The Changing Music Landscape: Apple’s Foray into the Music Industry (The impact of iPod and iTunes)[1]
Ng Shaoyong Alvan (alvan.ng.2012@accountancy.smu.edu.sg), 1st Year student, BAcc, School of Accountancy
Executive Summary
Most people carry around an iPhone or an iPod to listen to music while on the go; they download new songs and manage their music with iTunes. Thousands of megabytes of songs, videos and photos are copied onto their iPhones and iPods through iTunes. However, do they truly understand the impact that Apple has on the music industry and how it has shaped the world for aspiring artists? This paper hence aims to discuss the impact of iTunes and iPod on the music industry and how they have changed the market for the future. It also seeks to explore what lies ahead for the world of music for both consumers and producers.
Background / Introduction
Most people listen to music all the time, almost every other day. When they want to share a new song they have heard, all they need to do is whip out an iPod and click play. People have great access to music online and they can now buy songs at the click of a button, without even having to get off their seats; it is possible to find any song they want over iTunes. Do they know how all of this is possible? Do they remember a time where music was not portable? Where listening to a new song meant having to buy the entire CD (Compact Disc) album and the most songs that any individual could have with them depended on how many CDs they could carry?
It is surprising how few people realize the impact Apple Inc has on the music industry with their creation of the iPod and the iTunes. Music lovers now have their music, wherever they want it, whenever they want. The truth is, without the invention of the iPod and the genesis of the iTunes, the iPhone today might not have existed, nor the array of artists in the music industry.
Now, what is an iPod? The very first iPod that was released in 2001 was really just a portable music player and could hold about a thousand songs in various file formats. While portable music players existed before the innovation of the iPod, most of which that were in the market were big and bulky, or only held a small limited number of songs. The iPod was about “the size of a deck of cards” and was one of the smallest portable music players made at that time which could hold so many songs (up to a thousand) (Griffith, 2012). People could have their entire music collection in their pockets with them everywhere they went. As time went by, Apple constantly improved on their design and subsequently released many lines of iPods over the decade.
Essentially it was the iPod that galvanized the entire music player industry, but the iPod would not have had its success without the iTunes. Not only is iTunes necessary for an iPod to function, it also reshaped the digital music industry in its own way. iTunes was launched a few months prior to the birth of the iPod in 2001. Then, it was made available as a media player that also ripped music CDs on to computers. It was compatible only with Macintosh at the time of release but, following the success of iTunes as a platform for the iPod (when the iPod was released), in 2003 Apple decided to make it available with Windows. In addition, the iTunes music store was conceived. iPod was now available for use with Windows-users and people could now legally buy music online, that was when everything started to change.
There is no denying the reach that Apple has on the world. Many people have owned at least one Apple product in their life or have used an Apple product before. They have tried, tested and played with an iPod, be it at the Apple store or one of their own. Consumers have their music with them and buying songs has never been easier. Do you think they would have so much freedom to personalize now – in terms of buying individual songs, making playlists, and listening to any song they want at any time – had Apple not forayed into the music industry? Things would not have advanced at such an accelerated pace had Apple not laid the foundation for it. Apple basically redefined personal preferences for the music-lover. With the sale of individual songs and the portable iPod, users could now listen any song they want, and not be dictated by the radio.
Furthermore, without the creation of the iTunes or the innovation of the iPod, it can be argued that the arts scene today might have been even more obscure. Apple made it simple and convenient for us to listen to music. As a result, we humans have more exposure to music, and in turn, greater appreciation for the arts. In the past, people either had to listen to songs over the radio, or have a handful of songs burnt onto a CD and played over a CD player. This proved to be a limitation in terms of choice, and songs were mostly limited to the popular choices. While this is not necessarily negative, it stifles Man’s ability to explore and try out new genres or artists. Hence, with more people listening to music and greater access to different types of music, artists are more daring in their music production and styles, which gave rise to the numerous genres and varieties that exist today.
