Apple has inked its licensing pact with Universal Music Group and will reportedly charge $25 a year for an iCloud subscription. That revenue stream--once you factor in splits with the music industry--is essentially peanuts, but the value of iCloud will go well beyond the profit and loss statement.
First the news, CNET's Greg Sandoval reports that Apple has cut a licensing deal with Universal Music. That move gives Apple all the major labels and Universal brings U2 and Lady Gaga to the iCloud party. Meanwhile, the L.A. Times reports that Apple will "eventually" charge $25 a year for iCloud and sell advertising around the service.
When you factor in the revenue split with the music industry--labels 58 percent, publishers 12 percent and Apple 30 percent--Steve Jobs & Co. will get $7.50 in revenue for each iCloud subscription.
As for the rudimentary math, Apple is projected to move 184 million iPhone units in calendar 2011 and 2012, according to Piper Jaffray analyst Gene Munster. We'll assume that half of those iPhone subscribers will ultimately pay for iCloud with Apple getting $7.50. That's $690 million in revenue a calendar year.
Apple is also expected to sell 75 million iPad units over calendar 2011 and 2012. Again we'll assume half of those iPad users buy the iCloud subscription. Those iPad units will deliver $281 million in revenue a year in calendar 2012.
As for the iPod, Apple is expected to move 81 million units over calendar 2011 and 2012. We'll assume one third of those iPod users will get iCloud--it's unclear whether the Nano will be able to… Read more