Sunday, April 18, 2010

iTunes against the world

"I'll tell you about the magic, gonna free her soul
It's like trying to tell a stranger 'bout rock and roll" - John Mellencamp

It was new, it was cheap, it was TIME’s coolest invention of 2003.

It was iTunes.

Bono, Mick Jagger, and Dr. Dre were there when Steve Jobs introduced his newest brainchild. The iTunes Music Store was Jobs’ recent stroke of genius in a long line of rights. It was a way to share music legally, to give back what was due to those who had created the music while still allowing users to download content. Songs were just 99 cents, albums were $9.99. Here’s the catch—when iTunes was created, it was only available on Macs. In 2003, Mac computers represented a meager 3 percent of the computer world.

That was when Jobs made the decision; not only to sell music in an online format, but also to make the iTunes store available to the other 97 percent of the market: the PC users. Within the next three days a million copies of iTunes has been bought online and downloaded by PC users.

The rest is history.

When this article in TIME magazine was written, Apple had the rights to sell 400,000 songs and iPod’s were $499. iTunes now features more than 11 million songs and Apple now offers several different versions of the iPod with different features at different costs

iPod shuffle: 2GB-$59/4GB-$79

iPod nano: 8GB-$149/16GB-$179

iPod classic: 160GB-$249

iPod touch: 8GB-$199/32GB-$299/64GB-$399

iTunes, at the time, seemed to be the perfect solution to the problems of illegal online downloading. Create a quick, easy and efficient way to download, store and listen to your music all in one convenient application right on your desktop. However, within a few years, fingers were starting to point back at Steve Jobs & Apple as creating problems—not solving them.

About two years after the initial launch of the iTunes store, record labels and their company executives began to worry that they had relinquished too much money, errr-power, to Steve Jobs and Apple. Apple “set the ground rules for their own business,” according to several music tycoons. Record labels argued that they wanted to set their own prices for songs—give discounts on older albums and bump up the price of newer, popular songs.

Record labels may have agreed to iTunes before they fully understood the immensity of the project, a smart move (or a sketchy one) by Jobs. When the iTunes deals were made, the store was available only on Macs. Of course, a few months later, Apple released the iTunes music store for download availability on all platforms—also releasing the cheap songs to the rest of the computer world. By 2005, iTunes was outselling traditional music stores, further upsetting the record labels and the music industry.

Now, 5 years later, the music industry is still not happy about iTunes more-or-less monopoly over the current music business. Apple is now the number one American music retailer and the music industry is not enjoying it. According to the New York Times, “the relationship (between Apple and record labels) remains as tense and antagonistic as ever.”

Some labels argue that iTunes is not paying their “fair share” of the money they make off of songs. iTunes distributes them, but who do they really belong to? This debate was sparked 7 years ago when Jobs first introduced iTunes Music Store, and it does not seem to be going away anytime soon.

So what do you think? Is Apple killing the music industry, or saving it? Should Apple fork over more of the royalties on the downloaded songs, or are they just keeping what they deserve?

Maybe soon we'll be able to buy the answer on iTunes.

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