Remembering Steve Jobs

This week marked the one year anniversary of the passing of Steve Jobs. He was by most accounts a complex man of many contradictions. One thing was clear about him however, he loved music and respected artists. It was this genuine appreciation for the arts that is said to have driven his sense of design, look, feel and performance of Apple products. With the iPod and iTunes Steve and Apple made the most significant change to the record business probably since the introduction of the 12″ long play album.

It’s easy to slip into revisionist history about the iPod, but the truth is that the product launch was delayed pending the verdict in the Digital River Mp3 player trial. Only after it was clear that the iPod was not violating any rights did the product launch. Apple very well could have also achieved market dominance of the iPod without introducing a legally paid music store, but Steve recognized an opportunity that would be mutually beneficial to both Apple and artists alike.

Although controversial when it launched in 2003 (for ala carte song downloads), the Itunes Store is still the most successful online music start-up ever. Most important in recognition of that fact is acknowledging Itunes is a model that takes into account and benefits all stakeholders fairly. The prevailing wisdom of the internet and tech community was then (and sadly remains largely so today) to be one of greed and exploitation of both artists and rights holders.

It is precisely this intention and respect that makes the iTunes store great. When Steve rolled out iTunes for indie labels he said, “Things for you are going to get worse, they are not going to get better. Payment is optional, this will help you compete against illegally free by providing a better user experience, at a reasonable price.” He was right on all counts.

Thanks Steve, if only more people in the internet and technology community had as much respect for the arts and artists as you did we’d all probably be a lot better off. We miss you, sail on.

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8 thoughts on “Remembering Steve Jobs

  1. The technology was good, but……$.99 a song? What was he thinking? It was 2003 not 1967.
    This price shows no respect or regard for musical artists, as well as a misunderstanding of revenue streams in the recording industry.

  2. If only they’d adopted a pricing policy which was fairer towards labels & artists… The story goes that Steve decided that 30% “sounded nice” so that’s how the rev share was decided. In the first few years, when nothing was certain and Apple took all the risk, this was fair – but iTunes today is a massive cash cow and there’s absolutely no risk to iTunes whatsoever. Whilst Match is yet another attractive lure for punters, the level of revenue for any label not part of the Big Four cabal (receiving the huge advances) is pitifully small, on a par with Spotify.

    Given the notably lower costs involved in serving digital media, that they still take a flat 30% cut in 2012 irrespective of volume or the fact they’ve now cornered the market takes advantage of labels and artists, as well as simultaneously undervaluing that hard graft and creative output. They’ve also implemented some arguably anticompetitive prices in the past 18 months directly negatively affecting labels… But given the might of Apple, with their ability to kill a label’s primary source of revenue stone dead with no recourse — and more money than the US Fed — who has the power to challenge them?

    This is Steve’s legacy to music, and it’s not how it should be. Apple is either too lazy – or too uncaring – to make any changes. As long as it remains the most attractive system for consumers Apple won’t make any changes, even if it means all that labels can do is manage decline due to a grossly unfair business model.

    I’m surprised at the level of deference shown towards Apple and their business practices with regards to artist return, particularly given the strapline of this blog is “artists for an ethical and sustainable Internet”. The Reality Distortion Field in effect yet again?

  3. By introducing the iPod, Steve Jobs gave the single biggest boost to digital music piracy since Napster – perhaps even bigger than Napster, as it was the iPod that truly took piracy into the mass market.

    It should be remembered that the iTunes store did not come online until THREE YEARS after the introduction of the iPod. Jobs (like many digital entrepreneurs) used piracy to sell his product, then later realized that perhaps there was money to be made in music sales. By then the damage was done.

    Let’s not let the mists of time obscure the true facts – Jobs facilitated piracy and did much to legitimize it in the eyes of the public.

  4. I love the TriChordist … but this post is revisionist history….

    While iTunes is probably the best we have at the moment, has it really been good for artists in long-term? Is it the best of what could have been? I would argue the jury is still out….

    As the thetruthdisseminator I have to put the record straight….

    iPod & iTunes

    Apple’s aim: To make profit for the company and shareholder from selling hardware. Apple set out to make the iPod the dominant mp3 player.

    In 2000 Apple sales were in the doldrums. Sales of Steve Jobs iMac were not going well. So they began asking “What can we do to make more people buy Mac?”

