In 2001, the grounds concern was successful freefall owed to integer piracy, and the champion mode retired of this accelerating situation came successful the signifier of a achromatic instrumentality the size of a platform of cards. The iPod, launched 20 years agone this week, was besides however Apple’s Steve Jobs was capable to prey connected a failing concern successful bid to avenge his ain past failures – exiled betwixt 1985 and 1997 from the institution helium co-founded – by turning Apple into the astir profitable institution successful history.
Before the iPod lifeline arrived successful October 2001, grounds labels were successful afloat panic mode. In its yearly study for 2001, grounds institution commercialized assemblage IFPI called it “a turbulent” year, blaming filesharing and CD burning for a gross slump. Jay Berman was main exective of IFPI astatine the clip and calls the standard of filesharing past “a situation of momentous proportions” for grounds labels. “It truly was,” helium says, “a overseas invasion.”
The manufacture responded by attempting to writer filesharing work Napster and the copycat services that came successful its wake: litigation alternatively than innovation.
“[Litigation] was a bellwether for idiocy,” claims Jim Griffin, an manufacture advisor who chopped his integer teeth astatine Geffen successful the 1990s, putting retired the archetypal full-length opus legally online successful June 1994 (Head First by Aerosmith). “Whatever the euphony manufacture thought, that’s what you shouldn’t do.” So the iPod benefited not conscionable from the plan deficiencies of the MP3 players earlier it, but besides from an aboriginal mover taking each the ineligible vigor from a grounds concern spooked into combat mode.
The archetypal integer euphony players emerged successful precocious 1998 and aboriginal 1999, notably the Personal Jukebox (developed by Compaq Research), which held the equivalent of a CD’s worthy of euphony and was prone to skipping if bumped. It was Diamond Multimedia and its Rio scope of MP3 players that archetypal caught the public’s imaginativeness and the euphony business’s ire. Record labels felt it should beryllium taxable to a blank media levy and wage royalties to copyright owners connected each instrumentality sold.
The grounds labels “wanted the subordinate disconnected the market”, says Hilary Rosen, who was CEO of the commercialized organisation Recording Industry Association of America (RIAA) betwixt 1998 and 2003. In October 1999, however, a US territory tribunal justice denied the RIAA’s request for an injunction against the Rio and much than 200,000 players were sold soon after. Jobs viewed this arsenic an unmissable opportunity, damning the Rio and its competitors arsenic “brain-dead” owed to clunky bundle and design. He was convinced lone Apple could successfully streamline integer music.
iTunes, launched successful January 2001, enabled the ripping and absorption of CDs connected a user’s computer. The adjacent measurement was to make a euphony subordinate that shunted its rivals into the ditch, and from determination followed a determination into euphony retail with the iTunes Store.
It was an tremendous gamble but Jobs’s timing was, not for the archetypal oregon past time, impeccable. After the failed Rio litigation, determination had been a alteration successful somesthesia among labels, dilatory accepting it was amended to enactment with alternatively than against specified devices. “Once the iPod came along, they were much unfastened to a mediate ground,” says Rosen. She adds that grounds labels saw it arsenic 1 happening “to writer that small institution Diamond” but thing other to “try and instrumentality connected a behemoth” specified arsenic Apple.
The plan and functionality of the iPod was thing Jobs obsessed implicit during its gestation period. The contented of constricted retention was cracked by Toshiba processing a inexpensive 5GB disc thrust that could clasp astir 1,000 songs. Apple swooped and signed them arsenic exclusive manufacturers, slamming the doorway connected Creative Labs which was simultaneously moving connected their Zen MP3 player.
I approached Apple to speech astir the bequest of the iPod. The company, usually reticent to talk successful pieces that see non-Apple voices, initially said it could enactment guardant Eddy Cue, who oversaw the instauration of iTunes and present heads up everything from Apple Music to Apple TV+. The institution soon reneged, however, and said it would not person immoderate institution executives talk astir the iPod.
This secrecy defined the archetypal improvement of the device, with lone a fewer Apple executives allowed to spot the iPod, codenamed P-68 (and, colloquially, Dulcimer). The eureka infinitesimal was the click wheel, conceived by Phil Schiller, Apple’s selling chief, that enabled nimble hunt and power without a keyboard. Jobs wanted it arsenic tiny arsenic possible, with an apocryphal communicative circulating that helium tossed 1 prototype successful a food tank, pointed astatine the bubbles coming retired and said they indicated dormant abstraction that should beryllium removed.
It was unveiled astatine an Apple lawsuit connected 23 October 2001, with Jobs talking done the instrumentality specs and then, similar a integer conjuror, pulling it retired of his pocket. “There it is close there,” helium said holding it up arsenic the country erupted successful applause.
Record labels initially insisted that it beryllium a Mac-only device, with Apple past lone accounting for 5% of planetary machine sales. It was seen arsenic a tiny and harmless investigating ground. Its occurrence yet strengthened Apple’s manus to transportation labels to let it to beryllium compatible with Windows, giving the institution a immense marketplace to target.
Apple bolstered this with selling and advertizing walk – notably with its almighty “silhouette” ads – successful the tens of millions of dollars, thing acold beyond what labels had ever attempted. “That was an unheard of magnitude of wealth astatine the clip for an advertizing budget,” says Rosen.
The motorboat of the iTunes Store (in 2003 successful the US and 2004 successful Europe) was the adjacent cardinal measurement successful Apple’s domination of integer music. The grounds labels had tried to motorboat their ain ineligible download services but Pressplay and MusicNet were hampered successful portion by incomplete catalogues (as labels were initially barred from cross-licensing their euphony for monopoly reasons) but chiefly due to the fact that they were clunky and costly. “You truly needed an extracurricular subordinate to travel successful and spell copyright holder to copyright holder to get the agreements,” says Rosen.
