June 24, 2019 • 41 mins
Apple first unveiled iTunes in 2001, setting it and the company on an incredible journey. In this episode, we learn how iTunes came to be up to the debut of the iTunes Music Store in 2003.
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Episode Transcript
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Speaker 1 (00:04):
Welcome to tech Stuff, a production of I Heart Radios,
How Stuff Works. Hey there, and welcome to tech Stuff.
I'm your host, Jonathan Strickland. I'm an executive producer with
How Stuff Works and I Heart Radio and I love
all things tech. And On June three, two thousand nineteen,
(00:25):
at Apple's Worldwide Developers Conference or w w d C
for those who like initialisms, Apple announced that the company
was going to officially sunset the venerable iTunes program. In
its place will be three Mac desktop apps that are
pretty similar to what you can find on iOS devices
(00:47):
Apple mobile devices. In other words, So today I thought
it might be fun to trace the history of iTunes,
how it came to be, how it changed the music
industry and helped create the business I'm in, which is
podcasting in case you haven't caught on yet, and why
Apple decided to finally say goodbye. We'll also explore how
(01:08):
people felt about iTunes, because it's not all sunshine and roses,
particularly if you ever had to deal with the Windows
based version of the program. Oh and before I go
any further, I should mention that when Apple talked about
ending iTunes, they were really just talking about Max at
the time of this recording, the company hasn't said anything
(01:29):
about what it's planning for the PC version. PC mag
reported that there's no immediate plan for it to disappear
from Windows. So there's that, okay, so iTunes. Let's talk
about the program and where Apple was when it was
first announced back in two thousand one, because it was
a very different company from the one we're used to today.
(01:49):
In fact, it really behooves us to look over Apple's
history leading up to that moment, because the company had was,
let's call it, it was in a transition, to put
it gently, so really had been through an existential crisis. Arguably,
the crisis began when Steve Jobs inserted himself into the
(02:11):
development process of various products like the Macintosh line of computers,
and then complicated a process and alienated many over at
Apple in the same go, and this eventually precipitated in
his being fired, or at the very least, he was
pushed aside so far away that he would leave the
(02:32):
company in nineteen Steve Wozniak, the other co founder of Apple,
also left the company around that time, though he had
sort of stepped back quite a bit already after surviving
a plane crash in nine. Over the next few years,
lots of things would change at Apple. John Scully, who
(02:53):
was the guy who came over to Apple from Pepsi
and had served as the president of the company. He
was also of the man who was responsible for pushing
out Steve Jobs, would become chairman of Apple in nine
Michael Spindler would become the CEO. Then just a few
months later, Scully resigned his position as chairman and he
(03:14):
was replaced by Mike Markula. Markula, in turn, would step
down just a couple of years later. Gil Emilio would
become chairman and CEO of Apple in nine six. By
this point Apple was struggling. Son Microsystems had offered to
acquire the company, but Emilio turned down that proposal, and
you could call that a great decision, But Emilio also
(03:37):
made some questionable choices, such as allowing other companies to
sell macclone computers by running Mac operating System software on
non Apple computers. This gave other companies the opportunity to
sell computers running Mac operating System at a lower price
than what Apple was charging. And making matters worse was
(03:58):
that Microsoft had real least Windows, which was a significant
update to the Windows platform, while the Mac operating system
was looking more than a little dated at the time.
Emilia was also unhappy with the progress or lack thereof,
on the next version of the Mac operating system, code
named Copeland. In an effort to solve that problem, Emilio
(04:20):
led the charge for Apple to acquire a company called
Next in e x T. That company happened to be
the brainchild of one Steve Jobs, who founded Next after
leaving Apple in the nineteen eighties, and that set the
scene for Jobs to become the next CEO of Apple.
He first served as an advisor to the company, but
(04:41):
he began maneuvering with the board of directors in an
effort to become chairman again. Emilio eventually left the company
after butting heads with Steve Jobs, though to be fair,
Emilio was also at the helm during the worst financial
quarter in Apple's history. June seven was the final day
(05:01):
of that horrible quarter in which Apple lost fifty six
million dollars. So just let that sink in and just
three months the company lost more than fifty million bucks.
No wonder many people predicted that Apple was not long
for this world. Steve Jobs was named by the board
as the interim CEO. He would actually refer to his
(05:22):
own title as I CEO. Cute, right, but it was serious.
Business Analysts predicted that Apple was about three months away
from bankruptcy when Jobs took over, so he had a
huge hurdle to overcome, and he made some really big changes.
