Steve Jobs music sellout: The Man Who Sold Out Music for Pennies on iTunes

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Apple’s iTunes Music Store started 10 years ago, thanks to Napster. By late 2002, Napster had 80 million users but was shut down by the Recording Industry Association of America. This move led to the rise of new file-sharing services like Kazaa and LimeWire.

Steve Jobs saw Napster and the Internet as a chance to change the music world. He wanted to make music buying easier and more accessible.

Key Takeaways

Steve Jobs used Napster’s disruption to launch the iTunes Music Store and change the music industry.
The iTunes store sold 70 million tunes in its first year¹. But, legal downloads make up only about 2% of music sales¹.
Apple’s iTunes and iPod control over half of the downloading market¹. The music industry’s deal with iTunes has been extended several times¹.
Steve Jobs’ innovative approach and focus on creating great products kept Apple ahead².
The 99-cent song price on iTunes made people pay for music instead of downloading for free¹.

The Napster Disruption and the Birth of iTunes

Napster changed the music world in the late 1990s by making digital music free³. Big record labels were worried. They tried to stop music from spreading by using digital locks³.

Napster’s Rise and the Recording Industry’s Reaction

Napster started in 1997, and iTunes followed as a legal option³. The music industry tried to control music with strict rules. But this made fans turn to Napster instead³.

Steve Jobs’ Vision for Legal Music Downloads

Steve Jobs thought people wanted to download songs easily and affordably³. He talked to music executives. They saw that music downloads were a big change³.

The last ten years have seen big changes in music thanks to digital tech³. Digital music sales now make up 50.3% of all sales, up 8.4% from 2010³. iTunes sold ten billion songs by February 2010. This shows how digital music has changed the industry³.

Metric	Value
Music Industry Size	Decreased from $38 billion in 1999 to $16.5 billion in 2012⁴
Online Video Growth	Growing at a rate of more than 40% each year⁴
Advertising Budget Shift	Verizon Wireless and Mondelez have each shifted 10% of their TV advertising budgets to online video⁴
Music Festival Sponsorships	Brands are investing over $1.2 billion annually in music festival sponsorships⁴
SoundCloud Users	250 million users⁴
Social Media Stars	Have access to hundreds of millions of people⁴

Negotiating with the Record Labels

Steve Jobs aimed to change the music industry by getting major record labels to work with iTunes Music Store. He first met with Warner Music Group, showing them a beta version of iTunes. “It was going to be their storefront, the first thing that consumers saw,” said Paul Vidich, a Warner executive. “I remember thinking, ‘This is so simple. It works. It’s great.'”⁵

Convincing Warner Music Group

Jobs showed Warner executives how easy iTunes was to use. This won them over. He then got deals with Universal and Sony⁵.

Securing Deals with Other Major Labels

At first, labels were unsure about the 99-cent price and DRM. But Jobs showed them it could fight piracy and boost legal sales⁵. The store started with 200,000 songs and now has 26 million⁶. In its first year, it sold 50 million songs⁶.

Key iTunes Music Store Statistics	Data
Estimated downloads sold in first year	50 million⁵
Estimated songs sold in first year	70-75 million⁵
Apple’s revenue per 99-cent download	10 cents⁵

The iTunes Music Store’s launch changed the music industry. It helped Apple become a leader in digital content⁶. Microsoft’s PlaysForSure couldn’t match iTunes’ success⁶.

The iTunes Music Store Launch

The iTunes Music Store opened on April 28th, 2003, changing the music world⁷. CDs had ruled for over 20 years, but Napster’s rise in 1999 showed a need for change⁷. The iPod and Apple’s “Silhouettes” ads made music listening exciting again⁷. This mix of factors made the iTunes Music Store a game-changer, bringing digital music to everyone.

Revolutionizing the Music Industry

The iTunes Music Store was more than a digital shop; it changed how we listen to music⁷. It let people buy songs or albums easily, moving away from CDs⁷. This shift attracted a new crowd of music fans who loved the iTunes Music Store‘s ease and flexibility.

The iTunes Music Store deeply impacted the music world⁷. It became a top place for music, videos, TV shows, movies, apps, and podcasts⁷. Apple’s success with the iTunes Music Store also led to the iTunes Music Festival, a hit event from 2007 to 2016⁷.

But, services like Spotify later challenged Apple’s lead in digital music⁷. Apple then launched Apple Music in 2015 to stay competitive⁷.

The iTunes Music Store was a groundbreaking change in music consumption⁷. Its influence on the music industry was huge, opening a new digital music era⁷.

The 99-Cent Pricing Strategy

Steve Jobs and Apple started a digital music revolution with the⁸ 99-cent song price on iTunes. Jobs made a point about free downloads: “You’ll spend an hour and get four songs. These songs cost under four bucks from Apple. You’re working for less than minimum wage.”⁸

Jobs argued that 99 cents was a fair price for a song. He said, “How much is 99 cents? It’s less than a Starbucks latte. You can buy three songs for that price. Lots of lattes were sold today. Ninety-nine cents is a good deal.”⁸

The “left digit effect” made 99 cents seem like a bargain⁹. This price point made people want to buy digital music⁹. It also changed how people thought about music downloads⁸.

