A new report by Asymco shows that operating costs for Apple's iTunes service are up at nearly $1 billion per year.
Asymco was able estimate the average monthly income for iTunes on both the music and the App side. The info is based on the average selling price for songs and Apps. Below is the rough estimate based on iTunes sales and current pricing for content:
Remember, we also learned recently that the App Store is gaining, and may soon surpass music sales on the iTunes Store. This shows that iTunes are adding 50 percent to iTunes sales today, according to Asymco data.
They are also able to calculate the iTunes Gross Margin. According to Asymco, Apple's App margin is 30 percent, and the music sits at about 10 percent. They create a chart that shows the following:
After paying the content license for music, Apple is left with about $50 million each month to run the Apple Store and another $30 million for their music store."
Because Apple says that iTunes is run at a cost that lets the company break even, says the report, it means that they are using the gross margin to pay operating costs. However, the report also points out that Apple may be approaching an operating budget for the store that may be above what the company can reasonably spend. They say that due to increased bandwidth demands, operating costs that used to run roughly $30 million a month are now somewhere about $75 million a month.
By multiplying $75m by 12 months, you get roughly $1 billion a year in operating costs.
Of course this report is all based on estimates. Taking estimated sales and averaging out costs, then figuring out how much income that is, etc. We do know that Apple continues to distribute content through their online store, and much of it is even free.
How much it truly costs to maintain is anybodies guess.