Points to ponder about your bullet points
Mr.Bob said:
Aside from sheer size and the ability to spread costs over a larger number of song sales, Apple has leverage from:
1). Promotions like Pepsi (One big check per month with no credit card charges).
2). Gift certificates over a 1,000,000 sold (no credit card and lower servicing charges), i.e. cash in advance, so even interest earned if escrowed until used.
3). Pay Pal, again no crdeit card charges and summary checks once a month, little to no carry or service charges.
4). Audio downloads of books, NFL games, etc, have higher profit margins.
5). Watch for first releases and independent labels where the formula doesn't include high or no fees, the artist gets paid directly.
Apple's expenses are higher now because of new country expansions, but at some point this will go down (when most countries have a music store).
In time, profit margins will grow and become a significant contributor to the bottom line and at the same time margins will go down on the iPods as we know them today. Of course, new models, new gadgets and new ideas will have the higher margins.
Thus, continued innovation is the lifeblood and it flows best at AAPL!
1). Promotions like Pepsi (One big check per month with no credit card charges).
Yes, but Apple is surely giving the songs to Pepsi for less than 99 cents.
2). Gift certificates over a 1,000,000 sold (no credit card and lower servicing charges), i.e. cash in advance, so even interest earned if escrowed until used.
You have printing and distribution costs of the plastic cards - but this is probably your best point for higher dollar achieved.
3). Pay Pal, again no crdeit card charges and summary checks once a month, little to no carry or service charges.
As an ebay stockholder - my quarterly statement says differently here. It says the iTunes Music Store deal offers PAYPAL less of an expense because they don't have to offer cash back to premum users. The credit card processing is actually higher than Apple's merchant rate of 1.2%.
4). Audio downloads of books, NFL games, etc, have higher profit margins.
Not so on all purchases. But good point.
5). Watch for first releases and independent labels where the formula doesn't include high or no fees, the artist gets paid directly.
Also good point.
As for my math, Apple is said to have made less than 1 million on the iTunes Music Store so far. But I have read they are making, after expenses, about 3 cents per song average.