However, not all is positive with the iPod and iTunes. The innovation by Apple did bring its fair share of negative impacts and these are not to be ignored. Just as the rise of Apple’s products led to the birth of the ‘singles’ artists, it also resulted in the dwindling in importance of ‘album’ artists. (Guarino, 2010) Not only that, the growth of digital music also caused the demise of the ‘brick-and-mortar’ music store. (Guarino, 2012) Record labels and artists now earn sizably less by selling their songs online, even though production costs have gone down. All these effects have damaged the industry in one way or another and their true repercussions may only be felt years later. Nevertheless, its impact on the society and the music industry should not be neglected. Instead, more focus should be put on looking to the future and finding solutions to some of these problems.
Historical Perspective
With all that being said, it is imperative that a comparison is made between the way things were done before and after Apple’s innovation. This is done through looking back into the past and examining the facets in which listeners enjoy their music, from how people used to listen to music, how they used to buy and manage their music, to how it was produced.
How did we use to listen to music?
In the early days, Man had phonographs and gramophones, which played our vinyl records. Then in the early 1900s people listened to music through broadcast radio using a receiver. What they listened to was dictated by what the radio stations played. The only choices they could take were to switch between different stations. In spite of all this, music was not portable yet as the gramophones and radio receivers were all large devices. Through the 1950s and 60s, the closest Man had to portable music was the portable transistor radio. It was first conceived by Regency, and released in a myriad of colours over the years. (Technabob, 2007) Sony introduced the first personal cassette player in 1979, which started the Sony Walkman series and it was a revolutionary innovation then. (Lungu, 2008) With the invention of audio CDs in the 1980s, the portable CD player was thus born. Not surprisingly, Sony was the first company to produce such a device and was released as the Discman. (Lungu, 2008)
In 1993, thanks to a remarkable breakthrough, German Karlheinz Brandenburg together with many other developers pioneered the compression of audio files into a common file format that is used today called the MPEG Audio Layer 3 (MP3). (Ewing, 2007) With the ability to compress the size of audio files, many companies started developing their own versions of players that could support this format. This led to the escalation in portable media players in the market. New devices were released within months of each other.
The first of such devices was the MPMAN F10 introduced by Eiger Labs in 1998. The primitive player had only 32 megabytes (MB) in capacity. (Ionescu, 2009) The following year brought about the release of the Remote Solutions Personal Jukebox. It was a success in terms of storage capabilities, having the ability to store up to 1,200 songs. However, it proved to be expensive, big and bulky, and thus not portable enough. (Yoshida & Quan, 2000) The year 2000 brought the world pretty close to what consumers currently use. The i2Go eGo was released into the market that year and was the smallest media player in the market with 2 gigabytes of capacity. It had made use of the micro-drive technology and because of that, it was a great deal more expensive. (Carey, n.d.)
How did we use to get music?
With a clear understanding of how people used to listen to music, now the question lies in how did they use to buy their music? Through the days of vinyl records up to the audio CDs, music listeners went to the ‘brick-and-mortar’ music store to purchase their music. They either bought vinyl records, cassette tapes or audio CDs, depending on which era they were in. Where the physical products differed, the process was the same. Record labels and companies would mass produce their albums and ship them out to the music stores. Music listeners would then head out to their favorite store to browse and snap up the albums they want before bringing them home to play it on the music player that they have. With the origination of compressed digital music files, gradually more people went online for their music, but it was largely illegal.
How did we use to manage our music?
After obtaining their music, how did people in the past manage their music collection? Physical vinyl records, cassette tapes and CDs took up storage space. There was also a need to label and arrange the storage medium for easy searching. Be that as it may, being an avid music lover would still mean you would have to sift through possibly hundreds of albums and songs to find a song you are looking for. All this is time consuming and space inefficient. The digital music era engendered easy storage of files, however, a proper system still proved elusive.
How was music produced?
Music production in terms of the process was a little bit more sophisticated in the past. Artists would record their songs in a studio and would wait to record 10 to 15 songs before releasing it as an album into the market. Naturally, the better the songs were, the greater album sales would be. Artists and record labels made more money from selling an album as a whole as opposed to selling singles, which they could only sell at a fraction of the price. Album sales are better for artists because they are a more cost-effective way of selling 15 songs (2 good songs mixed with 13 average ones). On the other hand, in order to make the same amount of money selling singles, one would have to produce 15 good songs, which is not as easy to do. So, many artists resorted to recording ‘fillers’ around their one or two great hits to fill up an album. Many of these ‘fillers’ never make it as ‘hit songs’, which were around only for the sole purpose of necessity. Nonetheless, these artists still trail behind the ‘album’ artist who would have an album full of great hits. (Guarino, 2010)
Current Situation
Employing the same pattern of analysis, and examining the different aspects in which users are able to enjoy their music, this section shall consider the pros and cons of Apple’s innovation and the changes it brought about.