Some were seen as cute, like the iMac. Some were
(05:42):
seen as the deepest of betrayals, like when Apple and
Microsoft announced a partnership in a five year agreement to
have office software come over to the Mac. And while
not all his decisions were lauded by the Apple faithful,
he did get the ship turning around. At the Macworld
conference in he announced that Apple had ended the first
(06:02):
quarter of ninety eight with a forty five million dollar profit.
By the end of that year, the company had earned
three hundred nine million dollars in two thousand. Steve Jobs
made the transition from interim CEO to honest the Goodness
CEO and behind the scenes at Apple, where it was
progressing on a trio of big projects that would transform
(06:24):
the company. One of them was the OS ten operating system,
which is still the basis of Mac operating systems today,
one was iTunes and one that would come out a
little bit after the other two was the iPod. Now
keep in mind, at this stage Apple had not yet
fully re established itself. Steve Jobs could still fill a
(06:46):
room for a press conference, but this was years before
Apple would wow crowds with the iPhone or surprise skeptics
like me with the iPad. Apple the company was still
on uncertain footing, though it had been an upward trajectory
after nearly falling apart in the late nineteen nineties. One
thing Jobs new to do was to pay attention to
(07:08):
emerging trends. One of those trends that was just starting
to gain traction involved the MP three audio compression format.
Early adopters were starting to rip music from CDs to
their computers, and a couple of companies had created portable
MP three players, the digital equivalent of a Sony Walkman
(07:28):
cassette player, but one that could hold a library's worth
of music. And a couple of former Apple employees named
Bill Kincaid and Jeff Robin had created an interesting program
that could turn a computer into a digital jukebox, specifically
a Mac computer. Now, both Kincaid and Robin had worked
(07:48):
on Copeland, that Mac operating system version that Emilio had
discarded in favor of the next platform from Steve Jobs.
Once the decision was made to ditch the work they
had done on Opland, both Kincaid and Robin had left
Apple and they went on to pursue work at different companies.
They were separated and working on individual opportunities. Now, the
(08:12):
origins of what would become iTunes should be pretty relatable
to anyone out there. One day, Bill Kincaid was driving
up to a race track to practice driving his race
car at super high speeds. I mean, we've all been there,
right Anyway, he was listening to NPR when he heard
(08:32):
a bit about the Diamond Rio MP three player. Kincaid
wrote that this was actually the first time he had
even heard of the MP three file format, which is
kind of interesting because it was definitely in the news
because of file sharing. But I'll get into that more
than a bit. Toward the end of the report on NPR,
(08:52):
the person on the radio said something like it won't
work with Max, and Kincaid, being a former Apple employee,
thought he could do something about that, and he ended
up in listing his former co worker Robin in the effort.
So Kincaid built the back end of the program and
enlisted Jeff Robin to work on the front end, the
user interface side, and the result was software called sound
(09:15):
jam MP and it worked on Max and it was
interoperable with the Diamond Rio MP three player. Jobs somehow
heard about this software and was impressed with the work
done by the former Apple employees, so he had Apple
purchase the application. They also hired Kincaid and Robin to
come back into the fold at Apple, and Robin, by
(09:37):
the way, was in charge of iTunes all the way
up to its dissolution. Kincaid and Robin joined a team
that took sound jam MP and they began to transform
it into something new, something belonging to Apple. And this
leads us up to January nine, two thousand one, when
Steve Jobs took the stage at the back World conference.
(09:59):
He started off talking out O S ten and he
moved on to talk about hardware for a while, and
about an hour into the presentation, somewhere around fifty five minutes,
he segued over to talking about music. Now, this was
months before the company would reveal the iPod that was
still a secret. So at this stage, Jobs was talking
(10:19):
about the process of taking music CDs and ripping the
music to your computer. Jobs talked about stuff that I
think we all take for granted these days. He talked
about the opportunity to take a music collection, rip it
to a hard drive, and then create playlists from that music.
You can mix and match anything you like. You could
have a playlist with two songs from the New York Dolls,
(10:41):
three from Iggy Pop, half a dozen from David Bowie,
four from the Talking Heads, and gosh, I'd really like
to listen to a playlist like that. Anyway. You can
make the digital equivalent of an old mix tape on cassette,
or you could turn your computer into a digital jukebox,
but unlike a cassette, you could reorder those songs any
way you liked, any time you liked. You would never
(11:04):
be stuck in one particular configuration. The beauty of having
your music in a digital format is that you have
tons of options, so you can shift things around, or
even listen to your entire music library on shuffle, so
that you never have the same listening experience twice in
a row. Beyond that, you could use the program to
burn your playlist to a c D. Now, in this case,
(11:27):
you'd be stuck with whatever order you decided upon when
you made the CD, unless you were using a rewriteable
c D, in which case you could wipe it and
start again. But back in those days, burning a c
D could take several minutes, and most of us didn't
have the patients to do it again if we realized
we had fudged the order of the songs. Jobs then
went on to talk about portable MP three players, again
(11:48):
without hinting that Apple was making one of their own.
