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Steve Jobs behind music industry evolution

When Apple rolled out iTunes for the masses in the spring of 2003, the music industry was at a point of transition -- and chaos.

Entering the new millennium, albums were enjoying blockbuster sales of several million units for its superstar artists, and profits were booming. Yet the threat of Napster and other forms of illegal downloading threatened to eviscerate those profits as many music fans were starting to get used to the idea that music could be free.

Apple's iTunes entered into that landscape with a concept that wasn't exactly new: a system where you could pay for songs online. Yet iTunes, with its simple concept -- 99 cents per song -- and revolutionary MP3 device, the iPod, made it the gold standard.

The entry of Apple and its leader, Steve Jobs, who died Wednesday, into the music world was more than a success -- it was a phenomenon. Today, iTunes is the largest music retailer and has redefined the listening experience for millions of people.

What's less clear is how much the music industry, which is continuing to decline, has benefited.

"It really did remind an entire industry, and gave a cue to even a culture beyond the industry that if you provided music in a convenient, direct way and responded to the consumers' interest and demands, they would in fact buy it," said James Diener, chief executive and president of A&M/Octone Records.

"People who are critical of what iTunes may have done perhaps have short memories and don't realize that the alternative at the time was that an enormous amount of music was leaking onto the Internet and being consumed for free," Diener added.

At the century's turn, the industry had booming sales, fueled by the success of sensations like Britney Spears, the Backstreet Boys and 'N Sync.

But it was feeling the effects of the illegal downloading era: The top-selling album of 2001, Linkin Park's "Hybrid Theory," sold 4.8 million, down from 2000's top-seller, 'N Sync's "No Strings Attached," which sold almost 8 million.

"That was at the same time we were confronting Napster, we were confronting the beginnings of the global piracy epidemic that was to come," said Jim Donio, president of the National Association of Recording Merchandisers.

When Apple's iTunes became a full-service online music store in 2003, it offered more than 200,000 songs that could be loaded on your iPod and be fully portable, all for 99 cents a download, no matter who the artist was (in recent years, it has allowed for more variation, with some singles now costing $1.29 per song).

Bill Werde, editorial director at Billboard, said while other services were available, the genius of Jobs was making iTunes the ultimate consumer destination.

But while iTunes was booming, the era also hastened the demise of traditional retail stores like Tower and Virgin.

Fans didn't have to buy a whole album: Cherry-picking songs has become the norm, and some artists have complained that iTunes led to the diminishment of the album.

In 2010, iTunes marked the sale of its 10 billionth song. Yet for all of its success, the music industry is still floundering.

The industry has been on a dramatic decline for the past decade. While digital downloads continue to explode, overall album sales have dropped by at least half.

"Steve Jobs leaves behind a little bit of a complex legacy," Werde said. "He helped create what we think of today as the legal digital music market, which is a substantial music market around the world. But at the same time, the music business in the retail space is probably worth about half of what it was worth 10 years ago."

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