Mobile

iTunes users spend $40/year on apps, music, and digital shtuff

Image Credit: http://www.flickr.com/photos/68751915@N05/6710895025/sizes/l/in/photostream/

Apple has built a massive and fast-growing $16 billion annual revenue stream in digital content alone, Apple analyst Horace Dediu says.

The company announced that quarterly iTunes revenues topped $4 billion — including $2.4 billion in content alone — in its latest earnings report. Based on historical numbers alone, that’s a $16 billion annual run rate, thanks to Apple’s 500 million iTunes users. But since it also has grown at a fairly steady 29 percent per quarter for the past six years, it’s also an underestimate of the annual value of the iTunes ecosystem.

And it gets better as users have more Apple devices.

“Apple users spend about $1/day for each Apple device in use,” Dediu says.

iTunes digital media revenue by product segment

Above: iTunes digital media revenue by product segment.

Image Credit: Horace Dediu

All of which means that Apple is still king of the mobile ecosystem, at least as far as monetization is concerned. Users have currently downloaded 49.9 billion apps, and Apple is currently running a contest which will see the downloader of the 50th billion app win $10,000 in iTunes cash. While Google Play is growing faster than Apple’s app store, Apple still leads in downloads, and it holds a 2.6-times revenue advantage.

It’s also an interesting metric for Amazon to evaluate itself by.

Amazon sells Kindle devices at or near cost in part because it hopes to make extra revenue on digital content — perhaps $3 per user per month — via its own app store and its digital media offerings, such as TV shows and movies. Its newly launched virtual currency Amazon Coins should help with that mission, and with 11 million to 12.5 million Kindles sold through Christmas 2012, and perhaps 15 million sold to date, that would translate into just over half a billion dollars in revenue.

And at Apple-like numbers of $40/user/year, it would be $600 million dollars.

All of which could help explain why Amazon is hitting digital media hard and buying technology to make all of its Kindles full-color, with responsive screens.

And why Apple, Amazon, and Google are increasingly hard-core competitors in their three-way battle to own your devices … and your wallet.

Image credit: 401(K) 2013/Flickr


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