How do we listen to music now?
Presently, Apple products are dominating the music industry, whether it is the iPod, iPhone or buying songs through the iTunes music store. This is made more evident by the dearth of music players in the market now; other forms of media playing devices are mostly incorporated into smartphones (for example, Samsung smartphones). Apple’s monopoly was triggered in 2001, with their launch of the iTunes and the iPod. The iTunes was the software that manages the content in the iPod and in its initial release, was only made available to Macintosh users. However, with one quantum leap, Steve Jobs and Apple Inc decided to make it compatible with Windows in 2003. This opened the door for the majority of computer users, who were predominantly Windows users, to purchase and own an iPod. In the same year, while introducing the third generation iPod, Apple announced the inception of the iTunes music store.
How do we manage our music?
Music listeners now have their music collection in digital file format, kept in their computers. Using a cable, thousands of songs can be transferred on to a MP3 player or a phone within a matter of minutes. Listening to music is as simple as a click or a button away. Music is more often played through a personal player, where it is listened through a portable media player and earphones. The breakthrough that Apple had was in producing a media player that was portable and could hold a substantial number of songs. In their terms, “you could fit 1,000 songs in your pocket.” (Arcega, 2011) Listening to music was now enjoyable and convenient; music fans could listen anywhere they wanted, at any time.
How do we get our music?
Although there still exist some who would buy their music from the CD store, the large majority now get their music online. With the rise of the digital file format, online music sharing was becoming more prevalent. Consumers were realizing the possibility of downloading music. As “peer-to-peer networks such as Kazaa and Napster” provided a platform for consumers to share their files illegally, copyright infringement soon became a problem for music producers, not to mention the fall in sale revenues. (Barnett, 2011) With the inauguration of the iTunes music store, digital music downloads now had a legal platform from which to facilitate. Consumers could also download their music legally.
How is music produced?
Progressively, more artists are recording and selling their songs individually, as opposed to the old days of selling albums. Through iTunes, it is now possible and easier to sell singles. There are more artists selling singles now than there were in the past. Also because of the ease of uploading songs on iTunes to be sold, anybody could record their own song and sell it. The old process of going through a music producer or record label was no longer needed and this inspired more people to take a shot at fame.
Music listeners now manage their music collection through media players, by adding songs to their music libraries and creating playlists for future listening. Since the only way to load content on to an Apple product was to use the iTunes, naturally, that was the media player that was most commonly used. With iTunes, music is easy to sort and easy to find. It is relatively user-friendly and provided solutions to many of people’s problems. Now, it not only manages music, but also videos, photos and applications.
Impacts and Changes by the iPod and iTunes
Being able to listen to music through a portable media player meant that consumers had greater personalization and selection. People are no longer controlled by the limitations on the number of CDs they could bring with them or by what the radio was playing. They could play any song that they want to hear instantly. Greater personalization also came in the way of purchasing. The iTunes music store brought with it the ease of sale of single songs. Each song was priced at 99 cents on the iTunes music store regardless of the artist or when it was released. This price standardization made consumer choice a lot easier. Gone were the days where consumers had to deliberate on whether to buy an album because they wanted to hear one song in the entire CD. Moreover, the standard price of 99 cents was considerably cheaper than the amount consumers had to pay for if they were to buy an entire album from the ‘brick-and-mortar’ music store. It was a small price to pay for the convenience. Despite the fact now songs are priced differently, between 69 cents a song to US$1.29, each song is still relatively cheap. (Apple Inc., 2009) In general, iTunes not only brought about greater customization, but also provided consumers with cheaper options and alternatives.