He talked about how it was necessary to have software
on a computer that could interface with m P three
players to transfer music from computer to player. This was
necessary because back in those days, MP three players required
a wired connection to synchronize with a host computer. There
really were no WiFi MP three players in the early days,
(12:11):
so you had to pair your MP three player with
a computer using a cable. I know, it's like the
Stone Age, right. Steve Jobs finished his introduction before actually
unveiling iTunes, by talking about internet radio stations. These were
pretty young in two thousand one, but we're growing in popularity.
Audio compression had allowed stations to stream radio over the Internet,
(12:33):
giving them the ability to reach many more listeners than
terrestrial radio, particularly for radio stations that had lower powered transmitters.
Now this leads us up to the actual introduction of iTunes,
which I'll talk about in just a moment after we
take this quick break. Now, I know all those features
(12:59):
are news to us today. It's been nearly twenty years
since Steve Jobs gave that presentation. And let's be fair,
iTunes would not be the first program to help people
organize a digital music library. There were others that already existed,
but Apple always had a certain style to it, and
Apple designers are genuinely really good at what they do
(13:21):
and typically create intuitive, powerful interfaces. So it wasn't just
that iTunes could do these things. It's that it could
do those things and look good at the same time.
It was easy to understand. It wasn't so cluttered or
complex as others, and Jobs took opportunity to really hammer
home how iTunes, unlike most of the popular digital music
(13:44):
applications that were on the market, already, was much easier
to use and to understand. He contrasted iTunes with other
media software. He criticized how the competition made everything to
cluttered and confusing. He said that companies just had confused
options with operability. Jobs also said that the competition put
in arbitrary restrictions in their programs in an effort to
(14:07):
convince users to upgrade to the paid version of those programs.
He said that the software would throttle the ripping and
burning speeds for CDs, as well as use lower quality
settings to encode music into MP three files. So yeah,
you could download one of these applications and it technically
would work, but it would purposefully hinder itself and give
(14:31):
you a substandard experience. And this was all done in
an effort to upsell the user to a pro version
of that software, which would remove those restrictions, so said Jobs,
these companies weren't offering an improved piece of software for
a premium. Rather, they had purposefully downgraded their software's capabilities
(14:52):
to create the incentive for people to cough up cash
for the full version. It seems like a backwards way
to go about it now. In a demonstration, Jobs ripped
love Shack off, an album by the B fifty two,
so you know, good choice. He explained that the program
that his iTunes would read the data off the c D,
(15:14):
then searched the c D database and retrieved the track
titles to match with the actual tracks, because that information
was not encoded on the compact discs themselves. And then
it would allow you to listen directly from the CD,
or you could rip it to the computer. Jobs showed
off how the user could build a music library and
(15:34):
browsed through that library and play stuff easily. Interestingly, he'd
include a few examples by the Beatles. I say interestingly
because it would take a long time before the Beatles
discography made its way to Apple. But this is before
the iTunes store. Anyway, there was no way to buy
music on iTunes at this point. It was all about
ripping music off c d s, So at the stage
(15:57):
iTunes was really only a music management application. So iTunes
debuted in two thousand one as a way to build
and organize a music library, and there was no music
story yet. To put songs on iTunes, you would either
do one of two things. You would rip songs off
a c D or you would use some other means
(16:18):
to get the music files. So that could include peer
to peer sharing networks where you are technically pirating music
that would become a big part of jobs is discussion.
