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To: HamiltonJay
"So that’s about 25% of the revenue is going to content costs, that’s not to me outrageous or stingy. Anyone who things it is, hasn’t run a business."

I've been in business since I was 17 years old. I did so by not screwing the customer OR the people I work with. When I hire a guy to install flooring I don't charge 20 bucks an hour to my customer then turn around and pay 5 bucks an hour to the guy I hired to provide the service.

25 posted on 06/25/2015 8:07:57 AM PDT by Mad Dawgg (If you're going to deny my 1st Amendment rights then I must proceed to the 2nd one...)
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To: Mad Dawgg

Sorry, but I don’t see how you think anyone is getting screwed. What is your raw material cost to run your business? I can tell you in most industries its the 20-30 percent range.... and 30% is on the higher end. That’s not Labor, that’s not taxes, that’s not utilities, regulatory cost, etc, that’s the absolute raw materials you need to operate... cost of goods if you will. Where apple is based on the numbers I run is right in line with that.

They are charging $10 per month per user, and average user is likely to consume about $2.40 of that in content costs based on the reimbursement model of .002 per stream. (2 hours a day average listening, 30 days average per month, 3 minute average song length) that’s 24% of of their revenue dedicated to “cost of goods”. That’s not out of line at all, nor is it screwing anyone.

Apple has to pay all its labor, upkeep, infrastructure, administrative and other things out of the remainder of the funds and then sees a profit, a roughly 25% raw material cost is not remotely out of line for any business I have been involved in.


29 posted on 06/25/2015 8:23:45 AM PDT by HamiltonJay
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To: Mad Dawgg

You are comparing apples to oranges, you are trying to apply a consulting/general contractor model to a cost of goods business. Typical contractor type of model you are operating is a 2/3 to 1/3 typically.. that’s a different model. Go ask the guy you hire to actually do the work how much he plans on spending on raw materials for the job, if its over 30% he won’t be in business long.

Your business is basically that of a broker, you aren’t directly doing any of the work, just booking the job and then passing it along to someone else to provide the labor and taking a cut for brokering the deal. That’s a completely different model. If you want to have apples equivalent to that model, thats the 30/70% split they have on the sale of digital content such as apps and music on itunes. They keep 30% of the sale and in return they provide the marketplace and do all the things needed to make a sale happen. That business is comparable to the model you are using and its breakdown is about the same.


31 posted on 06/25/2015 8:29:12 AM PDT by HamiltonJay
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