Hey guys, it’s Greg with Apple Explained, and today we’re taking a look at the history
of iTunes. But I want to address something before we begin. Many of you are recommending
different video ideas which I really appreciate so keep them coming, but you should know that
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ado, let’s begin.
The story of iTunes is full of excitement, disappointment, and even some controversy
that all began in 2001. Now at that time, the iPod didn’t exist and playing music
from CDs was standard. There were MP3 players, but the industry was still in its infancy
and wouldn’t explode until a few years after the iPod was released. Most computers were
capable of importing songs from CDs and this created a problem with managing those song
files effectively.
The most popular desktop music managers were Real Jukebox, Windows Media Player, and Music
Match. The problem with these applications was that they were not only unappealing and
complicated, but they throttled things like encode quality and CD burning speed to encourage
users to pay for the software’s pro version. Apple capitalized on these shortcomings by
introducing a free, simple, and powerful digital music jukebox called iTunes.
Now I should mention that iTunes, like Siri, wasn’t made by Apple. It was developed by
Jeff Robbin and Bill Kincaid who had previously worked as Apple software engineers for the
Copland project but left Apple when the project was cancelled. They went on to create a media
player for the Mac in 1998 called SoundJam MP. The media player caught Apple’s eye
and they later acquired SoundJam MP in 2000. Robbin and Kincaid continued to develop their
media player as employees of Apple and simplified it's user interface, added the ability to
burn CDs, and removed its recording feature and skin support. It was then branded as iTunes
and released to the public in 2001.
iTunes was advertised as “the world’s best and easiest to use ‘jukebox’ software”
and it was only available on the Mac. Steve Jobs said “Apple has done what Apple does
best — make complex applications easy, and make them even more powerful in the process.
iTunes is miles ahead of every other jukebox application, and we hope its dramatically
simpler user interface will bring even more people into the digital music revolution.”
Reception to iTunes was positive, with critics praising the ability to turn audio tracks
into MP3 files, play Internet radio broadcasts, burn custom CDs, and transfer MP3 files between
a Mac and stand-alone music players. But there were some complaints about Apple removing
features that SoundJam MP used to have. Things like custom skins, additional visualizer plugins,
and the ability to record sound from a cassette.
The first update to iTunes came just nine months later and included support for the
iPod, improvements to CD burning, and a sound equalizer. Apple referred to this update as
iTunes 2 but there wasn’t very much excitement surrounding its release since the upgrade
didn’t introduce any groundbreaking features. And the same was true for iTunes 3 the following
year which featured smart playlists, the “my rating” column, and support for audiobooks
purchased from audible.com.
But the real exciting features weren’t included until iTunes 4 in 2003. A new user interface
was added along with the iTunes Music Store which was the main contributor to iTunes’
tremendous success. Now, you may find it odd that it took four versions of iTunes before
Apple included a music store, but that’s because creating a legal digital music marketplace
had never been done before. Apple was writing the book as they went along and initially
faced stiff opposition from record labels. But before we get into that, let’s understand
how Apple recognized the need for a music store to begin with. Initially, the main purpose
of iTunes was to simply serve as an easy way to rip songs from CDs, mix them into playlists,
and burn those playlists to blank disks. This process marked a paradigm shift in the way
consumers managed music. They were becoming more comfortable with digital song files and
listening to those songs on their MP3 players or iTunes. No longer were consumers using
CDs to store and listen to their music. The role of CDs, then, was to simply transport
music from the record store to your computer. Because after the songs were imported to iTunes,
the CD no longer had much of a purpose.
This behavior contributed to the growing need for a digital music marketplace. After all,
it’d be much easier to purchase digital music directly to your computer and save time
you would’ve spent driving to a record store and then importing all your songs at home.
Consumers were also annoyed that buying songs individually wasn’t possible. Some solutions
to this problem did surface, but they weren’t necessarily legal. File sharing applications
like Napster and LimeWire became quite popular in the early 2000’s since they allowed users
to download individual MP3 files directly to their computer. But because these services
were illegal, the music industry retaliated by trying to shut them down and they were
successful, but it took many years.
Throughout this time, digital music downloads developed a bad reputation since it became
synonymous with piracy. In 2006 “Weird Al” Yankovic even released a parody single titled
“Don’t Download This Song.” Who’s title may seem confusing since downloading
songs today with Spotify and Apple Music is perfectly legal. But these legal music downloading
services weren’t available 15 years ago. Steve Jobs had an interesting quote about
piracy that summed up the situation quite well, he said “We believe that 80% of the
people stealing stuff don’t want to be, there’s just no legal alternative. So
we said, ‘Let’s create a legal alternative to this.’ Everybody wins. Music companies
win. The artists win. Apple wins. And the user wins, because he gets a better service
and doesn’t have to be a thief.”
But the idea of a digital music marketplace wasn’t popular with music executives at
the time. And their concerns weren’t necessarily unfounded: They worried about profit margins.
