FT.com / Your money / FT Wealth - Apple worms its way into the music industry
Wal-Mart’s $5bn a year in album sales currently accounts for nearly 20 per cent of all albums sold. The operative word in that sentence is “currently”.With total iPod sales expected to hit the 50m mark by the end of 2006, you can extrapolate another $100 per iPod in revenue for iTunes (the equivalent of only six CDs over the lifetime of the iPod), which would entail $5bn in sales for Apple over the next few years.
Frankly, it is probably more reasonable to assume $500 (the equivalent of 35-40 CD purchases) in iTunes revenue every three or four years for every two or three iPods sold. That estimate would put the expected sales at iTunes up to $10bn-$15bn in the next few years.
Some interesting math I haven't seen anywhere else.
The black box in this equation, of course, is where the $100 over n years [lifetime of the iPod] comes from. It would seem, to me, to depend on some notion of the average upgrade cycle for iPods, the average number of iTunes purchases per iPod, some way to account for regional variation in iTunes Music Store catalogs, and the capacities of various iPod models (and their respective proportions of the total iPod population out there).
