$1.3 billion – that’s how much Horace Dediu estimates it costs to run iTunes per year. Dediu is an analyst / blogger for Asymco and based his estimate on some published statistics about Apple’s iTunes Store.
Dediu’s fundamental principle in making the estimate is Apple’s assertion that iTunes does not generate an income and instead its sales are re-invested back into operating and improving iTunes. Using figures that were announced at WWDC such as 15 billion tracks downloaded, 14 billion app downloads, and $2.5 billion paid to developers, Dediu was able to roughly estimate on a monthly basis how much Apple was earning in revenue and paying out.
It worked out at approximately $313 million per month and $1.3 billion a year.
Obviously there is a wide margin of error as Dediu isn’t privy to Apple’s actual operational costs or margins but the $1.3 billion sum does give an interesting ball park figure.
But the question remains, if iTunes gets approximately $1 billion re-invested in it every year then why does it still kind of suck?
