Steve Jobs To Receive Grammy's Trustee Award
Steve Jobs To Receive Grammy's Trustee Award

That a man who never played an instrument or so much as sang a note professionally could be considered one of the greatest rock stars of this generation speaks to the impact Steve Jobs had on the music industry, and the legacy on it he leaves behind.

In a way different from any artist or label exec, Jobs will remain an iconic figure in the history of the music business. The innovations he shepherded into the market changed not only the way music is distributed, sold and enjoyed, but also, to an extent, the way it is made, something few can claim.

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In many ways, Jobs was more than just the CEO of Apple. He was the father and leader of the digital music business, at once beloved and resented by various elements of the music business as a result. Through the introduction of the iPod, iTunes and the iPhone, he has left an indelible mark on the birth of the digital music business that will be examined, debated and desired by many in the generations to come.

But for all the talk that will follow about deal terms, devices and software design, let us not forget what really made Jobs such an impactful figure on the music industry. He was a fan. In many ways, the ultimate fan, not just of music, but for how music could and should be enjoyed.

According to former Apple employees, Jobs' involvement in the music industry was a labor of love. He was personally involved in not only creating the iTunes digital retail system itself, but also in acquiring the music catalog he himself wanted to hear and make available on it.

The most high-profile example is his success in ending the Beatles' longstanding digital embargo, but there were many more such cases of his personal involvement earlier on in the process. He personally convinced Dr. Dre. to make his catalog available digitally. He negotiated directly with Bono, Jimmy Iovine and manager Paul McGuinness at his kitchen table for the U2 iPod in 2004. He invited the acts he liked to perform at Apple's many special media events, and of course Apple's TV ads remain one of the all-time greatest platforms for music exposure.

Still, as much as music played an important role, the soundtrack to Jobs' life lies in the products and services he brought to the world.

The iPod
Many people don't remember this, but reaction to the first iPod was not exactly full of platitudes.

"Great just what the world needs, another freaking MP3 player," was one response. "iPoop" was another. And of course the mocking acronym "Idiots Price Our Devices," a ding on the $400 price tag.

Much of this derision stemmed from the fact that the MP3 player market was pretty much a dud. Napster has attuned music fans to acquiring music digitally, but it was still largely restricted to the computer of all but the most savvy digital users patient enough to put up with the clunky experience of transferring music to a portable player.

But what Apple designed in the iPod was nothing like the devices cluttering the market to date. It was slicker, better, and had a cooler name. That, and it worked great with iTunes, which at the time was just a music management software and not yet a retail store.

The combination was slick, easy, and exactly what digital music fans were looking for. One Billboard staffer can recall pulling out his then-new iPod while in an elevator, and a fellow passenger saying, "Can I see it?" The passenger was so transfixed by the iPod that she had to be asked three times to hand it back over while the staffer held the door, waiting to exit the elevator.

And the music industry got its first glimpse of what happens when you transfer control over to the fan. What happened next, of course, was a revolution, with the iPod supplanting the Walkman as the portable music brand of choice. If Napster was the birth of the digital music revolution, the iPod was adolescence. And it was only the beginning of Apple's dominance of the space.

The music industry's love/hate relationship with Apple and Jobs began with the "Rip. Mix. Burn." campaign, which labels took as a shot at legitimizing all the illegally downloaded music on users hard drives. But Apple quickly showed its kinder side, using iPod ads to showcase hip new music. The first ad featured the Propellerheads. The Black Eyed Peas got their first big break with the "Hey Mama" placement.

But the bigger impact was on how fans suddenly began interacting with music. The iPod's portability accelerated the decoupling of tracks from albums. It popularized the idea of making playlists for different occasions. And the shuffle feature helped them rediscover tracks otherwise long forgotten in the depths of their music library.

And as we all know now, that was just the beginning.

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iTunes
It was in the creation of the iTunes Music Store that Jobs' personality and negotiating style really made a difference. Labels at the time just saw the iPod as a way to mobilize illegally downloaded music. They were casting about for a legitimate way to sell music digitally, and all their internally build efforts were failing.

Given the desperation in the air, Jobs didn't need to turn on the charm too high to get them on board. He simply presented himself as the answer to their problems, and the rest took care of itself.

The industry as a whole was so mesmerized with the slick interface and intuitive navigation of iTunes, that the implications of the terms it made didn't immediately appear obvious.

For the traditional music industry, the 99-cent per-track price point--debundled from the album--virtually decimated the market for album sales.

While digital tracks were growing, they never covered the shortfall of album sales--in both digital and physical formats--leading many in the music business to question the logic of the transition, even if it was an inevitable one.

