HOW STEVE JOBS SAVED THE MUSIC INDUSTRY

October 12, 2011 — 20 Comments

As I write this, I am aware that I will undoubtedly take a lot of criticism from fellow music industry professionals.  But it’s important to tell the truth — looking at the facts dispassionately and making a logical case based on the realities of history is the only way to move forward.

The truth is that Steve Jobs saved the music industry.  In the late-90’s, computer and internet technology had reached a point that made the transfer of reasonably sized, high quality MP3 files extremely easy and inexpensive for millions of people.  Once that point was reached, the music industry was set on an inevitable collision course with modern technology.  The stasis of the (relatively young) modern music industry was shaken; nothing would ever be the same again.

In 1999, on the heels of the initial success of peer-to-peer file sharing sites like Napster, lawsuits were filed, but lawsuits would not solve the overwhelming issue: music had become broadly available online, and access was easy… not to mention free.  Sure, it was technically illegal, but the new technology was breaking unprecedented legal ground, and a population that was largely uneducated on intellectual property law ultimately took advantage of this access. You could say that the downloaders were ignorant opportunists.

The legal fights would multiply– record labels, publishers, the RIAA– it seemed like everyone reacted and got in on the fight— suing the file-sharing services, and suing the college kids in dorm rooms who were utilizing them, suing ISPs…  At various points, injunctions were granted, settlements were offered and accepted, but the sharing continued… the stealing of music was rampant and seemingly unstoppable.

As technological advances continued, the innovations that made this “sharing” possible grew in sophistication as well.  The genie would not go back into the bottle. The lawsuits were costly and cumbersome, and they weren’t solving the problem.  The music industry wasn’t coming up with a viable solution either.  It shouldn’t be surprising — after all, the music industry was not equipped — or even conscious — of the idea of selling directly to the public.  The industry was built on the model of creators under contract to labels who push distribution to retailers who ultimately sold product to consumers.  The downloading was bypassing the retailers (and in some cases the labels) and going straight into the hands of the consumers, cutting out the traditional distribution chain that existed with physical product like CDs and cassettes.

The problem was clear, but a solution would require a major paradigm shift.  It would require changes in licensing from the major labels, technological implementation, a strong marketing plan, and perhaps most importantly, an appealing value that would entice illegal downloaders to pay for music that was already free for the taking.

Steve Jobs quietly presented the answer.  Steve Jobs and Apple introduced the iPod and iTunes software in 2001 and it was marginally successful, but the real shift wouldn’t come until 2003 with the launch of the iTunes Store.  Steve Jobs not only had a vision, he had a plan — a plan that the music industry was initially reluctant to take part in. Jobs was intent on a singles-based sales structure with optional pricing for full albums.  He determined that 99 cents per single song would be the standard price point — a suggestion that rankled many industry traditionalists. Nonetheless, Jobs eventually negotiated licensing agreements with all of the major labels.  Of course in hindsight we see that there were few other options, but to his credit Steve Jobs could already see what was ahead…

In a 2003 interview Jobs spoke openly about the major labels and said, “When the Internet came along, and Napster came along, they didn’t know what to make of it. A lot of these folks didn’t use computers–weren’t on e-mail; didn’t really know what Napster was for a few years. They were pretty doggone slow to react. Matter of fact, they still haven’t really reacted, in many ways.”  Jobs recognized the path that technology was taking, and the effect it would continue to have on the music industry, and more importantly, music itself.

He also understood intellectual property, and this may be the most important piece of the strategy that saved the music industry.  Jobs stated, “If copyright dies, if patents die, if the protection of intellectual property is eroded, then people will stop investing. That hurts everyone. People need to have the incentive that if they invest and succeed, they can make a fair profit. Otherwise, they’ll stop investing. But on another level entirely, it’s just wrong to steal. Or, let’s put it another way: it is corrosive to one’s character to steal. We want to provide a legal alternative.”  With iTunes, Jobs not only provided a legal alternative, but a more convenient alternative.  He understood that people would pay 99 cents a song if it were easier than stealing, and of equal importance he understood that the vehicle — the iTunes application itself — would need to be free.  iTunes didn’t just carry Jobs’ vision to fulfillment — it built a commercial superhighway and saved the music business.

