Here's why Apple can take on the streaming industry

I pulled all the discs I bought from the '80s through the mid-2000s out of their jewelboxes and filed them in big envelopes after I ripped most of them into iTunes years ago—and found a few discs that I don't remember buying. Classic Yo-Yo by Yo-Yo Ma. A Bob Dylan live album. A Johnny Cash live album. Where did they come from?

Then I remembered. Oh, yeah—Steve Jobs bought those for me.

This is a momentous month for Apple's future as a part of the music world. On June 30 we'll get our first glimpse at Apple Music, Apple's own music subscription service. But Apple's history with music goes back 14 years, and what a long, strange trip it's been.

New century, new music

Back in 2001, the music industry was reeling. Computers with CD drives, the growth of the Internet, and the rise of Napster had made music piracy more convenient than it had ever been before. In January, Apple introduced the first version of iTunes for Mac, making it even easier for regular people to rip their CDs and listen to music right on their computer hard drives.

The other shoe dropped in February—coincidentally the very peak of Napster's popularity—when Apple released new iMacs with CD-burning drives (opens in new tab) that, combined with iTunes, made it easy to "Rip. Mix. Burn.", as the ad campaign went.

That ad campaign infuriated the music industry, but their greatest ire would be saved for the device unveiled in October of 2001 (opens in new tab)—the iPod. Eventually, once it became wildly popular, it would be a convenient target for angry record companies who sought to portray it as a vehicle for pirated music.

But you've got to hand it to Steve Jobs. Stung by the criticism of the "Rip. Mix. Burn." campaign, he wanted to make sure that attendees of the iPod launch would consider only legitimate, legal uses for the device. At the same time, he didn't want reporters—some of them not particularly tech savvy, many of them Windows users—to have to do a bunch of work to load music onto the prerelease iPods that were handed out to every journalist at the event.

The compromise was this: Demo iPods would be preloaded with the contents of a half-dozen CDs, and those CDs would be included in the bag that contained the iPod itself. Attendees could leave the event, plug in some earbuds, and immediately listen to music, while safe in the knowledge that the music on their iPods had been legally obtained. And that's why I still have a bunch of CDs I don't remember buying.

Forget ripping, Just buy

A couple of years later Apple's relationship with music really turned a corner. Apple released the third-generation iPod, which could sync via either FireWire or USB, and the first version of iTunes for Windows.

It's easy to pick the launch of the original iMac or iPod as the moment that Apple's fortunes changed forever, but I think a strong argument can be made for April 28, 2003. Without a version of iTunes for Windows and support for USB syncing (rather than just FireWire, which was rarely seen on a PC not made by Sony), the iPod would've never become a breakout product. For Apple to win the day, it needed to go to Windows, and the third-generation iPod did that.

But the other announcement that day was the iTunes Music Store. Up to this point, Apple was able to create music-related products without any negotiations with the music industry—it was all about clever hardware and software using the digital audio discs sold in every music store around the world.

To do the iTunes Music Store, though, Apple had to cut deals with record companies and convince them that Apple was a trustworthy partner for digital music sales. It seems obvious now, but at the time the conventional wisdom among many music-industry executives was that music downloads were going to cause the end of their industry, and that the only way to stop the bleeding would be to sue the Napsters of the world out of existence and stop the downloads.

Apple convinced these skittish music execs that downloads were inevitable, but that providing a legal alternative to piracy would turn the tide. It took a lot of convincing—and the fact that the store was initially only going to be available on the Mac made it even less scary—but the deal was done. Apple was now in business with content providers, and its trajectory was set.

You can draw a straight line from that day to the company Apple is today. (So long as you draw it through the iPhone, of course. But keep in mind that one-third of the iPhone's initial sales pitch was about playing back content, and that Apple's entire App Store infrastructure was adapted from the systems built to create the iTunes Music Store.)

Into the future!

Steve Jobs famously said that people wanted to buy, not rent, their music. But times change, and Jobs famously changed his mind all the time—once he was convinced that he was wrong.

While a la carte music sales aren't going to disappear entirely, it's clear that there's also a major segment of the music market that would much rather pay to have access to a giant streaming library. With the purchase of Beats and the launch of Apple Music on June 30, Apple's entering yet another phase in its relationship to music.

