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Steve Jobs

Was iTunes good for the music industry?

12 October 2011

by Christie Eliezer

Among the tributes to Steve Jobs last week, U2 manager Paul McGuiness described him as a music lover who had strong morals and generous but a "tough business guy." In the wake of his death, there are discussions by music execs on whether iTunes was good for the music biz.

iTunes taught the panicking industry in the early 2000s that the consumers who had become used to free music, would turn legit if given an easy-to-use alternative which stressed on “consumer experience”, and which took pricing and format restrictions away from the control of the biz. That iTunes gained 70% to 80% of the digital market, sold 10 billion tracks and became the world’s biggest music retailer is testament to Jobs’ vision.

But it has not “saved” the industry. Digital sales channels only made up 29% of the global industry’s revenue last year. The success of iTunes lead to the growing demise of physical music retailers — especially of indie stores, traditionally the place where fans found exciting new music. At the same time, iTunes’ has not, like its rivals, allowed its users to share music with their friends. It also popularized the concept where single tracks became more important than albums. Once a band built up fan loyalty with its musical adventures stretched out over albums.

There are many reasons for the decline of physical sales. But lack of fan loyalty is one. Record companies have to find profits from singles than albums. There are some who privately admit that kowtowing to iTunes gave it a monopoly and a lack of competition — a situation which could in the long run be worse for the biz than the threat of piracy.

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