservatively at 30%, Apple made a profit  
> of around $1,028 million on iPods.
>
> The label's share of music sold on iTMS is about $.66 per track,  
> leaving $.33 for Apple. Even if all of "other music related  
> products" was iTMS, and even if they have zero expenses for servers  
> and credit card processing and et cetera, that would be a profit of  
> $209 million.
>
> So even with all the assumptions in favor of the iTMS and against  
> iPods, Apple makes 5 times as much money on the iPods as on the  
> song sales.
>
> 	- Greg
>
>

Huh.  Fair enough.  On it's face it seems counter-intuitive, but the  
numbers don't lie.

Jeff