Ten Years After: iTunes Store Changed Music Biz

Discussion
Apr 26, 2013

Remember when people used to go to record shops. They used to buy albums, too. It’s not that those things don’t happen anymore, it’s just that they occur a lot less frequently since Apple launched its iTunes store 10 years ago this Sunday, and changed music retailing forever with 99 cents downloads.

Today, Apple remains the music retailing leader with a market share that NPD Group puts at 63 percent, but its download model appears to have a limited shelf life, now with the growing popularity of so-called iRadio services, which offer personalized content with a subscription.

Bob Lefsetz, a former music industry lawyer and blogger at the Lefsetz Letter, told USA Today, "When iTunes turns 15 years old, we won’t be talking about downloads, because Apple won’t be selling them."

"We are in an interesting transition," Mark McGuire, vice president of research at Gartner, told Bloomberg Businessweek. "Download-to-own will persist, but with younger consumers, access through streaming services makes more sense."

According to reports, Apple is planning to launch its own Pandora-like music streaming service this year.

How has Apple changed music retailing? Will its download model go the way of the CD? Where do you think the business will be 10 years from now?

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7 Comments on "Ten Years After: iTunes Store Changed Music Biz"

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Max Goldberg
Guest
4 years 7 months ago

Apple killed the record store, but its business model needs to continually evolve with consumer preferences, if iTunes is going to survive the same fate. Many people are willing to pay to own a song or album. Others would rather pay a monthly fee to access the music they like. With the growth of the cloud and smart devices (phones, tablets, etc.) more are opting for the subscription model.

The subscription services are like all you can eat buffets. They not only always have your favorite items available, but they know what your friends like and offer suggestions of new menu items.

Apple is wise to offer both services to consumers. The only question is whether they are too late to the subscription service party.

Ken Lonyai
Guest
4 years 7 months ago

Clearly Apple has shaken and disrupted the music industry. From arguably the first viable portable music device to iTunes, the industry was unprepared and unwilling to acknowledge change. Apple though, is nimble and savvy enough to adapt to whatever the technology of the day is, be it personalized streaming, or some future AI (artificial intelligence) driven place based or mood based model. iTunes has been too profitable for them to stand on tradition or principal and let the market go away.

Fabien Tiburce
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Fabien Tiburce
4 years 7 months ago

Bill Gates famously said that people often overestimate short-term trends and underestimate long term ones. Online streaming is big and getting bigger, but remember, 10 years after iTunes started, you can still buy a CD. There will be music downloads 5 years from now; there will be fewer of them as the streaming model takes a bigger share of the music consumption pie. Solutions that are cloud-based, “always-on” and based on leasing music (vs buying) are only going to get bigger but I doubt they will completely eradicate other business and distribution models in the next 5 years.

In the medium-turn, a successful transitional model might be a combo: buy a CD and get an MP3 or rent music and get x downloads per month. I see no reason why the cloud can’t coexist with other distribution models as customers may see benefits to both.

Adrian Weidmann
Guest
4 years 7 months ago
Having started in the music industry when we were still razor-blade editing of analog tape, I lived through the disruptive ride of both technical and business transformation caused by the advent and rapid acceptance of ‘digital’. It is amazing how similar the digital shopper marketing transformation is to me. I have seen this movie before and know how it ends (or evolves!). iTunes was introduced 10 years ago on the ashes of Napster and has become the evolutionary step beyond the CD. iTunes has clearly redefined the entire music industry in ways that go far beyond the obvious. Our generation enjoyed an album of 10+ songs along with the cover art and liner notes. An album had shelf-life. Today most of the single songs have a fleeting commercial existence and the Millennials just want the song. Streaming is definitely the next evolutionary stage along this path. Pandora has proved this and its success is foreshadowing the future. I believe the technology will continually evolve and we’ll see a return of album art and liner notes… Read more »
Lee Peterson
Guest
4 years 7 months ago

Apple has set the standard for the way young people buy music en mass, and that’s not going to change, even if they’re not the only source going forward. What is interesting though is the way some physical music operations persist, like Newbury Comics, etc. It seems that there will always be a market for the physical experience. That need may fluctuate a bit depending on location and migration back to inner city, but it will still be a niche market going forward.

Because even with all the downloading, how could you ever replace the classic record store employee? You just can’t get that awesome condescending snark from any other source. Keeps you humble.

Shep Hyken
Guest
4 years 7 months ago

The iTunes store was disruptive. By the way, disruptive is a good thing. It changed an industry. Record/CD stores are now specialty retailers. There may be a place for them, but they are slowly becoming obsolete, if not already so. That said, I love going to the Vintage Vinyl record shop in St. Louis. Guess what? It’s always busy.

Still, we have to accept that Apple changed the music retailing business forever. And in ten years, maybe sooner, it may be a completely different—and disruptive—technology or method that does it again.

Kurt Seemar
Guest
Kurt Seemar
4 years 7 months ago

There has always been an aspect of collecting related to music buying. With music streaming services there is no collecting or resulting collection. Downloads and CD purchases will be part of the music industry for the foreseeable future due to the collection aspect. How much and how long will be dictated by pricing for the streaming services and the downloads.

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