Now with the ability to buy and listen to any song they want, consumers had greater control. This completely changed the way consumers ‘consume’ music. This also ushered in the era of the singles artists. (The Sydney Morning Herald, 2011) Since it was so easy to upload and sell individual songs on iTunes, most artists did not see the need in producing a collection of ‘album-worthy’ songs to be sold together as an album. Most people took a hand at recording and selling their songs on iTunes, which eventually led to plenty of talent being scouted by record companies. This resulted in an increase in the number of artists in the music industry and the genres of music around.
Convenience, now, is an essential component of music consumption, and coupled with the increase in personalization, led to the rapid escalation of people listening to music. With easier access to music on the go, music became a part of people’s lives. Though iPod was not the first MP3 player in market, in a way, Apple was the first to get everything right, which was what won the market over. It was ultra-portable and had a great user interface that made browsing through thousands of songs trouble-free. (Breckenridge, 2011) Apple’s product broke a wall of limitations in terms of what companies could do with portable entertainment. Consumers now have a whole series of iPods (iPod Classic, iPod Nano and the iPod Touch), a few versions of the iPhones and many other products by separate companies. Having greater exposure to music and various art forms, this possibly galvanized greater appreciation for the music and arts. The world might have significantly fewer artists than it has today if listening to music or accessing media was not as convenient.
Apple’s price standardization has far greater impacts on the music artists and producers. With the ease of uploading songs and selling of singles, they were able to reach out to a greater market through iTunes. In the past, material music stores could only bring in limited CD albums due to limited shelf space. Most of the time, the type of music and albums that were brought in depended on popularity and CD sales. Music albums of obscure genres and artists were less likely to be brought in by the music store owing to the fact that they were unlikely to do great in sales. iTunes managed to revamp the way people searched for music.
Song recommendation was common with the iTunes music store, and any song that was uploaded on to the music store could be found with a simple search. In 2008, Apple released a new version of iTunes that included the Genius feature, which recommends users songs in the iTunes store based on their personal preferences. (Apple Inc., 2008) In addition, consumers could listen to a preview of the song before buying it. Consumers now have greater access to less popular music albums and genres, and artists have a larger consumer base to reach out to. This could have possibly led to the onset of numerous music genres that exists today, as people are more daring to experiment with different types of song composition. There is no longer a fear that music producers or record labels would not like a style of music that the artist is creating because they can sell it on their own. So iTunes has not only helped the consumer, but also improved the situation for young budding artists.
Apple’s foray into the music industry did bring about its fair share of detrimental effects. With the passing of the CD player and decline in popularity of music CDs, it very quickly led to the decimation of the ‘brick-and-mortar’ music store. (Guarino, 2010) Nowadays, music stores on the streets are few are far between. Producers and record labels are looking to shift into wholly digital music albums. Digital sales have been increasing steadily over the years ever since its introduction. A lot of cost goes into the production of music CDs, and with declining sales, it is becoming ever clear that it is time to move on. While it is certainly more convenient to buy music without having to leave the house, the exciting experience of discovering a great new artist in a music store cannot be easily replaced. Avid music fans still find that feeling breathtaking, and claim that to be the reason they spend hours in a music store. Nonetheless, it is unwise and impractical to alter the habits of the majority to accommodate the few. Everything in the world is moving, or rather has already moved, to the digital age and music should not be any different. Some day, humans may perhaps find themselves with many CDs but no player on which to play these CDs, and we would find this situation all too familiar.
Another industry that has been impacted by the innovation of the iPod and iTunes is the broadcast radio industry. Consumers are now able to listen to any song they want; less likely are they going to be dictated by what the radio plays. More and more music listeners are moving away from the radio to get their daily fix of music. These days, people only listen to the radio to get their news updates or traffic updates while driving in their car. With that, a new type of radio is emerging in the market: the internet radio. Young listeners are moving towards internet radio to gain exposure to new songs and albums being released. Even so, with the myriad of social platforms available, consumers are more informed than ever. A “study commissioned by the digital audio advertising network TargetSpot (Paul, 2012) found that there is a steep decline in broadcast listenership among younger adults” as they move on to internet radio and other means. With more ways to listen, users are altering their habits to make use of what they have. This is in line with the shift that broadcast radio is experiencing in terms of the programs they broadcast on air. Radio is slowly shifting away from plain, old music playing, and towards interesting on-air programs that engages listeners to call in and participate. This may present to be a tricky situation for the industry: one wrong move and they are months away from collapsing. If they do not manage their programs properly and listenership starts to fall rapidly across all age groups, producers and executives might have problem trying to save this dwindling industry.
