Steve Jobs Broke Hollywood’s Back with iTunes
Last week I found myself at On Hollywood, yet another conference where tech geeks meet ad execs meet entertainment moguls, all in a futile attempt to figure out what the heck is going on, and how to make any money off of it. Assuming of course that any of them could figure out what ‘it’ is.
At one of the sessions on the future of the music industry, while four guys in suits tried to explain why they are terrified of loosing their jobs and not being able to make payments on their BMWs, a friend of mine who’s made a very good living for himself in the podcasting/vblogging space and who was sitting on the other side of the hall from me, IMed me this profound thought: “looking up ‘Owned’ in the dictionary will find you a picture of their asses with Steve Jobs’ boot print on them.”
Apple won this race not in terms of the number of iPods sold or songs downloaded through the iTunes Music Store. What my friend meant is that Steve Jobs changed the fundamentals of the business of selling content and the entire entertainment industry is not just trying to catch up, they don’t even know how to catch up.
Steve Gillmor, of Gillmor Gang fame, put it this way in his blog:
Why don’t they get that the iPod broke the back of the record monopoly, just like the VCR broke the back of the projectionist’s union.
What they don’t get is that the consumer is no longer a passive receptor for whatever the Hollywood entertainment leviathan pushes out. Consumers now have options. We can turn off the TV and watch Rocketboom. We can create our own Rocketboom. DRM? Most of the music on my iPod was ripped from CDs that I own. Regional Encoding on DVDs? Download it through Bit Torrent. Don’t like what you hear on the radio? Create your own—do a podcast. Don’t like what you read in your local paper? Start blogging—cover the news how you think it should be covered.
All the tools are out there and it’s mostly easy enough that even my Mom can start her own blog. And it’s not just “the kids” who are doing all of this—it’s all of us.
We are all producers now. Hollywood can either catch up or die. And if it died, would anyone really notice?
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Why is it no one on the internets knows the difference between “lose” and “loose?”
For the same reason that those who criticize ‘GSM’ (grammar/ spelling/ mechanics) errors on blogs also don’t know that there is but 1 internet.
At the very least, if you’re going to criticize someone for an error, don’t make the same error yourself.
Burrrrrrrn!!!!!!
The record companies are particularly clueless (including of course, still called a format ‘records’ that they hardly sell any of). Just because their industry operated on certain margins in the 1980’s and early 1990’s does not mean (ie: entitle them to) those margins will stay the same forever. From the 1990’s, the following industries exploded: internet, video games, int’l movies & of course mp3’s 9and the subsequent sharing/p2p & other ease of transmission) - and still they operate like it’s 1992. as you rightly point out, consumers make, meld & rip their own entertainment whether it’s downloading a UK Tv series, listening to an amateur mashup or some guy reading a novel but yet the RIAA think it’s 1992 and apprently lawsuits is their answer to everything - have any artists actually gotten a cent from the lawsuits?
Or when Apple (& others) help them sell $1 billion dollars worth of tracks and over $1 billion in “found” money, what do they do? try and raise the prices and tick off Apple?
Or trying to pass the French law so itunes might be shut down? (itunes licenses tracks from them! If they hated “un-co-operative” DRM, why not just strip it out instead of trying to use a third party to kill the itues store? What is their real purpose?
Or the Sony rootkit that ONLY punished those who were actually bought the CD?
WTF?
Why doesn’t anyone ask them point blank these things?
To say that Jobs “owns” the music business is to say that Tower Records or Best Buy “owns” the music business. iTM$ is a player in distribution, but virtually all of its monetized content comes from the Big Labels and the Big Studios.
In fact, my criticism of Jobs is that he hasn’t done nearly enough to seriously challenge the existing distribution models. The Big Labels are STILL taking advantage of both artists and consumers, and Jobs isn’t really doing anything about it.
“Internets” isn’t a mistake, it’s a joke - google it and see.
Well first, you are correct Beeblebrox that the iTMS is pretty much the same as a record store like Tower and the rest. If they actually started taking the artist’s work directly from the artists that would make them very similar to a record label. How do you think the Apple vs Apple Corps lawsuit would have turned out if Apple was to become an ad hoc label? I don’t think Apple has any interest in getting into that side of things for now. Not until they can figure out a way around the issue of their agreement with Apple Corps and the current lawsuit is settled after all the appeals etc.
To me the big elephant in the room that no one really talks about is why the CD sales are really declining. That is directly due to Apple’s efforts with iTunes and the iPod.