The iPod and iTunes weren't the first attempts to create portable music hardware and an online music store, respectively. But it's fair to say that Apple's competition in the streaming music field is far more advanced and popular than the competition in those previous music categories.

Still, I had a hard time not rolling my eyes at Rdio's statement, upon the announcement of Apple Music: "Welcome, Apple. Seriously." (That's a reference to Apple's "Welcome, IBM. Seriously." ad campaign when the IBM PC launched.) Apple may be entering the subscription-music market for the first time, but it's the company that popularized music downloads, portable music players, and smartphones that are also audio and video players. Now they're entering your fraction of the market, and I suppose that's validating in a way—but it also seems a little churlish.

Also, I've got to point it out: We remember Apple famously welcoming latecomer IBM to the party, but the IBM PC won the day, not Apple. Be careful who you welcome. Seriously.

Jason Snell

Former lead editor at Macworld for more than a decade, wrote about Apple and other tech companies for two decades. Now I write at Six Colors and run The Incomparable podcast network, which is all about geeky pop culture, and host the Upgrade and Clockwise tech podcasts.

  • It can as most people have a general and bland taste for music and therefore streaming music services work great for them,!
  • I'm not sure if someone's taste of music has an impact. If the artists they like are streaming their albums on iTunes then why not subscribe?
  • With on demand streaming, that depends on the music catalog. Until a few days ago, there was a good chance that Apple Music was going to launch without a bunch of independent artists. Had that been the case, I would not have even bothered to play with the free trial. When it comes to radio streaming, I have yet to encounter anything that I consider listenable, regardless of what songs or artists I mark as favorites. Radio playlists are programmed by the record labels who are interested not in promoting the newest or the best music, but in manipulating public tastes in order to create huge hits. It's all about quantity over quality, and bland mainstream music rules the day. It remains to be seen if "Beats 1" will be any different.
  • There's two kinds of streaming: radio and on demand. In my view radio is crap, but on demand services are pretty good provided the service has a good enough music catalog. I've been fairly happy with Beats Music. It remains to be seen what's included or missing from Apple's music catalog. For DJ sets you're better off with something like SoundCloud, but their catalog and browsing features leave a lot to be desired for general listening.
  • "It's easy to pick the launch of the original iMac or iPod as the moment that Apple's fortunes changed forever, but I think a strong argument can be made for April 28, 2003. Without a version of iTunes for Windows and support for USB syncing (rather than just FireWire, which was rarely seen on a PC not made by Sony), the iPod would've never become a breakout product. For Apple to win the day, it needed to go to Windows, and the third-generation iPod did that." The impact of this cannot be overstated. This was the device that finally made me jump from Windows to Mac. For years I'd wanted a Mac, but lingering doubts about compatibility and value for the money kept me from taking the plunge. When I experienced first hand the iPod's quality and usability compared to that of every other digital music player I'd owned, Apple finally earned my trust and I bought my first Mac. I never looked back.
  • I believe that the success of Apple Music depends on whether or not it's tied to iTunes. iTunes continues to be buggy bloatware with a lousy interface that many of us avoid whenever possible. For me, the appeal of something like Spotify is the ease with which I can find a specific song, album or artist, discover new music, share discoveries with others and create and listen to playlists. If Apple Music is price competitive and has a slick interface I would consider trying it. If it's tied to iTunes I won't bother.
  • Get ready for intrusive $1.29 buttons on every screen.
  • A little button at the top is not something I would call intrusive.
  • I'm not fond of Apple's music UI. For example, instead of Beats' large, circular scrubber you have a tiny, hard to control linear timeline. The interface for browsing music is too limiting which results in greater effort when exploring an artist's catalog. Adding a distracting buy button to every page is just icing on the cake.
  • I still wonder where Apple would be today if MS "pulled an Apple tactic" and forbade iTunes, or the iPod on Windows. It would be totally contemptible, but goose vs. gander. For the record, they should have busted MS up!
  • 1) The now declining Windows empire was built on its relative openness, so it would have been difficult for Microsoft to come up with a policy that blocked iTunes without also blocking thousands of other partners. 2) I always thought MS should have been broken up, but frankly it's so much more satisfying to see them crumble without any government action to blame. I fell (slightly) sad for those remaining Windows zealots who continue to cling to their Surface tabputers and Nokia phone cameras.
