iTunes payments to developers growing faster than payments to record labels

Wed, Feb 2, 2011


With a few basic assumptions in tow, Horace Dediu charts the payments made by Apple to both record labels and developers. As you can tell, payments to record labels are closing in on $12 billion while payments to app developers are slightly above the $2 billion mark. But what’s interesting about the data is that the $2 billion threshold was reached 3 months quicker than it was on the iTunes Music Store.

Interesting stuff but we’re not sure if 3 months is that big of a gap to draw any substantive conclusions. After all, one could make a strong case that the success of the iTunes Music Store helped usher in an environment where purchasing content online (whether it be music or apps) is the norm. Still, the success of the iTunes App Store can’t be overstated. Apple in the blink of an eye fundamentally changed the phone industry much like how it changed the music industry with the release of the iPod. Recently, Apple celebrated the download of the 10 billionth app from iTunes, a feat reached in 2.5 years. Meanwhile, the 10 billionth song from iTunes was downloaded approximately 7 years after the iTunes Music Store debuted. Of course, a good number of iOS downloads are free apps, but the larger point is that Apple is establishing a huge built-in base of iOS users who are increasingly connected to the iTunes App Store. At the end of the day, Apple is happy as long as users are accessing and exploring the app store, paid apps be damned.


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1 Comments For This Post

  1. walleyf Says:

    Yes, 3 months difference IS a big deal. Remember that the music in the iTunes music store already existed and just had to be placed in the store. Most of the app store content had to be written for the store and required a significant effort on the part of the authors; the musicians had no extra work to do for their music to be in the iTunes store.

    The app store is basically creating a whole new market whereas the music store was shifting purchases from one venue to another.

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