1. The Current iTunes Business Model

2. The Current iTunes Business Model What are the main sources of revenue for iTunes? Music The App Store Movies/Televison Shows Other Revenue Areas

3. The Current iTunes Business Model Music Over 13 million songs (Apple.com, 2010, Purchasing Music) Introduced three tiered pricing structure in April 2009, to have tracks priced at either 69 cents, 99 cents and $1.29 depending on popularity of the song (Adegoke, 2009) Breakdown of a 99 cent iTunes download: Retail Price: 99 cents Wholesale cost: 69 cents Network fees: 5 cents Transaction fees: 10 cents Operating expenses: 5 cents Ergo: Operating profit per song: 10 cents (Savitz, 2007) On 25/2/2010 iTunes celebrated 10 billionth song download (Apple.com, 2010, iTunes Store Tops 10 Billion Songs Sold) They also have music videos and mobile phone ringtones available for purchase.

4. The Current iTunes Business Model The App Store Over 200,000 apps made by over 100,000 registered developers (Apple.com, 2010, Apps for iPhone ) Individual iPhone App developers pay $99 per year for a developer license, enterprises pay $299 per year (Elmer-Dewitt, 2009) In December 2009 App Store users downloaded an average of 4.8 apps each,one quarter were paid Average price for a paid app is $2.70 Each App Store user spends an average of $4.37 a month (Gigaom, 2010)

5. The Current iTunes Business Model There are over 58 million App Store users divided into two groups: (Gigaom, 2010)

6. The Current iTunes Business Model In December 2009 280 Million apps were downloaded generating $250 million in revenue of which 30% goes to Apple and 70% goes to the developer (Gigaom, 2010)

7. The Current iTunes Business Model Movies/Televison Shows Over 8,500 movies (over 2,500 in high definition) and over 55,000 television shows (Apple.com, 2010, iTunes Store Tops 10 Billion Songs Sold) Buy movies in standard or high definition – standard definition at $9.99, high definition at $19.99 (Apple.com, 2010, Purchasing Movies) Rent movies in standard definition - $2.99 for library titles and $3.99 for new releases (Apple.com, 2010, Renting Movies) Buy television shows prices range between $1.99 and $2.99 (Apple.com, 2010, Purchasing TV Shows)

8. The Current iTunes Business Model iTunes is the market leader in both movie and television show downloads (Dilger, 2008)

9. The Current iTunes Business Model Over 200 million television episodes sold (Apple.com, 2008, ABC, CBS, FOX & NBC Offer Incredible Lineup of Programming in Stunning HD on the iTunes Store) Over 33 million movies purchased/rented (Starrett, 2009) (viziononline.com, 2010)

10. The Current iTunes Business Model Other Revenue Areas Audiobooks – including best sellers in fiction and non fiction categories and have a wide price range from bargain books to prices comparable with traditional books in bookstores iTunes Affiliates Program – Link to your favourite iTunes content through your webpage and earn 5% commission on all qualifying revenue (Apple.com, 2010, Affiliates: Frequently Asked Questions)

13. The Current iTunes Business Model Breakdown of Apple Revenue: (Schramm, 2010)

14. The Current iTunes Business Model iTunes has very low marketing costs as iTunes software is required to work with all of the iPod, iPad and iPhone therefore has a ready made audience. (Hansell, 2008)

15. The Current iTunes Business Model References Adegoke, Y (2009). iTunes Tiered Pricing Goes Live. Retrieved July 5, 2010 fromhttp://www.wired.com/techbiz/media/news/2009/04/reuters_us_apple_itunes Apple.Com (2010). ABC, CBS, FOX & NBC Offer Incredible Lineup of Programming in Stunning HD on the iTunes Store.Retrieved July 6, 2010 from http://www.apple.com/pr/library/2008/10/16itunes.html Apple.Com (2010). Affiliates: Frequently Asked Questions. Retrieved July 7, 2010 from http://www.apple.com/itunes/affiliates/faq.html Apple.Com (2010). Apps for iPhone.Retrieved July 6, 2010 from http://www.apple.com/iphone/apps-for-iphone/ Apple.Com (2010). iTunes Store Tops 10 Billion Songs Sold.Retrieved July 5, 2010 from http://www.apple.com/pr/library/2010/02/25itunes.html

16. The Current iTunes Business Model Apple.Com (2010). Purchasing Movies. Retrieved July 6, 2010 from http://www.apple.com/itunes/features/#purchasingmovies Apple.Com (2010). Purchasing Music. Retrieved July 5, 2010 from http://www.apple.com/itunes/features/#purchasingmusic Apple.Com (2010). Purchasing TV Shows. Retrieved July 6, 2010 from http://www.apple.com/itunes/features/#purchasingtvshows Apple.Com (2010). Renting Movies. Retrieved July 6, 2010 from http://www.apple.com/itunes/features/#rentingmovies Apple Logo. Retrieved July 7 from http://www.viziononline.co.uk/blog/ Dilger, D.E (2008) Three Barriers Holding Up Apple TV. Retrieved July 7, 2010 from http://www.roughlydrafted.com/2008/05/30/three-barriers-holding-up-apple-tv/

17. The Current iTunes Business Model Elmer DeWitt, P (2009). How Apple Profits from the App Store. Retrieved July 6, 2010 from http://tech.fortune.cnn.com/2009/05/14/how-apple-profits-from-the-app-store/ Gigaom (2010). The Apple App Store Economy. Retrieved July 6, 2010 from http://gigaom.com/2010/01/12/the-apple-app-store-economy/ Hansell, S (2008). The iTunes Store: Profit Machine. Retrieved July 7, 2010 from http://bits.blogs.nytimes.com/2008/08/11/steve-jobs-tries-to-downplay-the-itunes-stores-profit/ iBook Image . Retrieved July 7 from http://www.apple.com/ipad/features/ibooks.html Rappa, M (2010). Business Models On The Web. Retrieved July 7, 2010 from http://digitalenterprise.org/models/models.html Savitz, E (2007). Apple: Subscription Music Service Seems Inevitable. Retrieved July 5, 2010 from http://seekingalpha.com/article/33231-apple-subscription-music-service-seems-inevitable

18. The Current iTunes Business Model Schramm, M (2010). iDevices Making Up More and More of Apples Revenue. Retrieved July 6, 2010 from http://www.tuaw.com/tag/graph Starrett, C (2009). HD movies now sold in iTunes Store, iPod versions included. Retrieved July 7, 2010 from http://www.ilounge.com/index.php/news/comments/hd-movies-now-sold-in-itunes-store-ipod-versions-included/