iTunes turns 10

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Why the iTunes Store succeeded

The traditional tenth anniversary gifts of tin and aluminum are appropriate for the iTunes Store. Both durable and somewhat flexible, the iTunes Store has become the preeminent place to purchase music. Still, if not for the unintended assistance of a bungling music industry, the store might have been as ephemeral as iTunes’ social service, Ping.

Seeing the present through the past

The history of music retailing goes something like this. Throughout the 1950s, ’60s, and ’70s the LP (Long Play album) was the long-form audio format du jour. If you wanted to purchase just a single song, you bought a 45-rpm disc, a smaller record that featured a hit song on side A and a lesser-known song on the B side. As tape players began to show up in homes and cars, 8-track tapes and cassettes became popular. You could purchase cassette singles, though they weren’t terribly popular.

As the ’60s ended and the ’70s began, albums increasingly became “works”—conceived as a whole rather than as just a collection of tunes to surround an artist’s chart topper. As a result, the single became less important. And the advent of audio compact discs in the ’80s did nothing to enhance the single’s popularity. Record companies claimed that the CD manufacturing process was expensive and so charged a premium for CD singles. Also, music buyers had become accustomed to listening to music uninterrupted for an hour or more. The idea of changing media after just a few minutes to play a single seemed quaint.

At the same time, with cassette decks a common part of an audio system, consumers had a way to make recordings of their records and CDs (and other cassettes if they had a dubbing deck) and then share that music with others via mixtapes. So common was the practice that people started to develop the idea that music could be freely (and legally) shared.

Labels under pressure

Fast-forward to the very late days of the 20th century, when computer programs were developed that could create digital copies of music stored on CDs. Ripping CDs because common practice. With the help of broadband Internet connections, people could share this music far more widely than ever before. And they did so by the truckload—via peer-to-peer sharing sites such as the original Napster.

The new Music Store in iTunes 4

From there, the story moves to the boardrooms of the major music labels of the day. CD sales were dropping, the singles market had mostly vanished save for dance music, music was increasingly shared illegally, the labels’ efforts to market and sell their music online was a hodgepodge of failures, and too many executives (and their lobbying groups) held stubbornly to the idea that if only music could be copy-protected and the worst file sharers prosecuted, the problem would disappear.

Apple to the rescue

Then, in walks Apple with a compelling idea: People who are motivated to steal music will continue to do so. But if you make stealing more trouble than it's worth by making digital music easy to find and purchase, and you price it reasonably, the vast majority of people will choose to buy rather than steal. And so was born the iTunes Music Store.

When it launched in April 2003, the iTunes Music Store was available only to Mac users, but Windows support was added that October. And, year after year, Apple’s store grew—in capability, catalog size, and number of sales—until the point where, with the addition of videos and eventually apps and books, it became simply the iTunes Store.

Where it all leads

History now under our belts, the question remains, why did the iTunes Store succeed where other services—such as those from Virgin, Sony Music Entertainment, Universal Music Group, EMI, and Time Warner—fail?

Certainly the music industry’s inability to come up with a single strategy that served all labels, as well as its stubborn adherence to protection and prosecution, left Apple a very large hole to hop through. But, as with Apple’s other greatest successes, it was the company’s ability to control all sides of the business that helped it succeed. It controlled the cloud-based store. It created the client that people would use to purchase the music—iTunes (which Apple wisely gave away for free). And, above all, it owned the most popular music player of the time, the iPod.

While other companies struggled to cobble together music services that clumsily delivered heavily protected music to a handful of third-party also-ran music players, Apple owned and operated all the component parts. The only thing the company needed was the consent of the content owners. To our benefit (and to the ultimate chagrin of the music labels), record company executives failed to grasp the potential of an ecosystem that provided easy access to music at a fair price, played on history’s most popular portable music player—and they allowed Apple to license their music.

Browsing artists in an early version of the iTunes Music Store.

It caught on.

Happy as those executives were when ever-juicier checks rolled in, that happiness dissipated when the labels felt their control slipping away.

“Sure, you’re selling lots of singles for 99 cents and albums for 10 bucks, but we think popular tracks should go for more,” they said. “We demand the right to price music as we see fit!”

To which Apple replied, “No.”

“We’ll leave!” they cried.

“Go right ahead,” responded Apple. “But before you do, recall the pickle you were in before we saved your butts.”

“Grrrrr…,” the labels grrrr-ed.

Over time, the labels have regained some authority. To get the labels to give up on copy protection, Apple relented on variable pricing. Apple threw the labels other bones by providing services to help move more (and costlier) music—iTunes LPs, Complete My Album, preorders, and longer previews.

These are not compromises of weakness but rather of practicality and partnership. Apple, thanks to the iTunes Store, continues to have significant clout in the music business. As media production and delivery evolve in the coming years, Apple’s influence is certain to be felt throughout the media world.

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