    Music lovers were “sharing” tunes like crazy on Napster and other pirate sites. They were attaching speakers to their computers and ripping and burning CDs. This was especially marked in dorm rooms, a big source of iMac sales, but Apple had no software to manage this mainly illegally downloaded digital music.

    To catch up, Apple licensed the SoundJam MP music player. SoundJam MP became iTunes which Steve Jobs introduced at Macworld Expo in January 2001.

    i Tunes was not a music store or file-sharing service or P2P software it was music file management software which allowed users to rip and burn CDs and only available for Mac users. The original software allowed users to rip-and-burn and “share files “on their iPods. Apple sold hardware. iTunes was the “free” music management software – where the thousands of files that their music software managed were obtained was not their issue. nor their concern. Furthermore, there were third-party software applications that interfaced between Napster and P2P software and SoundJam/iTunes, it too fringed on the illegal. This software enabled users to download from Napster and P2P sites and have iTunes automatically catalog and file their illegally gained music files. Music content drove the sales of iPod, Apple wanted to make music content available free (and no thought at that time was given to compensating rights holders or artists) to drive sales of Apple hardware. For two years iTunes operated in this Napster-like way. The meteoric rise of Apple was driven by the iPod and all the “free” pirated music content. The iPod’s success was piggy backed on pirated music.

    The original concept of the iPod came from seeing how students were downloading and using their illegally downloaded music. Central to the concept was the idea of music servers, with thousands of music files. These servers could “share” and swap music files. The name iPod comes from sci-fi. The Mac is the mother ship and the iPod is the smaller vessel that leaves the mother ship returning to get fuel and food. Likewise the iPod returns to the Mac to get music files.

    There is plenty of anecdotal evidence that Apple users were heavily involved in distributing/downloading music illegally. 80-90% of the ZIP and RAR pirated music bundles contain A __MACOSX folder and The DS_Store file. This points to the fact that the bundles were created using Mac hardware.

    With regard to Artists compensation, because of a recent legal ruling on Diamond Rios Mp3 player, Apple’s IPod devices were not classified as “digital audio recording device” under the Audio Home Recording Act. This meant Apple did not have to pay a 2% royalty to the Copyright Office for dissemination into the two separate funds, the Musical Works Fund and the Sound Recordings Fund (distributed by the American Federation of Musicians and AFTRA), so there was no artist compensation in this manner.

    Apple’s intent was to maximize sales of their hardware. From Steve Jobs himself, iTunes was simply a loss-leader for Apple to sell Macs & iPods.

    The Shutting Of Napster

    Meanwhile the record companies had started lawsuits against Napster and eventually succeeded in shutting Napster and other pirate sites down. The record companies had shown they could get the source of the pirated music sites shut down. For Apple this meant two things:

    1/ The source of the free and cheap content could dry up having and impact of iPod sales
    2/ The record companies may come after Apple for helping to enable piracy.

    So in an effort to head-off both these they began negotiations with the record companies to set up the iTunes store. Apple’s aim was to make available “legal” music download available as cheap as possible, so that Apple hardware sales would have plenty of cheap and freely available content.

    The record companies for their part had been badly bruised and beaten by the whole pirating saga, both financially and with the benefit of hindsight some idiotic ways of dealing with the piracy issue. Furthermore in the main they still really did not understand the technological landscape.

    It was in this climate that Apple was able to “negotiate” with the record companies. They dictated their terms.

    1/ 99c download
    2/ No album bundling – Apple priced a 10 track album at the same price as buying 10 individual tracks.

    In essence the record companies were told take it or leave it. Rumors still circulate about the big upfront payments to the major labels and individual record company execs, in the form of cash or equity in the service
    to get them on-board to the agreements. The various lawsuits between the artists and record labels have revealed some of this information. .

    For example, from the Temptations Lawsuit paragraph 37

    “Some music streaming providers have paid large upfront fees to labels, such as UMG, to acquire rights to large catalogs of music. Due to non-disclosure agreements signed between music streaming providers and labels, artists (such as the plaintiffs and the class action herein) are not provided with any details about these payments, and there is little transparency about how – and if – that money makes its way to artists. On information and belief, UMG does not provide appropriate royalty payments to its artists from the licensing income it receives from music streaming providers.”