What's the iTunes music store would debut a couple of
years later. Now you could use iTunes to port songs
over to an MP three player, and you could use
(16:38):
it to listen to internet radio stations, and you could
use it to burn your own CDs. But that was
about it. Oh, except the one more thing. Apple included
an option to run a graphics application that would create
trippy visuals as you listen to music, sort of a
kaleidoscope effect as you're listening. And then they played about
two thirds of love Shack So as a Georgia native
(17:00):
and B fifty twos or from Georgia, I approve of
that music choice, but at that point they should have
just played the whole darn song. I mean, if you're
gonna play that much, might as well let it go
all the way through. Jobs boasted that iTunes wouldn't brattle
c D speeds, it would allow users to encode MP
three files at a higher quality than competitors were allowing,
and most importantly, it would be free to download for
(17:22):
Mac users. The tagline for iTunes was rip mix burn,
and Jobs announced that it was available right then and
there for any Mac running OS nine, and the crowd
went banana. A week after the presentation, Apple reported that
the iTunes software had been downloaded two hundred seventy five
(17:43):
thousand times. Remember it was only available for the Mac
computers at that time, Matt computers running OS nine for
that matter, and the Mac had a very small market share,
so topping a quarter of a million downloads in a
week was actually pretty ppressive. Apple gave a quick update
a few months later in March two thousand one, with
(18:05):
iTunes one point one. The major part of that update
was making iTunes compatible with Mac OS ten systems. Now
skip ahead ten months. Steve Jobs appeared at a special
Apple Music event. He took a different approach at this
event and talked about value see The first version of
iTunes would burn CDs as normal music CDs, not as
(18:29):
MP three c ds. A normal c D can hold
a little more than an hour's worth of audio, and
m P three CD can hold more than one hundred
songs as data, but it could only be read by
special CD players with MP three capability. Those were slowly
becoming more prevalent, including in vehicles, so it was something
(18:51):
that was worthwhile, and then you had MP three player options,
the newest of which would be the iPod. Jobs talked
about how the iPod would hold a thousand songs on
it while fitting in your pocket. Again, it's old news
to us, but at the time it was a sweet
sales pitch. Never mind that other MP three players had
(19:12):
been on the market for quite some while. Jobs had
even alluded to them back in the initial iTunes announcement.
And this isn't an episode about the iPod, so I'm
not going to dwell on it for too long. But
at that same event, Jobs announced some updates to the
iTunes software. Now iTunes two point oh could burn MP
three files to CDs rather than creating a new audio CD,
(19:35):
and that would allow users to put way more songs
on a single disc. As long as they had a
player capable of reading MP three files, they'd be good
to go. Apple added a couple of other options to
iTunes at that stage as well, namely cross fading and
an equalizer. While Steve Jobs was setting things in motion
to blast Apple off into the stratosphere, iTunes continued to evolve.
(19:59):
When i Tunes three released in July two thousand two,
it was with a few new features. Now, users could
assigned songs of star rating, which allowed them to sort
their music library by how much they liked particular songs.
So if you wanted to just listen to songs you
really loved, you could choose the max rating and include
all those other, you know, songs that you had said
(20:22):
were fantastic, and exclude all the ones that you know
aren't really your groove at that moment. Notably, that was
a feature supported in an earlier digital media player application,
a different one one called Audion. Now. According to Cable Sasser,
who was co creator of Audion, he had met with
Steve Jobs and had a back and forth about the
(20:44):
differences between iTunes and sound Jam and the Audion digital
media player, and he had pointed out how Audion had
some features that iTunes did not, which would give their
software a chance in the market against the giant tunes.
Jobs actually pointed out that the version of iTunes that
Sasser was talking about was just version one point oh,
(21:07):
and that subsequent versions would add features features like the
ones Audience had. Sasser also said that he found out
Apple had allegedly originally intended on purchasing Audion and turning
Audion into iTunes, and that sound Jam was technically Apple's
second choice, but Audion at the time was in negotiations
(21:31):
with a different company and it kind of put Apple
on hold and the opportunity passed them by. And on
a side note, today Audion is no more. It was
actually discontinued in two thousand four. And whether this was
another example of one of Steve jobs favorite quotes frequently
attributed to Pablo Picasso that being good artists borrow, great
(21:52):
artists steal, That's beyond my knowledge, but it does seem
plausible that Apple might have taken some inspiration from Audion
after having that meeting in two thousand one. Another new
feature in iTunes three was the introduction of smart playlists. Essentially,
a smart playlist allowed iTunes users to set certain rules
(22:15):
that the program would follow moving forward in order to
automatically create playlists. So let's say you're a big fan
of the band The shut Ups. You have a playlist
of all their songs, and you could just keep adding
to that playlist as new albums come out from The
shut Ups. But with smart playlists, you could set up
a rule so that every time you added new songs
(22:37):
to your library from the shut ups, those songs would
automatically get added onto that particular playlist. iTunes also had
a play count for songs added in iTunes three, so
you could create a playlist of the songs you listen
to the most frequently. That list would change dynamically the
more you used iTunes to listen to stuff. So maybe
(22:58):
one month you find and you're just really fixated on
the classic song Come a little Bit Closer by J
and the Americans, and because you've listened to it a
billion times, it pops up on your most played playlist.
But over time you get out of this whole fixation
on the song, and eventually it gets swapped out for
(23:18):
some other song that now you are totally focused on.
iTunes three also added a feature called sound check. The
purpose of sound check is to act as a sort
of level izer for volume. And maybe you've experienced this
kind of thing where you're listening to digital music and
one song it's pretty quiet, so you're turning the volume
way up so you can hear it properly, and then
(23:40):
the next one comes on and it's way too loud.
