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| November 26, 2012
Facebook Users Can Now Purchase Digital iTunes Gifts Cards For Friends
Just in time for the holiday shopping season, the relationship between Apple and Facebook seems to be improving. According to AllThingsD, Facebook has announced that users can now purchase iTunes credits for their friends on the social network. As part of Facebook’s Gifts e-commerce initiative, you can now give friends iTunes credit of $10, $15, $25, or $50. Users pay with a credit card directly on Facebook. You can optionally also offer a recommendation, like a certain album or song, to the recipient. AllThingsD speculates on whether the partnership will actually help Facebook’s need for revenue:
Perhaps, according to a little back-of-the-envelope math. Per Apple's last 10-K, the company generated $7.5 billion from the iTunes Store during fiscal year 2012. Industry sources say that more than $2 billion of that revenue comes directly from iTunes gift cards. Sources also tell us that existing retailers who sell iTunes gift cards (like Best Buy, Target and the like) usually keep around 13 percent of each gift-card dollar sold. So that adds up to around, say, a $260 million-dollar market size for physical iTunes cards split among participating retailers, of which Facebook will now be an active participant. That pie is small compared to Facebook's overall revenue ($3.71 billion in 2011), but another digital product with less overhead and high demand is definitely a win for Facebook's Gifts department. Not to mention the potential boost Facebook's massive billion-user distribution could give on iTunes gift-card sales overall.Along with added revenue, the partnership also speaks to the better relationship between the two companies. After Ping rode off into the sunset, the next version of iTunes will be highlighted by its Facebook integration. Both the latest versions of iOS and OS X also have varying amounts of tie-in with the social network. Source: AllThingsD