How much money does apple get

How Apple Makes Money

Apple’s biggest revenue sources are the iPhone and the Americas

Apple Inc. (AAPL) is a global technology company that designs, manufactures, and sells smartphones, personal computers, tablets, wearables, and accessories. Some of its main products include the iPhone, the Mac line of personal computers and laptops, iPad, Apple Watch, and Apple TV. The company also has a fast-growing services business that includes its iCloud cloud service, and its digital content streaming services such as Apple Music and Apple TV+, the latter launched in November 2019.

Apple faces numerous competitors including smartphone manufacturers Samsung Electronics Co. Ltd. (005930) and LG Electronics Inc. (066570), computer manufacturers Lenovo Group Ltd. (0992) and Dell Technologies Inc. (DELL), streaming-content providers Spotify Technology S.A. (SPOT) and Netflix Inc. (NFLX), and other technology companies like Microsoft Corp. (MSFT), Alphabet Inc. (GOOGL), and Amazon.com Inc. (AMZN).

Key Takeaways

• Apple sells smartphones, personal computers, tablets, wearables and accessories, and services.
• iPhones are Apple’s biggest source of revenue by product, and the Americas is the largest revenue generator among its geographic regions.
• Apple’s services business generates the highest gross margins.
• Apple recently acquired classical music streaming service Primephonic.
• Apple announced changes to its ecosystem that will allow developers to offer payment options to users of their apps outside of the App Store.

Apple’s Financials

Apple posted net income of $21.7 billion on revenue of $81.4 billion in Q3 of its 2021 fiscal year (FY), the three-month period that ended June 26, 2021. Apple refers to revenue as net sales in its financial reports. Both net income and revenue rose compared to the year-ago quarter. Net income grew 93.2% as revenue climbed 36.4%.

Both Apple’s Products and Services businesses grew during the quarter. Revenue for the Products business rose 37.4% compared to the year-ago quarter, comprising about 79% of Apple’s total revenue. Among its products, iPhones comprised 49% of total revenue; Macs (10%); iPads (9%); and Wearables, Home and Accessories (11%). Services revenue grew 32.9% compared to the same quarter a year ago, comprising 21% of Apple’s total revenue.

Apple has mounted a major corporate strategy to reduce its dependence on lower-margin hardware products, which face slowing growth, while accelerating the growth of its Services business, which has higher margins and a more predictable, recurring revenue stream. Apple has introduced many new services in recent years, including Apple Arcade, Apple TV+, Apple News+, and Apple Card. The company now offers many of its services in one simple plan called Apple One.

The high margins in Apple’s Services business have continued to rise. Gross margin as a percentage of sales was 69.8% in Q3 FY 2021. Its annual gross margin in FY 2020 was 66.0% compared to 63.7% in FY 2019 and 60.8% in FY 2018. Gross margin as a percentage of sales for Products was 36.0% in Q3 FY 2021. It was 31.5% in FY 2020, down from 32.2% in FY 2019 and from 34.4% in FY 2018.

Apple’s Business Segments

Apple provides a breakdown of revenue and operating income for the following geographical segments: Americas; Europe; Greater China; Japan; and the Rest of Asia Pacific.

While the U.S. is still the dominant market, Asia is rapidly catching up. In Q3 FY 2021, markets in China, Japan, and Asia Pacific contributed 36% of operating income and 33% of revenue. That makes the Asia region dramatically more important than Europe to Apple for growth and profits.

Americas

The Americas segment includes both North and South America. Revenue grew 32.8% in Q3 FY 2021 to $35.9 billion, comprising about 44% of Apple’s total revenue. Operating income grew 62.0% to $12.9 billion, comprising about 41% of the operating income for all segments.

Europe

The Europe segment includes European countries, as well as India, the Middle East, and Africa. Revenue grew 33.7% in Q3 FY 2021 to $18.9 billion, comprising about 23% of Apple’s total revenue. Operating income grew 60% to $7.1 billion, comprising about 23% of combined operating income for all segments.

Greater China

The Greater China segment includes mainland China, Hong Kong, and Taiwan. Revenue rose 58.2% in Q3 FY 2021 to $14.8 billion, comprising about 18% of Apple’s total revenue. Operating income rose 84.6% to $6.3 billion, comprising about 20% of the combined operating income for all segments.

Japan

Revenue for the segment rose 30.2% in Q3 FY 2021 to $6.5 billion, comprising about 8% of Apple’s total revenue. Operating income rose 43.4% to $3.0 billion, comprising about 10% of the combined operating income for all segments.

Rest of Asia Pacific

The Rest of the Asia Pacific segment includes Australia and those Asian countries not included in the company’s other reportable geographic segments. Revenue for the segment grew 28.5% in Q3 FY 2021 to $5.4 billion, comprising about 7% of Apple’s total revenue. Operating income grew 54.0% to $2.1 billion, comprising about 7% of the combined operating income for all segments.

A note to readers that the combined operating income used in the segment breakdowns above and in the pie charts was $31.5 billion in Q3 FY 2021. To arrive at Apple’s lower, reported consolidated operating income of $24.1 billion for the quarter, Apple makes deductions for research and development expenses and other corporate expenses.