    In bringing a class-action lawsuit against Universal Music over digital music revenues, musicians trigger a big objection from Apple.
    “The musicians in the class action want to pierce the veil, but Apple contends that depositions given by Jobs and senior vp Eddy Cue, as well as other documents related to Apple’s business relationships with UMG and other record labels, are “highly confidential and proprietary trade secrets.”

    With the launch of iCloud the big upfront payments continued:

    Two years after the record companies had shut down Napster and other major pirate sites, Apple’s iTunes became a full-service online music store in 2003. Unlike the record companies solutions it did not have to compete with Napster.

    iTunes Pricing Issue

    In the Apple iTunes negotiations with the rights holders, Apple insisted $.99 per track across the board was the deal, take it or leave it. Apple set the price – not the creators, the artists or the record companies. All tracks were to be of equal value, no bundling – a 10 track album was the same price as buying 10 individual tracks.

    With regard to bundling, generally in business terms it is better to give the consumer a discount on buying a bundle. The consumer can make the choice to buy individual tracks or buy a bundle. If they choose to buy a bundle of tracks they get a discount over buying individual tracks. The total price of an 10 track album is cheaper than buying 10 individual tracks. In the world of commerce we see bundling all the time. At your local supermarket you can buy for example paper towel rolls in packs of 3, 6, 9, etc., The larger the bundle the less the individual towel rolls cost. The consumer has the choice what to buy. It’s a standard retail/commercial proposition. The manufacturer (in this case) benefits by incenting the customer to buy more by giving them a discount on buying a larger quantity. But this standard commercial proposition was not to be the case on iTunes. Like saying all paper towel manufacturers must sell their paper towel rolls individually and all the same price regardless of quality or popularity or any other factor. Apple promoted pricing parity for singles and albums, and gave no discount for buying an album. While digital downloads continue to grow, overall album sales have dropped by at least half.

    Many commentators have pointed to “unbundling” as being a major cause in the value destruction of music.

    Harvard Business School professor Anita Elberse, looked at the clash between bundles and digital distribution, and the effect on media and entertainment
    firms. Interview with Elberse about her working paper, “Bye Bye Bundles: The Unbundling of Music in Digital Channels.”
    Tracks of My Tears: Reconstructing Digital Music

    The Needham report goes even further and asserts more value has been lost via iTunes than by piracy. From the report:

    “What Is the Problem? …the major issue with iTunes has been the value destruction lost by “unbundling” If there’s not a consumer demand problem, then what is the source of the economic problem? We believe that unbundling in the digital age is the primary source of value destruction. In the physical world, consumers were forced to about $15 for an album that packaged the A-title songs they wanted with many B and C titles that they didn’t want. The pricing of $7-8 for each song the customer actually wanted (assuming 2 songs on an album of 10) was too high a price umbrella when iTunes began offering individual songs at $0.99. The music industry had to accept the iTunes version of unbundling because between 2000 and 2003, the audience unbundled music by stealing the songs they wanted to hear. In the end, $0.69, $0.99 and $1.29 per song (x 70% to the music labels) from iTunes were better than nothing. We are a little more skeptical than consensus about the notion that 4 Needham Insights digital piracy is responsible for the destruction of the music business. Before people stole songs one at a time over the internet, they bought entire albums via CDs made offshore illegally. That value chain has been decimated by digital. Why pay $1 for an illegal CD if you can legally pay $1.29 for the only song you wanted on the CD anyway?””

    The Artists

    After the record companies had signed their agreements with Apple, they in turn got their artist to sign digital distribution agreements, within the light of what was agreed with Apple.

    One of the reasons the licensing took so long was getting agreement with each artist for digital distribution written into their contract in place. There were plenty of issues and the arguments that ensured between artists and their labels with what the labels agreed with Apple. But like the record companies had been strong armed by Apple, the record companies in turn strong armed their artists. Unfortunately, like royalties the issues are not simple and easy to understand. Like in the physical distribution model, Artists have little say in the pricing or how their music is distributed if they want to use sites like iTunes.

