As promised, Medialoper team coverage of the 1 billionth iTune sold continues. Today, we look at the economics of the iTunes store. Conventional wisdom suggests that margins on the songs are so low that the real moneymaker for Apple in its iTunes experiment is the iPod.
That, of course, suggests that making money on volume is quaint concept. Apple is selling approximately three million songs a day, meaning the second billion will be reached much faster than the first billion. Unless things go horribly wrong, the third billion will be even faster. 83% of legally downloadable music is sold via the iTunes music store.
Let’s pause for a moment and ask the first obvious question: why in the world would anyone not be cutting a deal with Apple right now? Why would anyone be putting all their eggs in Microsoft’s basket? Yes, two questions. If you want to sell your music on the Internet, wouldn’t it be smart to go where the money is? You don’t have to be exclusive — make deals with everyone — but be smart.
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