Summary:

iTunes’ increasingly good quarterly sales demonstrates how the long-rumored Apple video and “iRadio” subscription services the company has over the years tried to bring to fruition could become significant revenue sources.

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For a nice visual aid of how Apple’s iTunes content business is doing, the Asymco blog has done a great job chart-ifying the company’s most recent earnings results.

The charts show how iTunes content revenue has been steadily growing upward and to the right. But they also show that Apple saw an increase in iTunes net sales by $300 million just from the holiday quarter (when Apple always sees its biggest concentrated pop in downloads) to the March quarter, making $2.4 billion in sales. This is also up from $1.9 billion during the same quarter a year ago.

Relatively, this is still very tiny compared to the $23 billion in net sales Apple derived from its most essential business, the iPhone. And to the $8.7 billion from the iPad last quarter. But iTunes alone is close to half of Mac net sales, which were $5.4 billion.

The reason for the increase is mostly due to Apple’s steady expansion of the iTunes Store to new countries around the world in recent quarters. iTunes Music sells in 119 countries, videos in 109 countries, while the App Store and iBookstore are both in 155 countries.

According to Asymco’s calculations, this wider availability in the store has driven up the amount the average user is paying Apple for content:

In March Apple reported that they have 500 million iTunes [users] so one way to think about the iTunes business is to say that  iTunes users purchase content and services at the rate of about $40 per year.

This is really interesting in the context of the long-rumored Apple video subscription deal and the still-being-hashed-out “iRadio” service for subscription music content. Imagine if just in just some of those countries Apple introduced a $10 per month streaming solution. So instead of $40 per year from a user, Apple started getting more like $120 per year. And that would be just music. If there was a separate video package some day that figure would get even larger. Plus, that doesn’t include money spent on and within both Apple’s own iOS and Mac apps and third-party apps.

iTunes has always been more of a bonus source of revenue than a meaningful contributor to Apple’s bottom line — the songs were originally there to sell iPods, in the way mobile apps are there to sell iOS devices. But software and services — from iCloud and Maps to Siri — have begun to play a more prominent role at Apple, and in its customers’ experiences. A subscription service of digital content, if deployed and priced correctly, could actually turn into a meaningful new source of revenue for Apple.

If current trends continue, with software and content sales going up and laptop and desktop sales dropping off, it’s not impossible that Apple’s content business could someday soon outpace the Mac segment as its third-largest business.

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