Apple, 55 Cents, And Advertising

As is turns out Apple is splitting video revenue approximately 70/30 and are keeping $.55 of every $1.99 download which is less than double the $.30 it takes on every $.99 download. With this model it appears that the TV industry is making as much money on downloads as they are on DVDs according to a Nielsen analyst. Considering that using the current advertising model, a hit show like Desperate Housewives brings in $12 million, on a per user basis that is only $.57 per user! So if only 20% of Desperate Housewives watchers downloads the show at $1.99 the network would make $15 million. Thus online distribution will allow the TV networks to make even more money than they are currently making. Also it appears that currently iTunes downloads adds viewer rather than cannibalizing existing viewers so both models could coexist for some time.