Even more interesting is the effect this had on other digital music services. The deal Jobs struck gave 70% of each sale to the labels and publishers, with Apple keeping only 30%. That's a thin profit margin, but Apple didn't care, as it could afford to run iTunes on a break-even basis while it raked in profits from the iPod.

Other digital music services didn't have that same luxury. They had to take that same deal that Apple was given, only without the benefit of a brisk hardware-selling business to offset the losses.

Then there was the issue of DRM, insisted on by the labels, the ramifications of which grew far beyond what they could have ever predicted. Apple's DRM implementation used a proprietary system called FairPlay, which worked only within the ecosystem of Apple's devices. The company refused to license it to other digital retailers, meaning any music bought in DRM form from those service would not play on the iPod. This was particularly frustrating for subscription services.

At the time of the iTunes negotiations, Apple held only around 5% of the computer market. Thanks to the success of the iPod and the restrictions of DRM, Apple soon captured an estimated 80% of the digital music market and has remained the dominant retailer since.

But to look only at revenue splits and user interface designs is not enough to fully appreciate what Jobs brought to iTunes. His opinions helped shape the market by what he didn't do as much as what he did.

Take subscription music. Jobs from the very beginning looked down on the model, not for business reasons, but because he personally didn't think that's what consumers wanted. And beyond all of Jobs' engineering brilliance lay a keen sense of what consumers did and didn't want.

This personal belief hit subscription music services hardest, because both the press and even label partners would parrot back his "people don't want to rent music" mantra as if it were a truism rather than a personal opinion.

The iPhone
Several industries were affected by the iPhone's phenomenal success, not just music. For starters, it revolutionized the mobile business, both from the perspective of hardware manufacturing (touch screen interface, etc.) but more importantly the way content is acquired through them. The App Store model took mobile operators largely out of the content retailing equation, allowing developers, service providers and content owners to reach mobile consumers directly.

It also had a profound impact on the digital music business by essentially mobilizing any service that could create an app. Before the iPhone, custom internet radio, subscription music, and music-ID companies, among others, had yet to find their legs and their lack of mobility inhibited their ability to grow. To take mind-share away from established players like commercial radio and TV, make accessing music as compelling as owning it, and ultimately, let users identify songs while they're out, these services needed a connected device that enabled users to take their services on-the-go.

And the iPhone turned out to be exactly that: the platform that freed web-based music services from the chains of the computer and let them enter the real world. Due to the frenzy surrounding the device and the subsequent app downloading craze, mobile usage of Pandora, Slacker, Rhapsody and Shazam skyrocketed, bringing users a renewed enthusiasm for music.

Once mobile, Pandora and Slacker allowed listeners to take the customized stations they made online and take them places they had not been experienced before. For many initial users, this may have been the first-time they had ever heard a radio station, tailored to match their taste, that they could give feedback to-in terms of "Thumbs Up" and "Thumbs Down"-in real-time.

The effortless nature of Pandora and Slacker, coupled with the music discovery opportunities they provided, appealed greatly to listeners. While still a minor blip on the radar of radio giant Clear Channel, these services could now be used in the car through FM radio transmitters and, in some cases, a direct plug-in. The iPhone placed web and traditional radio head-to-head, in a face off that continues today. Without it, Pandora and Slacker may not have become household names and many listeners would've never felt the pleasure of personalized music recommendations.

The Future
The long view of Steve Jobs' legacy depends on how Apple's newer innovations fare in the long term. It's fair to say that the iPad has both defined and dominated the tablet computer space. But it's not yet clear what impact tablets will have on the future of digital music. It could just be a bridge between the cloud and the in-home entertainment system. Or, it could become the album gatefold of the 21st century - time will tell.

Why Apple Will Dominate Cloud Music, Regardless of Label Deals

There's also AppleTV. Today, that's just a device that connects television sets to the Internet and the internal home network to do things like stream movies from iTunes, music and engage in other media. Rumors have been swirling for months that Apple is working on an actual TV set of its own, one that would take all the functionality provided by the AppleTV bridge and add all manner of new features and capabilities. But so far we've not seen anything official

And then there's iCloud--Apple's first foray into a streaming-like environment for music. Today, iCloud is simply a music locker that makes it easy to stream purchased music onto any Apple device. Tomorrow, it could evolve to a full-blown music subscription service, the kind Jobs consistently insisted music fans don't want.

What the Apple iCloud Means...and What it Doesn't

Steve Jobs may be gone, but his shadow in which the music industry still lives remains in full force. To say the Steve Jobs era in digital music is over just because the man himself has passed on and a new CEO now runs the company is completely shortsighted. This will remain a business shaped by Jobs' vision, passion and talent for decades to come. How many more years is impossible to predict, just as was his unlikely ascension to the digital-music throne.

He will be missed. He will be remembered. But he will never be replaced, and he may never be equaled.