Jac Holzman, laminitis of Elektra Records, had a roving little arsenic Warner Music’s main technologist astatine the clip and admits that creating a bully euphony work was beyond the ken of grounds labels. “It was amended that it came from the outside,” helium says, “because the extracurricular – and Apple specifically – would conscionable physique it better. We knew [Apple’s] past was excellent. So wherefore not springiness it a shot?”
Record companies, though, were profoundly unwilling to torpedo the lucrative CD concern conscionable due to the fact that integer had travel along. “These were the guys who had been successful the manufacture for a agelong clip and you would not person called them machine savvy,” says Berman of the IFPI. “Probably a large galore of them had their idiosyncratic contracts tied to the income of CD. The archetypal effect was precise much: support what we have.”
Rosen concurs, saying labels regarded “moving into thing wholly different” arsenic anathema to however they worked. “Like Butch Cassidy and the Sundance Kid, wherever you person to leap into the stream beneath due to the fact that they are coming for you, and praying that you’ll live,” she says by mode of analogy. “They conscionable resisted doing that.”
Holzman puts it adjacent much bluntly. “The grounds executives backmost successful that time,” helium says, “were not utilized to change.”
Against specified entrenched protectionism, Jobs’s defining – and arguable – thought was bound to clash violently. He wanted to complaint a level terms of $0.99 for tracks – caller oregon aged – connected the iTunes Store and, crucially, fto consumers bargain idiosyncratic tracks without having to bargain a afloat album. Even though iTunes, astatine its highest astir 2007, controlled much than 70% of the ineligible download market, downloads were a negligible borderline concern for Apple, contempt taking a reported 30% chopped of each sales. It was determination arsenic a operator for the iPod – wherever the existent wealth was.
Teeth were gnashed astatine the time, but labels had to judge that Apple steered them into a aboriginal they could not person reached nether their ain steam. “In effect, [Apple’s dominance of ineligible downloads] was the terms you paid for introduction into the instauration of a morganatic marketplace,” shrugs Berman. “The instauration of iTunes was the whipped pick connected top. It truly did make a sense, erstwhile things got disconnected the ground, that this had rescued the signaling industry.”
Rosen says she was sold aboriginal connected the iTunes Store, joining Jobs connected “a small spot of a roadworthy show” astir labels and absorption companies to get them connected side. Apple was, she says, an outlier successful Silicon Valley arsenic a institution that believed that each contented – and particularly euphony – should beryllium paid for.
“Not lone did helium go an advocator for the euphony manufacture wherever we had none, the euphony manufacture was truly ridiculed by the tech industry,” she says. “They didn’t spot what we created arsenic valuable.” Jobs couriered her an iPod connected the time it launched. “He sent it to maine with a large ellipse astir the ‘don’t bargain music’ [warning connected the box]. Those 3 words were a comfortableness broad to the manufacture earlier the iTunes Store launched.”
Apple besides blossomed due to the fact that nary different exertion institution could make a convincing iPod challenger. “Microsoft tried to get successful determination and had a fewer devices – but it ne'er clicked arsenic they were much cumbersome,” says Rosen. “Apple had the tract to themselves for a agelong time.”
She is much forgiving astir the flaws of rival devices than Jobs ever was. Jim Goldman, a newsman astatine CNBC, interviewed Jobs successful January 2008 and recounted however Robbie Bach, the enforcement successful complaint of the Zune, told him that Microsoft’s subordinate was a “worthy alternate to Apple’s iPod”. Jobs did not miss the accidental to footwear a galumphing rival. “Was helium inebriated?” helium asked. “Do you adjacent cognize anyone who owns a Zune?”
Apple besides had the magnetic powerfulness to bring successful personage endorsement. Engaging successful shuttle diplomacy betwixt California and Dublin, Jobs and Apple’s pb decorator Jony Ive enlisted the assistance of Jimmy Iovine of Interscope Records to transportation 1 of his label’s marquee acts to interruption their broad prohibition connected advertising. A achromatic and reddish iPod was created for U2 to coincide with the November 2004 merchandise of their How to Dismantle an Atomic Bomb album. The band, paid a royalty complaint connected each instrumentality sold, besides agreed to look successful commercials for the instrumentality successful speech for phenomenal levels of selling walk by Apple.
It was the iPod Mini, besides launched successful 2004, that proved the tipping-point instrumentality that, according to Walter Isaacson successful his 2011 biography of Jobs, “truly launched the iPod to marketplace dominance, by eliminating the contention from smaller flash-drive players”. Before the Mini launched, Apple controlled 31% of the portable subordinate market; wrong 18 months, Apple held 74%. At the commencement of 2007, the iPod unsocial made up fractional of Apple’s business.
Sales of iPods passed 100m successful April 2007 and its highest idiosyncratic twelvemonth was 2008 erstwhile it saw income of 54.8m. But Apple already had its succession program successful place, launching the iPhone successful 2007 and dilatory “retiring” its lines of iPods, with lone the iPod Touch surviving today. Now iPhones on with MacBooks, AirPods, iPads and Watches are Apple’s caller centre of gravity.
“I don’t cognize however you picture thing arsenic the cleanable product,” says Berman looking backmost astatine the iPod’s impact, “but it beauteous overmuch filled that statement astatine that time.”
It besides showed however integer technology, seen successful 2001 arsenic the nemesis of the grounds business, could really prevention it. But this rescue program came with hard conditions, benefiting Apple considerably much than it benefited the grounds business. At its archetypal time of trading connected the Amsterdam Stock Exchange connected 21 September 2021, Universal Music Group, comfortably the biggest statement and steadfast successful the world, deed a highest valuation of $54.3bn. In March 2021, Apple reported a marketplace capitalisation of $2 trillion.