‘Simplify!’
On 23 October 2001, Apple strengthened its commitment to digital music with the launch of its first-generation iPod portable audio player. Steve Jobs insisted that the design principles that governed the development of iTunes also be applied in the evolution of the new pocket-sized hardware — Walter Isaacson[1] relates that Jobs’ main demand in product development was ‘Simplify!’
Although the iPod was easier to use than other players then on the market with its user-friendly screen interface, innovative click wheel and seamless integration with iTunes, consumers were slow to adopt Apple’s new product. Isaacson attributes this to the company’s pricing policy, which launched the iPod at $399 in the US (£349 in the UK[2]), noting that in ‘the blogosphere, the joke was that iPod stood for “idiots price our devices.”’
Despite the initial derision, Jobs was able to announce at a special event at San Francisco’s Moscone Centre on 23 April 2003[3] that the iPod had sold 700000 units in the 16 months since its launch, making it the world’s bestselling MP3 player. Jobs again drew the comparison between the iPod and Sony’s Walkman having claimed that the iPod was ‘recognised as the “Walkman of the digital age”’ during his keynote at MacWorld in January 2003.[4]
The Walkman and iPod differed in the availability and legitimacy of the content they played. While the music industry had supplied music for purchase on cassette for some years before Sony introduced the Walkman, it offered no workable source for the legal acquisition of digital audio files at the time of Apple’s iPod launch. Jobs was able to leverage the impracticality of enforcing recorded music copyright laws to Apple’s advantage. Isaacson[5] notes that Jobs ‘could have decided simply to indulge piracy. Free music meant more valuable iPods. Yet because he really liked music, and the artists who made it, he was opposed to what he saw as the theft of creative products.’
The five major record companies had failed to agree on a format for the legal sale and distribution of their output online. As Isaacson details, this resulted in Sony and Universal working together to offer an online service called Pressplay, while AOL Time Warner, Bertelsmann and EMI linked with RealNetworks to make an offering named MusicNet. Both were unattractive to consumers because they were subscription services with limited catalogues that did not allow customers to keep tracks once their subscriptions expired. This kept consumers in the position of having no legal way to download and store music files.
Recognising that it was imperative for the industry to establish a consumer-friendly internet music platform, AOL Time Warner and Sony approached Apple for help. Jobs responded by proposing the iTunes Music Store, from which customers would be able to purchase, download and keep digital audio files. The record companies raised the biggest objection, Isaacson relates, to Jobs’ insistence that the new store would sell tracks individually, not only as part of albums. The record companies were reluctant to lose the premium they achieved on standout tracks by bundling them with less popular music on albums. Jobs pointed out that blocking track cherry-picking would make the iTunes Store much less competitive than pirate sites from which tracks were available individually and without charge.
Schlender and Tetzeli[6] describe how Sony was the last to succumb to Jobs’ logic on the iTunes Music Store. Sony Music Entertainment’s Chairman and CEO Andrew Lack realised that allowing Apple to sell Sony’s recordings through iTunes would help boost iPod sales significantly and probably to the detriment of Sony’s competing digital audio products. The fact that Apple had already partnered with the other four major labels ultimately drove Lack’s decision that Sony would also be on board when Jobs launched the iTunes Music Store in his keynote on 23 April 2003.[7] Schlender and Tetzeli record that the store opened with a catalogue of 200000 songs, selling a million downloads within the first week and exceeding 25 million sales by the end of the year.
‘Hell froze over’
As Schlender and Tetzeli continue, Lack’s prediction that the iTunes Music Store would prove a huge fillip to iPod sales was correct. Originally available for use only with Apple’s Macintosh computers, sales of the device threatened to saturate the market of existing Mac users, and Jobs took the reluctant decision to port iTunes to Windows PCs. He announced the inclusion of Windows at a special event in October 2003, jerking his thumb at a presentation slide that read ‘Hell froze over’.[8]
This emerged as a good day in hell for Apple as it not only expanded the market for iPod and iTunes Music Store sales, it exposed Microsoft customers to Apple’s user experience, which often encouraged them to switch fully to Apple products — Isaacson[9] recalls that Jobs sniped again at Apple’s arch-rival in a 2007 interview: ‘Asked about the fact that Apple’s iTunes software for Windows was extremely popular, Jobs joked, “It’s like giving a glass of ice water to somebody in hell.”’
Think conspicuous
Satanic similes aside, the strategy served, in part, to turn Apple from a company in steep decline at the time of Jobs’ return to it in January 1997, to (with Amazon, Facebook and Google) one of the four major tech multinationals it is today. Schlender and Tetzeli show how the pace of the turnaround was surprising even to Apple insiders like Eddy Cue (now the company’s senior vice president of Internet Services and Software[10]), who:
[…] remembers a day in late 2003 when he was waiting for a plane and he looked around the airport lounge at the other passengers waiting with him. Perhaps a dozen folks were listening to music on iPods, earbuds in place; a handful of people were working on PowerBooks with the distinctive white Apple silhouette glowing from the back of the lid; and only one guy was tapping away at a laptop PC. “Holy shit, I thought,” Cue recalls. “We’re really onto something here. We didn’t really have time to lift our heads up and look around, you know? But there it was. It was cool.”[11]
Cue’s observations mark not only the upturn in Apple’s fortunes in the early 2000s but also a return to conspicuous consumption connected with recorded music. The recording industry’s failure to innovate with viable mass-market products to meet the disruption it faced due to digital audio files created a hinterland in which consumers developed a culture of music piracy. This culture was capable of little concrete expression both because it was illegal and because there were few products to represent it offline. Apple’s iTunes Music Store and iPod offered both a legitimate way to access music online and to consume it conspicuously by wearing the iconic white earbuds that accessorised the portable music player.