Apple’s Recent Developments

On Aug. 30, 2021, Apple announced that it has acquired Primephonic, a classical music streaming service. Financial terms of the transaction were not disclosed.

On Aug. 26, 2021, Apple announced that developers will be able to share purchase options with users of their apps outside of Apple’s ecosystem. The change, which comes as part of a proposed settlement of a class-action lawsuit, will make it easier for Apple’s customers to use forms of payment other than the App Store.

How Apple Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Apple and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Apple releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Apple discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Apple breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and membership in the LGBTQ+ community.

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How Much Money Does Apple Have? (AAPL)

By David Zeiler , Associate Editor , Money Morning • @DavidGZeiler • April 29, 2015

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In one sense, answering the question «How much money does Apple have?» is easy.

During its Q2 earnings conference call Monday, Apple Inc. (Nasdaq: AAPL) reported that it now has $193.5 billion in cash and cash equivalents on its balance sheet.

That’s a big number. What does it really mean?

For one thing, it means the AAPL profit machine rakes in an incredible amount of money every hour of every day.

In the March quarter, Apple earned $13.56 billion in net income. That works out to $150.77 million of profit every single day. Or $6.282 million per hour. (If you think that’s something, Apple pulled an average profit of $8.3 million per hour in its record-breaking December quarter.)

That’s why Apple’s cash pile has grown so large. As recently as the end of Q2 of 2012 — exactly three years ago — Apple had $110 billion in cash. That’s an increase of $83.5 billion.

That figure is higher than the cash holdings of any other company save one — Microsoft Corp. (Nasdaq: MSFT), which has $107.4 billion. Next on the list is Google Inc. (Nasdaq: GOOG, GOOGL), which has $67 billion — well below Apple’s three-year increase.

And the swelling of Apple’s cash reserves has come despite a good faith effort to spend it.

Research and development spending has more than doubled over the past three years. And the company has given billions back to shareholders via Apple stock buybacks and Apple dividends. Apple now pays out more than any other company in dividends, $12.1 billion per year.

But let’s get back to the question of «How much money does Apple have?» The figure of $193.5 billion is hard for just about anyone to wrap their head around.

So we’ve come up with some things Apple could do with that money that show how just mind-boggling that amount of cash is.

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How Much Does Apple Music Really Pay per Stream?

It wasn’t that long ago when I would get excited about downloading my favorite band’s newest album from the iTunes Store.

It also wasn’t too long before then that I would order physical CDs from Amazon and have them shipped to my house. And while we’re at it, I remember shortly before then looking forward to heading to the F.Y.E. at my local mall or to the music section at Target or Best Buy on the weekends to pick up a copy of my favorite band’s newest CD!

Indeed, some of my fondest memories are about getting home from school, heading to my room, powering up my stereo system, popping a CD into my CD player, and jamming to my favorite tunes.

But times have changed, and they’ve changed fast. Gone (for the most part) are the days of buying physical CDs. The music industry reports that it shipped under 50 million physical CDs in 2019, down from nearly 1 billion CDs shipped in the year 2000. Apple even went so far as to shut down the iTunes Store, effectively ending the days of paying to download MP3s, as well. Instead, people have turned to various streaming services to listen to their favorite music.

Streaming has taken the industry by storm, and there’s no indication that it’s slowing down. If anything, it’s speeding up, with more and more players getting into the streaming game each year. Most of the major tech companies offer music streaming services, with options available from Apple, Google, and Amazon. Pandora, too—one of the original music streaming sites—is still around, although it operates a little differently from the other streaming services in that it doesn’t allow users to pick and choose individual songs to listen to. And of course, Spotify offers one of the most popular streaming apps around.

This leaves consumers with plenty of options to access their favorite music from virtually anywhere. But what about the artists? If people are no longer buying CDs or paying per song or per album to download music from iTunes, how do the artists make money? Artists, of course, make money from touring, but before streaming, selling records was another substantial source of income. Now, though, that income stream (no pun intended) has all but dried up.

This leaves us to wonder whether revenue from streams of individual songs makes up for the revenue lost from declining record sales. Well, this article takes a look at just how much Apple Music pays artists per stream. So, if you’ve ever wondered how much money your favorite artists make from fans streaming their music, keep reading to gain a little insight into this often-overlooked piece of the music industry.

This article focuses only on Apple’s streaming service, Apple Music. For insight into the other streaming services and how much each one pays artists per stream, be sure to check back later.

Streaming basics

Just in case you’ve been living under a rock for the last 5 or 6 years and are unfamiliar with music streaming, here’s the basic concept: instead of paying per song or per album to download an MP3 of the track onto your device (think iPod or iPhone), you pay a set monthly subscription fee and, in return, gain access to the service’s entire library of music.

For Apple, this means users pay $10 per month for access to every single song in the iTunes library. Yes, you read that right. For just $10 per month, you can listen to any of the 45 million songs in the iTunes library as many times as you like. All you need is an Internet connection. Instead of downloading each track, you just select a song and it plays directly from the Internet on your device. This is what we mean by “streaming.” But don’t worry, if you still prefer to download your music, Apple Music allows you to download songs and albums, too, so you can listen to your music if your iPhone is in Airplane Mode or otherwise disconnected from the Internet.