  • I have a Surface, like it, and I'm no MS zealot. Meanwhile Apple routinely, and sometimes arbitrarily, blocks certain things without blocking thousands of other partners. Frankly, I think iOS's control is far worse than MS ever was. Their saving grace is non 90% market share.
  • A lot of the Apple-haters love to point out - especially when it comes to iPhone features - that others have had those features for a while and Apple is late to the party. But Apple keeps proving over and over again that even though they are not first, once they do it, it then becomes the industry standard. Google Wallet has been around for quite some time but until Apple Pay hit the market, nobody was talking about this technology. I am excited to see what Apple Music will actually look like next week and if it is as good as I think it will be, I will subscribe, if not I'll stay with Spotify. But if history holds true, Apple will yet again set the standard even if they were not the first.
  • Apple is indeed very good at fixing other people's mistakes, and then dressing it up as their own. Where the engineers try to market "cold dead fish", Apple says "sushi"!
  • It's easier to just slap on the latest tech on your product and highlight it in your advertising then to take existing technologies and refine them to actually solve problems for users.
  • I did say "fixing it"...
  • I think it's more nuanced than that. Simplest example is the 6/6+. Apple built phones with those screens years ago, and of course the finally sold them when demand was a sure thing, but they also waited until Jony and Co thought they had gotten the details right. Every time Apple is accused of copying, it turns out they were working on it years in advanced. But, of course, that news isn't brought to light until after the gloaters have had their fun. And obviously, the answer is equal parts that (1) Apple released it when they were good and ready and (2) someone else helped show that "ready" needed to be sooner rather than later.
  • Plus their main advantage is they will be in more countries than the others plus many people will probably say why not for the trail and then just stick with it. I know I will be signing up for the family plan. I would bet in 6 months they will have more people signed up then anyone else.
  • I have a gut feeling AppleMusic's family plan is especially going to bring in a lot of subscribers. It's a really good deal. Although I do believe Apple will reach it's goal of 100 million subscribers by the middle of 2016, if it doesn't start moving right away, there are going to be an awful lot of pundits yelling about how AppleMusic is a failure even when it surpasses Pandora and Spotify. One thing for sure, AppleMusic will be profitable which definitely can't be said about those other streaming services. Considering all the Apple devices out there and all those iTunes credit card accounts, I honestly don't see how AppleMusic can miss even if it's just a satisfactory music streaming service. With pockets as deep as Apple has, tweaking the AppleMusic to near perfection should be easy. Once AppleMusic becomes a standard, I'm willing to bet AppleVideo will be ready to follow up.
  • Great piece Jason, thanks. Just a few numbers that I have floating in my head, if Apple manages to convert 1% of it's iTunes customers, they could be within touching distance of 100 million Apple Music subscribers within a year or so (which is going to -no doubt- cannibalize iTunes' music sales). If it plays out that way, Apple are not going to necessarily "take on" the streaming music industry as much as they are going to contribute in "confirm it" and contribute in making it bloom.
  • 100 million would be 10% approximately. Sent from the iMore App
  • Well spotted! (sorry about that) Please imagine a 10% conversion rate in my comment... 1 % (or roughly 8 million subscribers) is probably below Apple's hopes for the very first month of the service going live.
  • I can't wait to see the numbers this Autumn when they announce the new iPhones, the numbers of those subscribed for the free trial and how many have started to pay the fee. Sent from the iMore App
  • My carrier offers free spotify for 2 years so I'll see you in 2017 apple music!
  • The lengthy article isn't needed. Apple can take on the streaming industry simply because they are Apple. There is enough loyalty in their brand that they can do virtually anything and still outsell their competitors for the most part.