Why would anyone buy $15 albums if they could just spend a few dollars handpicking their
favorite songs. They worried about piracy. How would they prevent digital song files
from being illegally resold and distributed? But most of all they worried about losing
control of the retail music marketplace. If everyone buys music from the iTunes store
than that gives Apple an unprecedented amount of bargaining power over the record labels.
Power the record executives weren’t willing to give up.
But Steve Jobs knew digital sales was the only way forward for the music industry and
he was successful in persuading labels to at least give it a try. This was partly because
of Apple's limited role in the computer industry: Labels saw the Macintosh market—which represented
less than 5 percent of the total U.S. computer market--as a small, relatively safe way to
experiment with Jobs' ideas.
The iTunes Music Store offered 200,000 songs at its time of release and allowed customers
to quickly find, purchase and download those songs for just 99 cents each, without subscription
fees. And customers could burn their songs onto an unlimited number of CDs for personal
use, listen to songs on an unlimited number of iPods, play songs on up to three Mac computers,
and use songs in applications on the Mac like iMovie and iDVD.
iTunes was widely used among Mac users but it didn’t explode in popularity until it
was released for Windows in October 2003. In just three and a half days after it’s
release, iTunes for Windows was downloaded over a million times and secured iTunes position
as the number one digital music marketplace in the world. Digital music sales eventually
exceeded CDs but it’s important to point out that overall music sales began to decline
in 2004 and it was due to one factor in particular: The shift from digital music purchases to
streaming services like Pandora and YouTube who offered free music streaming with varying
feature restrictions and ads that could be removed with a monthly subscription.
iTunes remained successful during this transitional period and received annual updates, but Apple
saw the writing on the wall and tried competing with streaming services like Pandora by introducing
iTunes Radio in 2013. It experienced mild success but was never able to dominate its
competition like the iTunes Music Store had. To make matters worse, a Swedish company called
Spotify brought their music streaming service to the US in 2011 and was gaining incredible
traction with consumers. Spotify offered on demand music streaming in addition to radio
services and it was supported by ads which made the service free. Although users could
pay a $9.99 monthly subscription fee to remove ads and other restrictions.
As popularity of Spotify exploded, it marked another paradigm shift in the way consumers
managed their music. Buying songs digitally and syncing them to various devices became
antiquated since consumers could simply download an app and stream any song they’d like from
any device. Other music streaming services were created to compete with Spotify like
Tidal and Beats Music, but these services were only able to put a small dent in Spotify’s
on-demand music streaming marketshare. In 2014 Apple acquired Beats Electronics in a
$3 billion deal, and brought on its executives Jimmy Iovine and Dr. Dre to help develop Apple’s
own music streaming service called Apple Music which was released in 2015.
Apple Music was integrated with iTunes 12, a controversial decision since iTunes was
already quite bloated and resource-heavy even without the addition of Apple Music. Many
users felt that, because iTunes needed to be trimmed down, establishing Apple Music
as a separate app would be a smarter choice.
But Apple felt differently baked Apple Music right into iTunes. Apple promoted the service
heavily with various ad campaigns to get it off to a strong start. Reception to Apple
Music was mixed, many criticized the user interface for being messy and unintuitive,
while others praised it’s quality playlist curation. In iOS 10, the Music app received
an updated user interface with less clutter, improved navigation, and a larger emphasis
on users' libraries, but issues with the service persisted. One of Apple Music's features is
something called iTunes Match, which allows you to upload existing music you already own
to your iCloud Music Library so you can share those songs with your other devices. Unfortunately
this featured caused significant issues for some users, like duplicate songs, missing
tracks, and synchronization problems. There were also reports of user-uploaded music being
replaced by versions locked with digital rights management, an issue Apple later fixed.
Despite these hiccups, Apple Music experienced rapid growth after its launch, passing the
milestone of 10 million subscribers after just six months and 40 million as of April
2018.
Today, Apple Music is Spotify’s biggest competitor. And because Apple Music is gaining
subscribers at a faster rate than Spotify, it’s set to surpass Spotify for the number
one spot in summer 2018.
Now even though streaming is the most popular way to listen to music, Apple continues to
sell music from the iTunes Store, although sales have been declining since 2012. Rumors
have been circulating about whether or not Apple will close the iTunes Store in the near
future. And although Apple hasn’t made any official announcements on the subject, an
anonymous source close to Apple said, “keeping the iTunes Store running forever isn’t really
on the table anymore. They plan on riding the iTunes Music Store out for the next 3-4
years, maybe longer. If Jobs was alive, he would have killed it.”
The end of the iTunes Music Store may be inevitable, but I don’t see it happening anytime soon.
After all, the iTunes Store offers more than just music and as long as customers are buying,
it wouldn’t make much sense to shut it down.
But what do you guys think? Should Apple end the iTunes Music Store in order to focus their
energy on Apple Music? Or is there still a good reason to keep the declining digital
media marketplace alive? Let me know what you think. And if you want to vote for next
week’s video topic, don’t forget to subscribe. Thanks for watching, and I’ll see you next
time.