Itunes Threatens Closing Down

[tdog 0]

Apparently Apple cannot seem to figure out how to make a profit on $.90 to distribute a song when they only have to pay $.09 (10%) to the artist.

I think a 10 times markup should pay for some software and internet access.

An Itunes press release said it has sold 4 billion songs to 50 million users.

4 billion * $.99 = $4 billion bucks in sales (ok, I rounded up).

If raw royalties cost $.09 then they have made 4,000,000,000 - ($.09 * 4,000,000,000) or 3.6 billion iBucks after paying the artists.

If apple can't figure out how to pay the artists a tad more without cutting into their 3.6 billion iBuck profit after royalties - I will go back to downloading for free... After all, the reason I don't pirate is because I want the artists (especially the unique non-mainstream ones) to make a tad too.

Oh, $3,600,000,000 bucks iProfit before network expenses / 50,000,000 iUsers = $72 per user. If they can't build a network to distribute music for that - then WHAT IN THE iHELL ARE THEY iDOING???? Yes, bandwidth costs some money, but it is not like they have a huge factory stamping CDs...

Here is the news:

http://www.9news.com/life/entertainment/article.aspx?storyid=100887&catid=343

[quade 3]

It's an empty threat.

Companies pull that kinda crap all the time when negotiating.

quade -
The World's Most Boring Skydiver

[Gawain 0]

I suspect that Apple's net profit margin is significantly less than some may think.

It's not like they have a bunch of DS3s running into a server room. More likely, they are operating some kind of OC192 or OC748 to manage the massive traffic in and out of iTunes. Plus, there are real live people that are managing the content, hardware, cooling of the servers. A lot of that is outsourced to be sure, but it still costs...I once sold a SONET OC12 to a client in Oregon, the price of that beauty was $15K/month...not including carrier access (which added another $5K).

By the end of the day, I bet their net margin (for iTunes) works out to somewhere between 10-20%...pretty good, but fragile. Microsoft I think nets 24%...

Having said that, they won't shut it down. They could keep songs at $.99 and kick movies up a notch (which I think they've already started to do). Plus, if they start peeling DRM completely away, or open it to other players, they'll have a case to push margins down due to higher volume.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[Steel 0]

It's not like they have a bunch of DS3s running into a server room. More likely, they are operating some kind of OC192 or OC748 to manage the massive traffic in and out of iTunes. Plus, there are real live people that are managing the content, hardware, cooling of the servers. A lot of that is outsourced to be sure, but it still costs...I once sold a SONET OC12 to a client in Oregon, the price of that beauty was $15K/month...not including carrier access (which added another $5K).
-----------------------------------------

Wow, I must be behind the times. I recall back in 2000 a DS3 costing $11K a month and an OC-192 being described as enough bandwidth for a small country. When did they come out with this OC-748 that you speak of and how much is that currently costing monthly? Inquiry minds want to know.

If I could make a wish, I think I'd pass.
Can't think of anything I need
No cigarettes, no sleep, no light, no sound.
Nothing to eat, no books to read.

[PhreeZone 15]

OC-768 is the core lines that ATT runs for its MPLS backbone. I've never heard of a datacenter tapping it, but it would be the best way to serve up large files. I think its about 39 gig a second.

Cisco has supported this connection for a bit, I remember reading a paper on it in 2007.

You can lease an OC-3 line for $5000 plus service fees in some markets anymore.

Hell, I just did a google and it looks like back in 2007 you could lease a NYC-DC OC-3 for $1400 a month or an OC-48 will set you back $12500. A NYC to London OC-3 is 3k a month. Prices sure have fallen since I looked at the cost of a private T1 in 2002

Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

[Steel 0]

Well we know that and oc-3 is 155mbits. So then an oc-768 would be 256 times that ( 39680). So yeah 39Gigabits/per sec. But does anybody know how much that will cost monthly?

If I could make a wish, I think I'd pass.
Can't think of anything I need
No cigarettes, no sleep, no light, no sound.
Nothing to eat, no books to read.

[Steel 0]

Interesting, I just did some googling and noticed that I never made the association with 10Gig ethernet being specifically capable of handling an OC-192. The only company that I have seen has come close to filling their 10 Gig links with significantly more than 1 Gig of data is Sprint. I am sure there are others like ATT, I just hadn't come across it.

I have yet to see a 40 Gig ethernet link and actually I would expect the next step to be 100 Gig ethernet.

If I could make a wish, I think I'd pass.
Can't think of anything I need
No cigarettes, no sleep, no light, no sound.
Nothing to eat, no books to read.

[ryoder 1,381]

Quote

Apparently Apple cannot seem to figure out how to make a profit on $.90 to distribute a song when they only have to pay $.09 (10%) to the artist.

If the artist gets 9 cents, then what does the studio holding his contract get?

"There are only three things of value: younger women, faster airplanes, and bigger crocodiles" - Arthur Jones.