The 99-cent strategy worked well. The iTunes Music Store had⁸ 30 million downloads. Apple sold⁸ 2 million iPods, making them a leader in digital music⁸¹⁰.

Steve Jobs and Apple changed the music industry with their digital platform. They turned a¹⁰ $8 billion company into a¹⁰ $65.2 billion tech giant by 2011. They redefined how we listen to music¹⁰.

The Aftermath and Industry Impact

Steve Jobs’ music industry disruption with iTunes changed everything. The iTunes Store quickly became the biggest music seller, beating out Walmart and Best Buy¹¹.

At first, record labels were upset about the 99-cent price and missing out on iPod and iPhone sales. But Jobs’ digital music revolution was clear¹¹. In ten years, music sales fell from $38 billion to $16.5 billion, due to piracy and digital changes¹¹.

Apple, under Jobs, was the clear winner. As the music industry shrunk, Apple grew into a tech giant¹¹.

iTunes Becomes the Largest Music Retailer

In its first week, iTunes sold one million downloads¹¹. This made it the top digital music store. Jobs’ vision and Apple’s user-friendly design won over fans fast.

“Steve Jobs and Apple didn’t just revolutionize the music industry, they transformed the entire landscape of how people consume and purchase digital content. The digital music revolution sparked by iTunes had far-reaching consequences, both positive and negative, that continue to shape the industry today.”

The music industry disruption by Jobs and iTunes changed music forever. It set the stage for the industry’s next big changes¹¹.

The Transition to Streaming and Apple’s Response

The digital music world is changing fast, with the rise of streaming services like Spotify and Pandora. These services let fans listen to any song, anytime, often for free¹². Spotify, for example, has over fifty million users worldwide, with over twelve and a half million paying subscribers¹².

Apple is rumored to be working on its own streaming service to keep up with the demand for on-demand music¹². But, the iTunes store’s buy-and-own model might soon seem old-fashioned¹². Track sales, mainly through iTunes, have dropped two percent this year, Billboard reports¹².

Yet, a survey by NPD Group shows iTunes is still strong, with 44 million Americans downloading paid songs or albums last year¹². Also, 38 percent of music fans still want to own their music¹². This shows the digital music world is complex, with both streaming and owning music appealing to different people.

Apple’s innovative minds will play a big role in the future of the itunes music store, the digital music revolution, and the technology innovation that drives it.

“Spotify now offers about twenty million songs and adds twenty thousand new ones daily. Its algorithms have improved a lot, making it better for users. Spotify bought The Echo Nest to make its music recommendations better. The Echo Nest helps Spotify’s automated radio stations, using user data for better music curation. Spotify wants to know as much as it can about its users for better song selection and playlist customization.”¹²

Apple’s move to release U2’s album “Songs of Innocence” exclusively on iTunes was notable. In the first week, 33 million people accessed the album¹³. A month later, the album had 26 million complete downloads, with over 81 million Apple customers listening to it¹³.

The digital music revolution is still growing, and the fight for listeners’ attention will get fiercer. But, with its resources, brand, and history of innovation, Apple is ready to lead the way in the itunes music store and the music industry.

Conclusion

Steve Jobs changed the music world with the iTunes Music Store in 2003. He showed how to turn industries around with new ideas and a clear vision¹⁴. By showing the bad side of free downloads and then the good side of iTunes, he made millions pay 99 cents for songs¹⁴. This changed how we buy and listen to music forever.

In the 10 years since it started, iTunes became the biggest music store in the world¹⁴. But the music industry has seen ups and downs. Still, people want to own their music and enjoy digital downloads. This shows Steve Jobs’ vision for iTunes will keep shaping the music world¹⁴.

The music industry is always changing. But the steve jobs music sellout, itunes music store, music industry disruption, digital music revolution, and technology innovation from iTunes will always be a key part of its history.

FAQ

What led to the creation of the iTunes Music Store?

The rise and fall of Napster, a pioneering file-sharing service, led to Steve Jobs and Apple’s innovation. They created the iTunes Music Store to change the music industry.

How did Steve Jobs convince the major record labels to partner with the iTunes Music Store?

Jobs won over Warner, Universal, and Sony by showing the iTunes interface’s simplicity and power. He also offered digital rights management and priced songs at 99 cents.

What was the impact of the iTunes Music Store’s launch in 2003?

The iTunes Music Store’s launch in 2003 was a game-changer. It made buying songs online easy and affordable. This led to the iPod’s huge success and changed how we get and enjoy music.

How did Steve Jobs’ 99-cent pricing strategy for songs challenge the notion of free downloads?

Jobs believed 99 cents was a fair price, comparing it to a Starbucks latte. He pointed out the hassle of free downloads, saying iTunes offered better value.

What has been the long-term impact of the iTunes Music Store on the music industry?

The iTunes Music Store has become the biggest music retailer globally. Yet, the music industry has seen big changes and declines. The rise of streaming services shows Steve Jobs’ vision is still evolving to meet new consumer tastes.

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