This morning, Apple announced that it has sold 5 billion songs to date from its iTunes store. What does that mean? It means it is selling a lot of songs. But growth at the store is slowing.
Apple (AAPL) is now selling about 6.4 million songs per day on iTunes, according to AmTech analyst Shaw Wu. That’s up 7.6% from January, when its run rate was about 5.95 million songs per day, according to Wu.
But growth has slowed: That old 5.95 million songs per day average was a 21% increase over the 4.93 million average songs per day that Apple sold from January to July, 2007. So the new 7.6% increase is a smaller bump. (We admit this is an imperfect metric, because Apple doesn’t supply sales numbers over regular intervals — so there’s no way to compare similar sales periods, account for holidays, etc.)
That’s OK, of course — we’ve known that iTunes growth was going to slow down for some time. And iTunes’ business has always been ancillary for Apple; the company only keeps about 30% of gross revenues, and at best the business is small contributor to Apple’s bottom line. Indeed, Wu calculates today that Apple is bringing in more than $500 million in quarterly revenue from iTunes music sales, “though profit contribution [is] likely modest.”
Apple also said today that it’s selling and renting 50,000 movies per day through iTunes. At a $6 average price, Wu calculates that Apple’s quarterly movie revenue is $27 million. That’s growing rapidly, he notes, but still a rounding error.
Big picture: All of this is good news for Apple, which, to quote Wu, uses iTunes as the “glue” to tie together its multiple platforms: Mac computers, iPods, the iPhone, and Apple TV. What about the content providers? That’s a different post.
Business Insider Emails & Alerts
Site highlights each day to your inbox.