Why I Think Apple Is Making a Nice Profit From the iTunes Store

Me, back in September (after the launch of the Amazon MP3 Store), on why I think Apple is making more money from the iTunes Store than many people think:

And, as if that weren’t enough, I suspect Apple makes a nice chunk of change on the other $.70 of each song sold. Assuming Apple issues payments to the record labels only periodically — weekly, monthly, quarterly — Apple gets to hold onto that money in the interim, during which time they earn interest on it. It doesn’t require a high interest rate to make a lot of money on two billion dollars flowing through your hands.

In short, while Apple doesn’t earn much at all on the sale of a single song, they make up for it in volume.

Thursday, 3 April 2008