These days it is hard to imagine a world without the iPod.  But I encourage you to try to imagine a world in which a viable, marketable entity such as iTunes never existed. Before the iTunes store illegal downloading was on the rise, and there were no viable legal alternatives that provided the variety and consumer-demanded selections of the bygone mega-record stores.  Would the industry have even more aggressively sued its customers?  Would it have collapsed completely? Perhaps each major label would have eventually opened their own online music marketplace, but with what arcane limitations? Was it even possible that the major labels could reach enough of a consensus to integrate their technologies? Or would we need a separate Sony Walkpod for one genre while U2 fans would be relegated to the Island/DefJamPlayer? Thankfully, we will never know.

I strongly believe that Steve Jobs did the impossible – he created a platform that would ultimately sway the public through its ease, affordable price-point, and vast selection.  He brought together an industry that was disintegrating —  fragmented and scrambling in every direction but the right one.  Steve Jobs brought this industry together on a level playing field and confidently showed them the new rules of the game.  He pointed towards the existing revenue potential — not the revenues of the past, full of packaging deductions and other physical goods profit points.  Jobs pointed us towards revenues that existed in a brand new landscape.  He knew that the music-oriented public was already far more sophisticated than the labels, and he knew what they would want, because as a music fan himself, he knew what he wanted.

A true innovator gives the market what it wants before the market knows what it wants.  Steve Jobs was a true innovator.  The music industry is still refining their models for business – and is taking a hell of a long time to let the old models go.  But music is being consumed more than ever – songs are delivered faster, and there is more variety at our fingertips than ever before in the entire history of music.  It is a special time — uncertain, exciting, scary, and quite exhilarating in its potential.

The music business will survive and will once again thrive – this time with majors and independents sharing nearly equal footing. Things don’t look the same as they did 15 years ago, and I guarantee that they will not look the same 5 years from now, but music is here to stay and as long as intellectual property is protected, it will always be a valuable commodity.  To think we can completely control it is foolish — this is art in its commercial form — but it is art nonetheless: creative, unpredictable, and attractive when excellent.

I am so thankful that Steve Jobs was a music fan, because he believed that its value was intrinsic when delivered effectively.  He showed the music industry how to capture the value that was quickly being eroded by old-world ideals.  He developed technology, and then built the marketplace that would allow music-creators to communicate value and reap the benefit of their work.  It’s not the world I imagined when I first entered this business; it’s more challenging, but in many ways it’s better. Thank you, Mr. Jobs, for saving the music industry. We owe you one.***

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20 responses to HOW STEVE JOBS SAVED THE MUSIC INDUSTRY

  1. Spot on Edward! No contradictions from me. Itunes saved my life once upon a time …

  2. Nice editorial, Ed. Very well stated.

  3. Love this. Steve saved us from Limewire! :)

  4. I happen to agree, because of the fact that I have been singing dance music and the best way to download a “single” minded musical genre is to get it online and instantly into the hands of my DJ’s and Fans…. I fought the concept at the time online purchasing was evolving, because I had a Full Album deal and didn’t see beyond Tower records…. But, I do enjoy My Checks now from online downloads… ;) Steve Jobs live on….. You as well Nash! ;)

  5. He saved an industry that didn’t want to be saved by allowing people to actually purchase products legally to use them in a way they wanted to use them at a reasonable price. It really is amazing when you think about it.

  6. Never thought of it this way. Well put!

  7. THis blog blows me away. It is, I think, the best blog you have written. I get it and it is easy to understand. I am absolutely blown away with what you have written. I only hope that Steve’s family gets to read this. it is a testament to a very special human being who has left us far to soon!!!!

    I am proud of you dear son!!!!

  8. Great review! This is truly the type of information that should be shared around the web. Shame on the Yahoo for not ranking this post higher!

  9. Ed – Spot on, brother. You are so right about a lot of things. I would say that the majority of illegal downloaders are good people that weren’t proud of the downloading and needed an out. Along came iTunes and that made it so much easier — we had incentive to get music fast and less expensive.

