Thursday, 7 October 2010

Discounting iTunes gift cards

JB HiFi and various other retailers occasionally sell iTunes gift vouchers at a discounted price, so you're able to get, say, $40 iTunes credit for only $30 outlay. This means two things. One, it is cheaper to go through a middleman retailer for your iTunes credit than to hand your money directly to Apple. Two, Apple are selling these cards to retailers for less than their face value, presumably as a form of advertising for iTunes, and cutting off part of their profits as a result.

Whatever proportion of the sale goes to Apple when you buy directly from iTunes is probably half or less what they get from selling cards to retailers. And as it is easy to verify from many online sources, Apple's profit margin on iTunes is massive compared to what the publisher and artist get, so there's plenty of room to bargain. But why undercut themselves by so much? Well, it's either a way to get non-credit-card-holders onto iTunes or simple advertising, as I said earlier. If you get in the habit of buying from iTunes, sooner or later you'll stop bothering with the cards and just buy direct.

Mokalus of Borg

PS - Even when they're generous, they're insidious.
PPS - Did you expect anything else?

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