The gathering cloud
Jobs strongly eschewed establishing a subscription music service when launching the iTunes Music Store in 2003, favouring offering customers indefinite ‘ownership’ of downloads following purchase.[12] The prevailing content distribution model at the time was a ‘digital hub’ with a computer at its centre. Consumers owned a variety of peripheral devices capable of generating and/or storing content, which they archived on their computers. This meant that iTunes users assembled their music libraries in their computers and synched their iPods with as large a selection from their libraries as their portable devices could hold. The computer was also the point of contact with the internet, so web content also entered the digital hub through it. Early iPods’ lack of direct internet access meant that they could neither download music directly from Apple’s servers nor stream music from online sources.
The iPhone, introduced in 2007,[13] combined — as Jobs headlined in his keynote at that year’s Macworld convention on 9 January[14] — ‘an iPod, a phone and an internet communicator.’ While the new device still functioned as a satellite to a computer in Apple’s digital hub — synching content through iTunes on a Mac or PC — its internet connectivity added scope for subsequent models to work as standalone devices. Four years after launching the iPhone, Apple announced at its Worldwide Developers Conference (WWDC) keynote in 2011[15] that its mobile devices were going ‘PC Free’. An ailing Jobs revised the digital hub hierarchy, demoting the PC to rank alongside its former peripherals and replacing it with cloud storage. ‘Some people think the cloud is just a hard disk in the sky — right?’ he said. ‘We see it as so much more than that.’ He explained how the company’s new iCloud service would synchronise customers’ content across their devices, making photos, videos, address books and so on available via Apple’s servers at every point of access. iTunes in the Cloud allowed customers to download their iTunes Music Store purchases directly to their iPhones, iPads and iPod Touches, while Music Match compared the contents of subscribers’ music libraries to those available in the Music Store and allowed them to download matches regardless of how the tracks had been acquired — by ripping CDs, for example. Music Match also uploaded tracks not available from the Music Store to the cloud so that customers could access their entire libraries online. Both services meant that — provided they were able to get an internet connection — consumers could now play all their music unrestricted by the capacities of their mobile devices. Music Match was the last product Steve Jobs announced — with his signature ‘One more thing…’ teaser — before his death on 5 October 2011.
The switch to streaming
Apple resisted offering a music subscription service until 2015 when it introduced Apple Music. As Wikipedia’s post on the service relates,[16] the company created it as an outcome of its acquisition in 2014 of Beats Electronics, which had been operating a streaming service called Beats Music. Opening the Apple Music section of the WWDC keynote on 8 June 2015[17] record producer and Beats Electronics co-founder Jimmy Iovine,[18] outlined that the new offering aimed to provide a coherent alternative to the plethora of music streaming services that proliferated at the time. The keynote continued to present Apple Music as a platform combining on-demand access to 50 million songs, curated playlists, a worldwide radio station and other features serving both music fans and musicians. Although it overrode Jobs’ inceptive antipathy to subscription services, the company offered Apple Music alongside its iTunes Music Store model, so that consumers could both buy songs to add to personal music libraries as before and subscribe to access a vast catalogue.
I have focussed mostly here on Apple’s innovations in consumer music in the digital age because the company has frequently been first to develop and release products with enduring mass-market appeal. Although other subscription music streaming services were available when Apple Music launched, Apple was able to bring its established business and customer base to bear in establishing a significant competitive advantage for its new product. Sony Music’s CEO Doug Morris broke the news of the imminent launch of Apple Music in an interview in Cannes on the eve of the 2015 WWDC keynote:
“What does Apple bring to this?” Morris said. “Well, they’ve got $178 billion dollars in the bank. And they have 800 million credit cards in iTunes. Spotify has never really advertised because it’s never been profitable. My guess is that Apple will promote this like crazy and I think that will have a halo effect on the streaming business.
“A rising tide will lift all boats,” he added. “It’s the beginning of an amazing moment for our industry.”[19]
Music streaming further banishes the illusion of consumer ownership of commercial recordings. Streaming service subscribers are able to access the online content only for the duration of their subscriptions, after which they have no legacy collections as with records, CDs or music download purchases. The perceived lack of ownership here is, though, more of an issue for those of us raised in the expectation of buying recordings on physical media. Chris O’Brien notes in the above Venture Beat article[20] that Apple had ‘watched in recent years as the digital music download business it pioneered more than a decade ago [had] slumped and consumers shifted to streaming music.’
Notes and references