iTunes Holds 60% of Digital Music Market Revenue
The iTunes Music Store is already known as being one of the top contributors to the music industry’s bottom line but a recent analysis pegs Apple’s digital music download market at about a $3.4 billion business, or roughly 60% of digital revenues. According to Horace Dediu of Asymco who parsed recent figures from the International Federation of the Phonographic Industry (IFPI), total music revenues of $16.5 billion were recorded for 012, marking the first growth in music revenues since 1999. Of this overall figure, $5.6 billion comes from digital downloads.
Dediu estimates that of the $13.5 billion, the iTunes Music Store accounted for about $4.3 billion, of which $3.4 billion was paid to music labels. This would amount to roughly 22% of iTunes revenue. The numbers show proof that the service which was originally a means to provide easily accessible music for iPod owners has now become a juggernaut in the music industry. For several years, iTunes has been the number one music provider in the U.S. and the storefront has reached a milestone in selling its 25 billionth song in early February.
The iTunes music revenue is estimated to be growing at about 10% while App Store revenue is growing at around roughly 50%. Video and other revenue is estimated to be growing at around a whopping 90%. In the past, Apple has held that the App Store and iTunes Store operate at a break-even rate as they have largely been just a value-add for Apple’s high-margin hardware. Dediu pointed out that given iTunes increasing revenues, Apple may be generating significant operating margins from software and other iTunes sales.
Overall, it seems that Apple is continually headed in the right direction with their business model in several different aspects.