  • @Jason: Do you know why there are so many Apple haters? Articles like this and the comments that cheer it on. Look, no one hates Apple as a company. They make great products and have very good technical skill and design chops. Instead, what Apple haters can't stand is Apple fans. Whenever a company dares to compete against Apple, you folks act like preschoolers on the playground whose balloon burst or whose ice cream scoop fell off its cone. You take it personal when it is just business. The ridiculous thing is the double standard. You guys LOVE it when Apple takes potshots at other companies ... even if the things that Apple says aren't quite true. But when other companies criticize and challenge Apple, you call it churlish? So Apple spends millions of dollars on copyright lawsuits trying to intimidate competitors, drive them out of the market and ruin their reputation as thieves and infringers who can't innovate and you guys eat all that up, but when an Apple competitor merely says "Welcome to the party" it is churlish or promotes the advantages of owning their products as opposed to Apple products it is "bashing or slamming Apple"? Seriously, what it is that you guys want? Do you want Apple to have a monopoly in every market that they enter, with no competition at all? Or do you want Apple's "competitors" to be terrified of Apple, or to worship Apple, to take the position: "Yeah we know that Apple not only makes better products but is a morally and intellectually superior company in every way, but we welcome people who have irrational, consuming, jealousy-driven hatred for Apple to buy our products anyway"? Is that the "kneel before the might and superiority of Apple" position that you want Microsoft, Google, Samsung, Spotify and everyone else to have? Don't you realize that if Apple's competition takes that attitude that it will bleed over into their product design and marketing efforts and they will never actually sell anything or make a profit? My goodness, you guys have gotten to the point where a tiny little company that will probably never make a profit cannot make a humorous, witty reference to one of Apple's own advertising campaigns merely for the purposes of A) being funny and B) getting customers to think about choosing an industry veteran over a first generation product and you call them "churlish" and (preschooler temper tantrum analogy again) respond with "oh yeah, well WE are #1 in music downloads, portable music players, and smartphones that are also audio and video players." Again, it isn't Apple that anyone hates. It is Apple fans who cannot countenance anyone EVER saying ANYTHING that can be construed as negative about Apple in any context or for any reason that we can't stand. You might say "why do they have to attack Apple to sell their products? Why can't they just stand on their own tech"? But the problem with that stance is that Apple attacks - and mocks - everyone else ALL ... THE ... TIME. It is just that you guys take the position that anything and everything that Apple does is fine (because Apple only speaks the truth and only acts in the interests of its customers and in the greater good of humanity) and everyone who disagrees is a jealous hater. Really, that is a mindset for sports fans - and bad sports fans with myopic tunnel vision at that - and not serious tech people. And by the way: IBM didn't win the PC battle at all. IBM's machines were quickly outsold by cheaper, better clones from the likes of Compaq, Dell, HP and later foreign brands. Now IBM doesn't make PCs at all, having sold their long money-losing PC division to Lenovo over a decade ago. The rest of their hardware division is also in steep decline - they also sold off their small servers and chipmaking divisions at huge losses - and are trying to reinvent themselves as a software and services company and compete with more established players in that arena like Oracle, Red Hat, Microsoft etc. By contrast Apple is still selling PCs and at huge margins, and quite honestly can be considered the world's leading and most influential PC maker, even if Lenovo has a bigger market share. So not only was your column a whining tantrum, but your last shot wasn't even accurate. Which, of course, is no surprise. And finally, back when Apple WAS looking up at the Wintel hegemony that was IBM and its clones, Apple fans responded "their being #1 in sales and profits doesn't necessarily make them better at products, services or innovation." Now THAT is something that Apple fans like yourself need to remember. Apple is #1 right now because they positioned themselves to lead the tech market shift from computers to computing devices (I still remember those Wintel commercials featuring the Flaming Lips and the Blue Man Group pushing Windows computers as personal/home entertainment machines) with the iPod and from wired devices to portable mobile devices with the iPhone and iPad. But is Apple poised to lead the next phase, the shift from local hardware-based computing to cloud computing that will make hardware almost irrelevant and ecosystems obsolete? The tech world IS moving in that direction, and fast. If Tim Cook doesn't start taking the cloud more seriously - as opposed to fearmongering over privacy and security to try to scare people away from products offered by cloud centric companies while doing just enough in the cloud to sell and support the very types of hardware that the industry is moving away from - in ten years Apple will be more like the formerly high flying but now declining and grasping to stay relevant IBM, HP and Sony ten years from now and less like the world leader that they are today.
  • A better and more accurate title would be: Watch apple copy everyone else when it comes to streaming music... Posted via the iMore App for Android
  • As someone who subscribes to Beats Music, I'm pretty excited for Apple Music. Should be good. Sent from the iMore App
  • I'm all for streaming because I just don't like the fact of storing 10,000 songs on my phone and takin up space.