No Worries in Music Industry as Apple Gets New CEO
The earth did not stop turning when Steve Jobs, the executive most responsible for transforming how music is purchased, distributed and experienced in the digital age, resigned as Apple's CEO Wednesday. He has been replaced by Tim Cook, Apple's chief operating officer since January 2007 and acting CEO since January of this year. All indications point to business as usual at Apple.
And the business world showed few signs of panic after the news of Jobs' resignation. Apple's stock ended Thursday trading down just 0.65%. In news reports and research notes, equity analysts gave Cook a strong vote of confidence. Underneath the calm is the understanding that Apple has not lost its man with the vision. "We should remember that Steve is still the chairman of the company and will provide that continued view of the future," says Roger Faxon, chief executive officer of EMI Group. "I think there's a lot more to come from Steve Jobs."
All indications point to a seamless transition into the Cook era. While Jobs was the one who spearheaded the development of Apple's digital music business, executives Billboard contacted feel the company's execution is the result of the team Jobs has assembled. "They have innovated and driven a marketplace in ways the music industry on its own could never have done," insists Faxon.
During the transition, executives Billboard.biz spoke with expect Apple to continue to place a high value on the content that drives its products. Jobs had a unique vision that content could support the consumer experience of Apple's products, and as a result Apple has always been a big supporter of music, explains one senior record label executive.
The indie label community, which has benefitted from Apple's innovations in digital distribution, is optimistic. "We are hopeful, given the continuation of existing internal management as part of the succession plan, that iTunes will continue to treat the independent music label community on an equitable basis, as they always have in the past, and look forward to continued Apple innovations that bring consumers into the music space," A2IM president Rich Bengloff said to Billboard.biz in an email.
Music executives have little to fear because Jobs' imprint is everywhere at Apple -- the culture, the people who have risen in the ranks, the way music is at the soul of the company. That passion is what drove Apple through some difficult times last decade, says Cameo Carlson, a former manager of label relations and programming at iTunes who now heads digital business development at Borman Entertainment. "In the beginning the labels paid no attention to us, wouldn't work with us, were resistant to our model, but Steve had a vision and he not only stuck to it but he believed in us to execute it for him."
Tim Cook is not Steve Jobs, but he's definitely a continuation of the Jobs era. By all accounts, Jobs had handpicked Cook and groomed him to be his successor as far back as 2004 when Jobs first had surgery for pancreatic cancer. In addition to the 2004 and 2011 stints at acting CEO, Cook temporarily took over the reigns in 2009 when Jobs took a six-month medical leave of absence. "I think he's proven his mettle," says Faxon.
Although Cook did not conceive the products that have transformed digital music, they may not have had such success with his impact on Apple's supply chain. As COO, Cook gave Apple products an advantage in materials and cost that other manufacturers have struggled to match. This is why beautifully designed and powerful iPhones, for example, have more memory, faster processors and longer battery than do competitors' products that cost as much or more. The result has been a competitive advantage that has made Apple products the standard devices for serious music fans.
For at least the first few years of the Cook era, Jobs' fingerprints will be all over Apple's road map. Jeffries analyst Peter Misek and Bernstein analyst Toni Sacconaghi put Jobs' impact at two years, Piper Jaffray analyst Gene Munster puts it at five years.
iCloud, due out this fall, will be the first music-specific product of the Cook era. For the first time, consumers will be able to stream their iTunes collection from mobile devices. The product and the timing of its launch are quintessential Jobs. He has been an outspoken critic of unlimited subscription services and has led the creation of a fundamentally different type of cloud-based music experience. And as other companies launched other cloud-based storage services without licenses from content owners, Apple acquired the licenses that should make iCloud more user-friendly than its peers. The service is the next stage of digital music and will be a stimulus to digital music, says the senior record label executive.
Over the long term, once Cook has gone through the road map established by Jobs, Apple may not be the same company. He is one of the world's finest executives and the person responsible for turning Apple from an aimless also-ran into a technology juggernaut. And Apple's value comes from its ability to create new products, not just release successful iterations of old ones.
But for the foreseeable future, Apple is in the hands of a talented CEO who will work with the team installed by his predecessor. With Jobs in the chairman seat and his culture intact, music is likely to be at the heart of the company for many years to come.