For decades we as consumers would buy all the music that we liked and as soon as a new format would come out, like 8 Track, Cassettes, CDs, we would have to buy it all over again. The timing on the availability of these new formats was always as the sales of the current format were in decline. If all you have to do is pick out the few songs currently being played that you like enough to purchase because you already have enough music, then you aren’t spending enough for the record labels to be happy. So here comes another format. The big error was creating CDs and providing the music in a dgital format.
I guess the record labels could not foresee the technology getting cheap enough for everyone to have access to the content. I was making mixed CDs of the ones I owned long before Apple brought iTunes to the scene. They came along and made it easy. Real easy.
The way that Apple has revolutionized music and taken the power away from the labels is by removing their ability to control the format music will be played on. We don’t have to re-purchase the music we have owned in the past to enjoy it in the new format(s). Sure, the record labels have the new audio DVD format. That isn’t gaining any traction though. Only hard core audiophiles care about the difference between CDs and audio DVDs. For most of us we can be happy with the quality we get from the iTMS.
CDs still make up the majority (by a very wide margin) of purchased music. The reason sales are declining is because everyone bought their copy of Dark Side of the Moon a long long time agao and they don’t have to buy it again.
Personally, I love it. All of my CDs are in storage. I still wonder if I have to keep all those CDs for fear the RIAA gestapo should show up at my door and demand to see proof of ownership for all my music. They just don’t get it. Their industry is changing in much the same way the horse and buggy died off and we started driving cars. You either adapt to your market or evolutionary forces will take care of you their way.
Their way isn’t pretty but it is efficient…
I don’t think Apple has any interest in getting into that side of things for now.
That would seem to bely the argument then that Jobs somehow “owns” the music industry, wouldn’t it?
The way that Apple has revolutionized music and taken the power away from the labels is by removing their ability to control the format music will be played on.
Apple has added a method of distribution that may very well become the dominant model. But this has NOTHING to do with the labels, and does not threaten them in any way (unfortunately). In fact, Apple is still beholden to them and has made no effort whatever to shake up the RIAA cartel.
What iTM$ threatens is OTHER distribution models, like brick-and-mortor stores. But the labels are still the major content providers. Apple’s success with iTM$ doesn’t change that in any significant way as long as Apple continues to rely on them for all of the monetized content.
Years ago my company (a print music publisher) sent me to a conference given by Rolland, the digital keyboard company.
A top Japanese scientist heavily involved in their R&D;at the time spoke of bringing technology down to the masses by broadening the base of the tools.
Recording is a good example.
Once the domain of specialists, sound engineers with years of experience and hundreds of thousands of dollars of equipment, now anyone with a decent Mac and Logic Pro (even Logic Express!) and a mic or two can produce quality recordings.
Granted, there is still a place for the expert, but --
Well, you get my point, I’m sure.
Mr. Jobs has brought the technology of music/video distribution (perhaps even creation, to a point) down to the masses.
Which means you and I can do whatever we want with content, from share it to create it.
Now it might interest you to know these words come from a print music composer. My company specializes in choral and instrumental music for sacred and educational markets. When a piece of music I wrote sells, I get ten percent of the retail price. When someone photocopies it, I get nothing.
And yet I welcome what Jobs has almost singlehandedly done.
“I want what I want when I want it.” That’s the American way.
I just hope that we’ll learn to balance (there’s that pesky word!) the desire to have/have for free with the need we all have to honor those who create.
If we do, then we’ll find that it’s distribution that’s going away, not the music, the video, or the ideas that make them.
Beeb, you’re stupid if you think Apple are going to begin signing new artists directly to iTMS. It would be identical to wal-mart or amazon.com doing the same - it just isn’t going to happen.
But this whole article is ignorant IMHO, along with many of the follow-up comments.
I’ve forgotten the exact figure now, but I believe iTMS sales make up less than 1% of music sales revenue.
In short: Steve Jobs really, really, doesn’t have the labels over a barrel.
Beeblebrox, you’re looking at this completely wrong (and you completely misread the point of my comments). The way Apple has revolutionized this industry has nothing to do with the iTMS. The store is all fine and well and is a great product but the revolution comes via the iTunes software.
It is true that Apple was very late to the game when it comes to the software and putting CD-R drives in their hardware, but they were the first to make it easy to rip CDs, create playlists, burn mixed CDs etc.
The way this “threatens the labels” as you say, is to take away their power to control the direction the industry will go. At least as it pertains to format. It used to be that the labels decided what and when the newest format of music will be chosen and implemented. Do you think that can ever happen again?
Even if they did they could only sell new music to people since we all have our favorite songs in a digital format and we can convert it to whatever we like (except of course for the music we purchase through the iTMS).
The labels will continue to be the content providers for a while. That revolution will have to come from within the industry. I don’t think Apple has the answers to that. But, they are the ones who have planted the seeds I think.