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The iTunes Store at 10: How Apple reinvented the music business

Michael Gowan | April 29, 2013
As I write this paragraph, I'm enjoying a playlist that I created from among the thousands of songs on my iPhone, and it's no big deal. It wasn't always so simple: Once upon a time, crafting the perfect playlist for your MP3 player felt like an epic project. You had to rip the songs from a CD onto your computer, find sources--legitimate and otherwise--for tracks you didn't own, and then hope everything was in the right format to play on your portable device. Apple changed all that, thanks to a series of musical moves right at the dawn of the 21st century--not the least of which was the launch of the iTunes Music Store.

Many start-ups tried to find the right mix of selection, ease of use, and price to entice listeners into legal digital music, says Russ Crupnick, an analyst with research firm NPD Group. Most failed. It took Apple to find the magic combination.

To put it another way, Apple may not have invented the notion of selling digital music, but it certainly made the process easier than anyone who had tried before it.

Changing the music industry's tune

Crupnick credits Apple's digital music ecosystem with making the difference. The company didn't just launch a store. It built that retail effort directly into its iTunes music software and made sure that the songs you bought from iTunes worked seamlessly with the iPod.

Apple also convinced record labels to buy into some important innovations as well, including letting iTunes shoppers transfer files to more than one device and burn tracks to CDs (with some limitations, of course). Before the iTunes Music Store's arrival, you could do those things only if you had ripped music from a CD or downloaded a track without DRM.

"Apple dragged the music industry by the scruff of its neck into the digital age," says Mark Mulligan, music industry analyst and founder of Midia Consulting.

With the iTunes Store, users could download whatever tracks they wanted instead of buying a complete album.

Digital downloads also let listeners pick and choose which songs they wanted, a dramatic change from the album-centric models we'd grown used to from records, tapes, and CDs. "iTunes enabled people to skip the filler tracks and go straight to the killer tracks," Mulligan says.

Want to know how successful the iTunes Music Store was? Look at all the copycats it spawned. Microsoft, Virgin, Real Networks, Sony, and Walmart all started digital download services. But only iTunes worked with the iPod, and only iTunes remains relevant ten years later. Earlier this month, NPD reported that Apple still enjoys a 63 percent share of the paid music download market. (It enjoys similarly sized chunks of the market for movie and TV downloads--65 and 67 percent, respectively, NPD says.)

The store enjoyed success right from the start. People rang up 1 million downloads from iTunes within the first week the music store opened for business. That number grew to 25 million tracks by the end of 2003. These days, the milestone is 25 billion downloaded songs and counting.

Flying ChiliMusic downloads from the iTunes Store have grown steadily over the years; not coincidentally, so did holiday season sales of iPods for most of the years the store has been open for business. (Click to enlarge.)

Steve Jobs certainly saw the store as an early-on success. "When history looks back, the iTunes Music Store will gain recognition for being an incredible landmark in the music industry because it was the first time that online music could be sold really legally in a pay-per-download model, so good and easily and fun and fast and reliable," Apple's then-CEO told the UK's Independent in 2003.

 

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