Apple Music launched in 2015. Boasting approximately 60 million subscribers, Apple Music continues to grow its market share, although it still lags behind Spotify in total users. Still, 60 million users are nothing to write off. That’s a lot of people listening to music and an enormous number of potential fans with access to an artist’s music at the touch of a screen.

Streaming revenue

Music streaming grew from a relatively minor portion of total music-industry revenue to a main source of revenue in a very short amount of time. Indeed, one estimate puts the proportion of total revenue that streaming generates for the music industry at 80%. In just five years, streaming revenue experienced a nearly-500% increase, growing from $1.8 billion in 2015 to a whopping $8.8 billion through 2019. But how much of this money passes through to the artists? The answer is not much.

Streaming services have been criticized from the beginning for the relatively small royalty payments they make to individual artists. But just what kind of numbers are we talking about? Successful artists, who amass billions of streams each year, of course, can still earn substantial income from streaming. Taylor Swift’s songs, for example, generated approximately $400,000 in a single week across all streaming platforms. But for smaller artists, the numbers aren’t so great. Even an artist with, let’s, say 10 million streams in a year is unlikely able to live on streaming revenue alone.

The numbers

Alright, enough about the music industry and streaming in general. It’s time to get down to what you all are here to learn. Just how much does Apple Music pay artists per stream?

It’s important to first note that the rates Apple Music pay artists vary. But one artist, the cellist Zoë Keating, publishes the breakdown of her earnings from the various streaming services each year. For the year 2019, Keating reported Apple Music paid her $0.012 per stream. That’s 1.2¢ per stream. This is consistent with 9to5mac’s report that Apple Music pays between $12 and $15 per 1000 streams (i.e., 1.2¢ to 1.5¢ per stream).

So, let’s say an artist’s songs were streamed a total of 20 million times on Apple Music in one year, and that artists receive the same 1.2¢ per stream rate as Keating.

20,000,000 stream x $.0012 per stream = $24,000

You may think, $24,000, alright, not bad for not having to do anything (other than, of course, writing, recording, engineering, producing, and distributing the tracks, and paying your manager, co-writers, and studio musicians). But $24,000 in a year pales in comparison to Taylor Swift’s $400,000 in a single week.

And 20 million is a lot of streams. Many artists don’t come close to that number. Each year around the end of December, I enjoy seeing the artists I follow on Instagram post their Spotify Years-in-Review. This feature tells the artist how many times their songs were streamed that year. I distinctly remember one of my favorite artists, whom I listen to on repeat for literally hours at a time, posted about 1,000,000 streams in 2019.

So, let’s do that math and let’s assume they receive the same 1.2¢ per stream from Apple Music that Zoë Keating did.

1,000,000 streams x $.0012 per stream = $1,200

$1200. That’s it for an entire year, for the entire band. I’d bet $1200 isn’t enough to pay the rent on the lead singer’s apartment, not to mention pay any meaningful sum to the other 4 band members.

And that’s assuming the artist receives 1.2¢ per song. But many artists aren’t so fortunate. Remember, Keating’s 1.2¢ per stream is an average, which necessarily means some artists receive less.

So there you have it. While it may seem like musicians have it made as soon as their songs hit Apple Music and people start listening, the reality is much different. At rates of just 1.2¢ to 1.5¢ per stream, simply achieving a few million streams will generate nowhere near enough revenue for the artist to live on, much less to live on lavishly. Instead, only those massively successful artists, who achieve billions of streams, are likely to make any serious money off streaming alone.

You can see a full report on the revenue generated by streaming services from the Recording Industry of American here.

Royalty policies and the Music Modernization Act

Since the beginning, streaming services and artists have butted heads over fair payouts. Streaming services, understandably, want to keep as much of the revenue they generate from users’ monthly subscription fees as possible. But artists, too, deserve to be paid fairly for their work, and there’s something to be said for the argument that streaming services, and their billions in annual revenue, would not, and indeed could not, exist without the artists whose music serves as the foundation for the entire industry.

In 2018, the United States Congress passed the Music Modernization Act, and it was subsequently signed into law. Without getting into too much detail, the MMA modernizes copyright laws in the United States in an attempt to ensure artists receive a fairer share of the streaming revenue they help generate. CNBC reports the MMA, “allocates royalties to music producers, updates licensing rules for streaming to make sure rights holders are paid in a more efficient fashion, and ensures that artists receive royalties on songs that were recorded before 1972.” CNBC also reports the MMA creates a new body, called the Music Licensing Collective, that is charged with collecting and distributing royalties beginning in 2021.

Streaming looks like it’s here to stay, at least for the near future. We hope you’ve found this post helpful and enlightening. While you may be disappointed to find out just how much (or little) money your favorite artists receive from streaming, the industry appears to be making adjustments to ensure artists are paid fairly so they keep producing the music we love to listen to.

If you enjoyed this article, be sure to check back soon for more!

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