    Too bad Jobs didn’t decide to continue working on the music industry—could have made a lot more changes for the better.

  10. I whole heartedly agree, I’m so glad you wrote this after becoming an apple user…I might not have been able to swallow it with that PC sitting in your office ;)

  11. Ed, Great article!! Our best to you! Marie and Bruce

  12. From an composer/artist standpoint, Steve Jobs, Apple, iTunes saved my life too! Great article, Ed!

  13. Barb Turner Delisle October 20, 2011 at 8:01 pm

    Ed,
    Fantastic article…very interesting and “intune” take on what some might have originally thought was a counter productive move on Job’s part.
    Blessings on your work…Pastor Barb

  14. I’m certainly happy that placing your fingertips on my creation makes you giddy (or excited, exhilarated, uncertain, whatever). You can thank ME for that, Not Jobs. It is the ARTISTS who guide and who have shaped the growth of civilization. And historically they’ve been rewarded with theft, petty jealousy, poverty and pestilence. The planet is a better place for Steve Jobs, his technical contributions to art and music were perfect innovations for present civilization. But, unless one agrees that music can be found anywhere, then it will never be intrinsic, because an ARTIST put it there… Yeah, I know the check’s in the mail…

  15. Few this in life bring tears to our eyes, death, family, loved ones, children, pets and SONGS…
    I thank the man from the bottom of my heart…

  16. Absolutely great review of one awesome man who has done so much with his life, talent, and heart! I am so proud of you, ED!

  17. It’s really that simple, He did just that! and we Thank You much Mr.Jobs, (R.I.P.)
    As an Independent Artist, you leveled the playing field for us to be able to compete in a dominated controlled industry.
    Who am I? The “Silver Conductor” on Facebook, Twitter and:
    http://www.thesilverconductor.com
    http://www.youtube.com/watch?v=wOO6ZTBf1Oc
    Remember:”Always know who loves you”
    The “Silver Conductor”

  18. Hi Ed,

    Saved the music industry? That’s a bit sensationalist. The point about the iTunes/iPod phenomenon is it was extremely well integrated which made it very easy to use for the masses. Limeware, Napster et all were too complicated to get music from for most people. iTunes with an attached player wasn’t. Other people such as Sony had similar ideas but Apple pulled it together quicker.

    However, it’s left us with a legacy of poor sounding tracks – people are so used to MP3s and over-compressed pop tracks, that high fidelity full range tracks don’t sound right to a lot of people, which is a shame.

    There’s also the cost issue with Apple still creaming a lot of money off the top.

    There are many things apple could do to really advance the music industry but they don’t because that’s not their core business. Their core business is to make well integrated consumer devices.

    The real saviors of the music industry over the past decade have been the small independent labels pushing through new artists and adapting to the new internet medium faster than the large established players. This has got nothing to do with Apple. Music sales are still in decline, particularly with the advent of things like Spotify, but concert sales are generally up. Apple did nothing to change that it was inevitable with the Internet arriving at the masses.

    I like your article, but I was hoping it would have a little more depth.

    Keep writing and all the best,
    Will

  19. Ed,

    I graduated from Belmont University with a music business degree a year ago and have found it difficult to find my way in this sluggish, old industry that really isn’t capitalizing on the ever changing technologies and consumer trends. I just wanted to tell you that it is refreshing to see someone in the industry that actually acknowledges the changes that are taking place all around us. You just gave me a new spark of hope for this industry and I look forward to reading more of your blogs to see what else you have to say.

    Cam

Trackbacks and Pingbacks:

  1. Music: Part 2 | Technology - July 31, 2012

    [...] Ed Nash argues that iTunes was “not only a legal alternative, but also a more convenient alternative. Jobs understood that people would pay 99 cents a song if it were easier than stealing, and of equal importance he understood that the vehicle — the iTunes application itself — would need to be free. iTunes didn’t just carry Jobs’ vision to fulfillment — it built a commercial superhighway and saved the music business.” http://www.ednashonline.com/?p=87 [...]

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