iTunes turns 10

The iTunes Store at 10: How Apple reinvented the music business

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The store enjoyed success right from the start. People rang up 1 million downloads from iTunes within the first week the music store opened for business. That number grew to 25 million tracks by the end of 2003. These days, the milestone is 25 billion downloaded songs and counting.

Flying Chili
Music downloads from the iTunes Store have grown steadily over the years; not coincidentally, so did holiday season sales of iPods for most of the years the store has been open for business. (Click to enlarge.)

Steve Jobs certainly saw the store as an early-on success. “When history looks back, the iTunes Music Store will gain recognition for being an incredible landmark in the music industry because it was the first time that online music could be sold really legally in a pay-per-download model, so good and easily and fun and fast and reliable,” Apple’s then-CEO told the UK’s Independent in 2003.

A pirate’s life

The iTunes Music Store came along at a time when piracy plagued the music business. Crupnick says that at one point 50 percent of college students were using services like LimeWire to download tracks without paying for them.

Wider access to broadband gave piracy a boost, contends Josh Friedlander, vice president of strategic data analysis for the Recording Industry Association of America (RIAA). But that same access to broadband also made a legal alternative like the iTunes Music Store possible.

When it launched, tracks on the iTunes Music Store came with FairPlay, Apple’s DRM. You could listen to a song on up to five computers and burn a playlist ten times. That put some restrictions on users, but FairPlay didn’t get in the way of listening to your music as much as other DRM schemes did, NPD’s Crupnick says.

Still, some dispute what impact the iTunes Music Store really had on stopping piracy. In the first five years of the store’s existence, piracy continued unabated. After all, Mulligan notes, not even iTunes could give pirates what they really wanted—unlimited music, wherever they want it, whenever they want it, for free. Analysts think continued litigation by the RIAA and rights holders as well as the rise of free streaming options did more to stem piracy than Apple’s music store.

Do the evolution

The iTunes Music Store changed the landscape of digital music instantly, but it also has continuously evolved over the past decade as entertainment and technology have changed. Consider some of these adaptations rolled out by Apple over the years:

  • The iTunes Wi-Fi Music Store, introduced by Apple in 2007, as a way for iPod and iPhone users to buy music straight from their devices. These days, every iOS device ships with mobile stores for both entertainment and apps already installed.
  • Apple dropping DRM in 2009, following the lead of competing services like Amazon’s MP3 music store.
  • iTunes Plus, Apple’s first foray (in 2007) into DRM-free music. It also offered songs encoded at higher bit rates for better sound quality.
  • Adding more cloud-based services such as iTunes in the Cloud and later iTunes Match to let you download tracks you’ve bought to any of your devices.

iTunes has also moved beyond music, even dropping the word “Music” from its name. These days, iTunes is more of an entertainment store, where you could buy or rent movies and TV shows, download books, and—of course—load up on mobile apps.

Apps, introduced as a section of the iTunes Store in 2008, also wound up creating some competition for its music business. Through apps like Pandora, you could stream music over your iOS device—no purchase necessary. Now, with subscription services like Spotify and Rdio, you have access to millions of songs, anytime, anywhere (though not for free).

In the stream of things

With the iTunes Store, Apple took the existing physical record store model and made it digital. And while the iTunes Store is still about ownership, it’s a transition technology, Mulligan says.

Analysts agree that the future of music lies not in ownership, but in access. In other words, you won’t have a copy of a song on your device, but you’ll stream it on demand when you want to hear it—essentially the model that Spotify, Rhapsody, and Rdio follow. Crupnick thinks that we’re still five to ten years away from this becoming the standard, but it is coming.

What place do Apple and the iTunes Store have in this brave new world? Expect Apple to remain dominant in digital music for a long time to come. iTunes is now entrenched in the way that many people think about music.

Whether Apple creates a long-rumored streaming service of its own, or, through iTunes, it just continues to be the platform that other apps use to provide those services, it will remain in the middle of digital music in large part because it makes the devices that people use to listen—iPhones and iPods, especially.

When downloads go the way of 8-track tapes, we may not feel nostalgia for the files that consumed our drive space, but we should appreciate the role that the iTunes Music Store played in freeing us to listen to music when we want, where we want, and how we want.

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