Seven Ways iTunes Changed the Music Industry

In less than 10 years, iTunes has become so embedded in people’s everyday lives that it has all but disappeared into the overall fabric of our digital commerce.

It’s hard to remember a time when selling a song by itself for $3.49 was an option, which it was, at least as a proposal, before iTunes came along. Or when people had to buy an entire album in order to get that one hit single.

For the industry, many business practices have become the norm – getting 70% of each sale, having proper invoices detailing exactly how many tracks have been sold and the ability to sell music on just about every device with a chip in it. What’s now taken for granted as standard operating procedures had to be carved through months of painful haggling, desperate handwringing and enough cursing to fill a thousand books.

Here are seven ways in which iTunes changed the landscape, in the words of the executives in the music business who played a part in making it happen.

 

1. iTunes created the first legitimate digital music store that competed effectively with piracy.

“Steve [Jobs] created something that made it so easy for people to buy music. He had a complete thought that went from iTunes to the iPod. It made complete sense, and it was something he felt people would be willing to pay for. In the end, he was right. It was all about having the right product.”

            Doug Morris, CEO of Sony Music Entertainment and former head of Universal Music Group


2. iTunes + iPod turned digital music into a fashion statement.

“Steve made digital music fashionable. The iPod white silhouette campaign was a perfect representation of that. He turned music into a fashion statement, a wearable fashion statement. He made it sexy.”

            Paul Vidich, angel investor and former head of digital at Warner Music Group


3. Digital music became ubiquitous through the combination of iPods and iTunes.

“Apple made music ubiquitous in a way it never was before. And they set music free from large PCs. Earlier MP3 players did that, too, but not like this. That ubiquitousness has driven a consumption of music that is unparalleled in the history of the world.”

            Jeff Price, founder of TuneCore and co-founder of spinART Records


4. iTunes leveled the playing field for independent labels and artists.

“Apple was the great equalizer. With iTunes, it was a meritocracy. You couldn’t buy shelf space like you had to with all the other retailers. If you presented great music, iTunes would give you promotional space right alongside the major labels. They made it possible for independent labels and artists to compete with the majors.”

            Robb A. McDaniels, Founder & CEO of Isolation Network Inc. and INgrooves


5. The 99-cent download became a standard price.

Steve Jobs “said to us, 'There're two things you have to accept: 99 cents for every single song, and every song has to be sold as a single.' And we went home and swallowed hard because that was tough for us to accept for us as a music industry…. If certain songs were really popular we should be able to set the price at whatever we thought was the right price as opposed to the $1 price. Steve said, 'You know, you've got to keep it simple, you've got to keep it clean.’”

            Thomas Hesse, President, Corporate Development and New Businesses, Chief Digital Officer at Bertelsmann. He was Chief Strategy Officer for BMG Music Entertainment when the iTunes Music Store launched


 
6. The economics of the single rose in importance.

“Some people say Apple unbundled the album. In my mind, it had already been unbundled by piracy. So why not do it in a way in which we get paid? That’s what iTunes really did.”

            Doug Morris, CEO of Sony Music Entertainment

 

 7. Labels got paid faster – much faster.

 “Physical takes a lot of money to produce. There are a lot of headaches: shipping, tracking, breaking of CDs and vinyl. Back in 2003, … people were still buying CDs. But to get paid on CDs was difficult. There was always a problem getting paid. For a small label like Frenchkiss, we needed that money to come in every quarter. When the physical distributor would say, 'Hey, sorry, these all broke,' or 'The stores lost the CDs' or whatever excuses came up, it would stall our money. As digital started to grow, it allowed [labels] to get paid more promptly.”

             Syd Butler, President of Frenchkiss Records

 

Questions? Comments? Let us know: @billboardbiz

Print