The fixed price of 99 cents per song set by Apple in the iTunes music store has impacted and angered many record labels and artists. The iTunes business model of 99-cents-a-song has left record labels and artists without a choice in the way they priced their work. With iTunes monopolizing the digital music sales, artists had no control over the amount they could charge. By free market forces, natural supply and demand would mean that popular artists could actually charge a lot more for their music. However, Apple’s business model did not allow for that. Record labels and artists would thus be earning a lot less than what they would have earned if digital music did not exist. Furthermore, by easing the sale of individual songs, music producers earned a lot less. The profit margin from selling single songs is significantly lower than that of selling albums. All in all, record labels and artists now earn substantially less by selling their songs on iTunes.
By making the sale of songs, especially singles, more convenient, Apple and iTunes diminished the value of ‘an album’. Consumers were pecking around for single songs on iTunes, and very seldom does somebody buy an entire album unless they really liked the artist. Eventually, some artists would lose the motivation to record and produce entire albums at one go. This is an era of the ‘singles’ artist, where singers are known for their one-hit wonders. For the ones that still do produce albums, it is getting increasingly hard for people to listen to their other songs in the album. Without buying an entire album, most consumers lose the obligation to listen to every song that an artist produces. Music appreciation is at a point where users are nitpicking the things they like and ignoring the things they dislike. Much of the artist’s efforts go down the drain when this happens. Not to mention, albums are essential for an artist in branding and packaging their image. Every song in an album represents how the artist envisions and produces their music, and how they want their listeners to feel, that is why music is an art form. Without truly listening to each artist’s work and understanding their standpoint, music listening loses part of its meaning.
In concluding this section, it is apparent the changes that the iPod and iTunes has brought about on the music industry and the world. It was iPod with its smaller-than-ever and easy-to-use concept, and the iTunes’ revolutionary music store that set the wheels in motion. One could not have succeeded without the other, and its effects inseparable. Having said that, humans should keep looking forward in terms of innovating for the future.
Future Considerations
The future of the music industry
Despite the Apple iTunes providing a convenient and cheap platform for consumers to purchase their music, it is the power of the internet that has spoilt us into wanting free things. The rise in music sales on iTunes might only be a temporal situation; as people increasingly find ways and ‘loopholes’ to download free music illegally, they gradually move away from spending money to purchase music. As some countries, notably Sweden’s failed attempts in trying to shutdown the file-sharing website The Pirate Bay (Wikipedia, undated), are unsuccessful in tackling piracy in spite of numerous attempts, there is no telling when we can eradicate piracy from our society.
Even if music producers and artists get the few cents from online music sale, it is a far cry from what they used to earn. The continuous fall in profits for them entails that they may have to evolve their style and means of earning money. Their focus should no longer be on album and song sales, but instead, on image rights and concerts. Product endorsements are already prevalent in our society. However, we might see a shift in artists focusing on their concert performances, delivering highly entertaining concerts that are priced at premiums. Also, with the fall in album revenue as piracy grows rampant, artists and producers would have to charge exorbitant prices for concert tickets to make up for other losses and to sustain continual music production. Ultimately, music artists would evolve to be concert performers, rather than the conventional singers, who genuinely sang well. Music artists are intently focused on being able to dance, and have all sorts of stage performances to market their concerts so as to be able to sell at higher prices. This degrades the value of music in our society and plummets the quality of music that is being produced.
The obvious solution to such a problem would be to increase efforts in eradicating piracy in the society, which would benefit not only the music industry, but other media industries as well. However, if piracy is stamped out, would music producers and artists take advantage of the situation to exploit their consumers, seeing that they would have no choice but to pay for music? Notwithstanding the free market forces, music producers and major record labels would charge a high price to consumers, possibly exceeding the price of a CD album now. Since there are no other means of getting music other than purchasing it, consumers are left with no choice. This might lead to a decline in listenership where not everybody gets access to music, but only the people who are willing to pay. Even as the use of Digital Rights Management (DRM) in digital content is slowly declining (Kravets, 2008), other plans such as digital-watermarking technology further limits users from sharing their music between devices and computers, resulting in fewer means of getting music. Generally, less people would be listening to music, which might change the perception of music as something for the rich.