    All the B.S. talked on the internet about how slow the music companies were to come to the table, ignores how long it took for the music companies to negotiate all the necessary contracts and licenses with their existing artists. A record label has no legal right to license anything with anybody that falls outside the terms of their contract with the artist. Licensing took time to negotiate with every artist who did not have digital distribution written into their contract, which at that time was virtually everybody. The tech companies and their apologists have often been the last to highlight and respect these artists rights.

    Fast forward a number of years, Artists find their revenues are not what they expect and they have little say in how their music is sold:

    Pink Floyd wins out against EMI for song-bundling

    In general terms a growing number of artists are accusing their record labels of accounting for downloads off of iTunes as “sales” rather than “licenses.” Generally revenues from “sales” after packaging deductions etc are significantly lower than that from “licensing” income. They don’t have contracts with Apple, only with record companies so this is where they are going after. As album sales drop, the income of musicians drops. Individual tracks do not make up for that loss. For example:

    The Temptations Join Chorus of Lawsuits Over iTunes Royalties

    ‘Weird Al’ Yankovic Sues Sony Over Royalties

    Tower Of Power Sues Warner Music Group Corp. Over Digital Royalties

    James Taylor Suing Warner Bros. Records For $2 Million Over Digital Revenue

    REO Speedwagon and William ‘Boz’ Scaggs

    Independent artists

    These lawsuits have revealed also the major labels license 80% of iTunes downloads sold in the USA. iTunes has meant that there are more independent artists music available than ever before. But independent music sales from iTunes is less than 20%, the majors still receive the majority revenue. This is approximately the same percentage as the “Brick And Mortar” stores such as Tower records, despite the fact that there is more independent music available. So despite the fact that independent artists have easier access to the market, they are not selling much more through iTunes. In fact the 20% of independent sales is shared out over a larger number of independent artists.

    • A generally excellent response, except for

      There is plenty of anecdotal evidence that Apple users were heavily involved in distributing/downloading music illegally. 80-90% of the ZIP and RAR pirated music bundles contain A __MACOSX folder and The DS_Store file. This points to the fact that the bundles were created using Mac hardware.

      This is apocryphal and not something I have seen in my near-two decades of Internet use. Indeed, Scene rules dictate that no custom folders such as that appear in any “official” releases — perhaps amateur, homemade packages of audio files but you’ll never see .DS_Store files in a scene release (just audio files, SFV, NFO and M3U).

      iTunes offered the consumer ever more choice but only sped up the almost inevitable commoditisation of music. It was already suffering into the 2000s, mind. With the exception of a minority of forward-thinking people, the industry ploughed on regardless…

      • The anecdotal evidence I cite is for the period 2001-2003. During this period Apple users were using the iTunes software (re-badged and re-packaged SoundJam MP) to rip CD’s and upload them as zip and rar files to the torrent and P2P networks. Many of these zip & rar packages still exist on todays file locker sites. Most of these file packages were produced by amateurs using iTunes software to produced MP3s (not Flac or other formats) and were not scene hackers.

  5. We were a little surprised that most of the comments about Steve Jobs were negative. We disagree only cause we believe that unlike many in the tech industry ultimately Job’s respected artists copyrights. But your opinions have been duly noted.

    • I know we have to pick our fights and Apple and Steve Jobs is not the worst of the worst but do think it’s important to have real perspective as Artists on what is going on….

      Steve jobs was a fantastic corporate business man. He did what was good for Apple and it’s shareholders.For that he is to be immensely commended. Apple would not be where they are today.

      Regarding Artists rights he spoke many fine words but surely the actions that a man takes are the mark of a man,

      Apple as technologists did what seems to be the modus operandi of technologists “do not seek permission (don’t respect rights) but ask for forgiveness later”

      During the launches of both the iPod and the iPad demonstrations were given. Both showed how these new products would work and used content. In both launches some of the content that was used as part of the demonstration permission had not been sought to use that content.

      Imagine for a second …true respect for a content holders rights … you approach a publisher, a rights holder, a music publisher, a book publisher and you say we would like to use your content to showcase your new product and the new technology – the launch – can we get your permission to use your music/book? You work in partnership. If permission was not forthcoming you move on… but many would be happy to give permission and be part of the launch…. but was that done? The answer is no, They just digitized and used what they wanted during the launch. Period.

      Apple spend much money on lobbying. A true indicator of their intentions is where they place their monies. An important question is what percentage of their monies go to groups that are pro-artists rights?

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