Moreover, it is quite unlikely that piracy can be fully eradicated from the world through legal restrictions. Just as there are software developers and music producers, there would be software hackers and digital content pirates. While it is possible to block and ban these websites and servers from functioning, people will find other ways to try and get around the legal issues of sharing files freely. To reduce piracy, a more feasible method would be to implement a strict and elaborate plan to carefully alter the culture amongst users that we should be paying for our content. This cultural shift, if implemented properly and coupled with reasonable prices for music, would be the ideal way forward for the music industry.
Without a doubt, humans would see a day where we have heaps of CDs but no CD players to play it with. This is the consequence of moving into the digital music age. This is to a good cause for the future of the world because in reducing the use of physical CDs, the consuming of music is becoming more environmentally friendly. Old CD players would become antiques. This should not be compared to the rise in popularity of vinyl records in present day. (Nassiff, 2011) While vinyl records provide unparalleled sound quality, music CDs still use the same compressed audio files used in computers and media players. This makes the resurgence of music CDs quite impossible.
As the use of Apple products and iTunes continue to grow, it is only a matter of time that other operating systems and platforms start adopting the use of iTunes and its features. In the near future, it is not impossible to foresee the Apple iTunes being ported to be compatible with the Android systems. Although Android has its own system of downloading content, it is undeniable that the market share iTunes has makes it a dominant player. By making iTunes compatible with Android systems, consumers would have a larger choice in terms of the music and other contents that they can purchase and download. On top of that, software producers would have their work made easier as there would not be a need to produce the same applications for two different systems. An alternative for Android would be to formulate a music store of their own, like iTunes. However, it is difficult, and at the same time dangerous to recreate a system like Apple’s that already exists, without infringing copyrights and patents.
Looking further into the future, one ponders at whether it is possible to integrate cloud computing and crowdsourcing with the production of music and listening of music. Where Apple has had its impact on the music industry in the last 2 decades, the future of the music industry lies in the hands of the consumer. We live in a world where products and services are strongly dictated by consumer preference and demand. It is therefore inevitable that consumers are invited to have a say in the direction and production of music eventually.
Presently, individuals or bands write and record their own songs. They then sell their songs, either through CDs or online sales. It has been an age-old method of producing music. Music production was limited in the sense that if different people wanted to produce songs together they had to meet for days to brainstorm and tinker. Some artists who are less connected would have less options and help in terms of new ideas.
Cloud computing is a system where computer resources are being provided as services over a network. (Wikipedia, undated) Crowdsourcing is the process that involves outsourcing tasks to an undefined public. (Wikipedia, undated) By integrating cloud computing and crowdsourcing with music production, entire community of artists can upload into banks of music scores and compositions to seek help in their production. Cloud computing creates a network for artists to share their ideas and styles through various applications and software. Moreover, people with great ideas can come together and create music together, forming bands or collaborations. This in turn brings about more efficient music production and greater variety for consumers. Through crowdsourcing, there is less ‘wastage’ in terms of music production because music producers and record labels can make use of consumers to create and formulate the sounds they want or like. It also engages consumers more in a hands-on approach. Consumers can give their input and feedback on what are some of the tunes or melodies that they like and artists would have something to work on. Passionate music fans can also have greater song personalization by suggesting song titles for artists to work on, thus creating songs that they can identify with. All this means producers are producing music that consumers can agree on.
Conclusion
To conclude, the world of music without iPods and iTunes might not have been the same today. The revolutionary innovations by Steve Jobs and Apple Inc have left music storeowners grasping at every dollar they can get. It has also left consumers with greater convenience, variety and appreciation for music. However, iPod, iTunes and music might have reached its saturation point in terms of listening and buying music. A new revolutionary innovation might be needed to revitalize the music industry, and kick-start a whole new era of music entertainment.
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[1] This paper was reviewed by Jonathan Chen Yi and Vivian Heng Swee Ling.
alvan. 2012. 