It's blasting your ear drums. To minimize that kind of experience,
sound check would attempt to bring the volume of different
songs closer together to the same level to avoid a
jarring experience. One last thing that iTunes three added was
support for audible dot Com audio books. Back then, audible
(24:01):
dot Com was its own standalone company. It would actually
be a few more years before Amazon would acquire it now.
I add this because I imagine Apple and Amazon are
kind of competitive with each other on most occasions. Audible
dot Com is known for audiobooks, and this would also
help pave the way for a future form of media
to emerge the podcast. While iTunes three added in some
(24:24):
features that increased the digital jukebox programs functionality, it would
be the fourth version of iTunes that would really bring
it along with a component that would have a massive
impact on the entertainment industry. In April two thousand three,
Apple unveiled iTunes for which included a little thing called
the iTunes Store. The music business would never be the
(24:47):
same again. At the two thousand three Apple Music event,
Steve Jobs took the stage to talk about the new
changes to iTunes. He talked about how iTunes would now
support advanced audio coding or a sea files, which is
an audio compression format similar to m P three's but
with generally better sound quality. And then he talked about
(25:08):
the iTunes store and how Apple was going to change
the way we acquire music, which I'll talk about more
in just a second after we take this quick break.
Upon the initial release of iTunes and up through two three,
(25:29):
Apple's official line was that you would add music to
iTunes by ripping tracks off of c d s you
had purchased. But even in two thousand one, when iTunes
first debuted, that was really being pretty coy. Back in
the late nineties, services like Napster allowed users to share
and download files, including ripped audio tracks. All you needed
(25:52):
was the Napster software and an Internet connection, and you
can start pulling music off the Internet to add to
your own personal library for free. The greatest fears of
the music industry were realized. People had the chance to
pirate music to their hearts content, and lots of people
really went hog wild with that concept. The music industry
(26:13):
struck back, and Napster itself was first shut down in
two thousand one, but the cat was out of the bag.
There were numerous other services that were doing effectively the
same thing, and people were rapidly acquiring massive libraries of
music because it seemed like everything was available all the
time always, But argued Jobs, what if buying music online
(26:36):
was really easy. One of the reasons piracy existed, he argued,
is that buying music online was really a non option.
There was no legal way of doing it, and the
few places where you could get a digital track made
it a real hassle. You had existing services like Rhapsody,
but they required a subscription, so you couldn't just pop
(26:58):
on to buy the tracks you wanted, and there was
no guarantee you'd be allowed to download the track you
liked in the first place. Another similar service was called
press Play, and that was another subscription service, and you
could download songs from press Play and from Rhapsody, but
they would require you to spend an extra amount on
top of your subscription fee in order to download a track,
(27:21):
and Jobs pointed out, at least with press Play, if
you let your subscription lapse, you would no longer be
able to play your downloaded music. There was drm attached
to it, so that only if your subscription was current
would you be able to listen to the music you
had downloaded to your machine. You would have files on
your computer you would not be able to access, your
library would be locked off from you. No one out
(27:44):
there was big enough to create the sort of marketplace
where major labels could strike deals to have their catalogs
available for purchase and download. No one was offering the
software for free without the need for any sort of subscription,
and no one was giving users the free they wanted
to download songs and play them where and when they
wanted to, and that ended up being the pitch for
(28:07):
the iTunes Music store. On a side note, one of
the most interesting things about this two thousand three presentation,
which you can find on YouTube, by the way, is
that Jobs takes time to dismiss the idea of subscription
services for music streaming. He pointed out that for decades,
the model for consumers was to go out and buy music,
(28:29):
either on LP albums, cassette tapes, c D s, singles,
or whatever. He argued that this would become an intrinsic
part of how we as consumers relate to music. Were
used to owning copies of it, and therefore the subscription
model opposed how we preferred to interact with music now.
I just wanted to mention this that because today we
(28:53):
are back to a lot of subscription based services, that's
the new prevalent model out there, many of which have
an ad supported free tier and a paid for ad
free experience. And it's interesting that the environment Jobs was
dismissing in two thousand three is now the reality in
two thousand nineteen. And that's not to say I think
(29:16):
that Jobs was wrong when he said that. I think
for the time he was absolutely right, and the success
of iTunes is evidence supporting that stance. But things would
change over time. All right back to iTunes, Jobs laid
out how establishing the iTunes store was actually a pretty
tough endeavor. To make it happen, Apple had to meet
(29:38):
with what we're known as the Big Five. These were
the five big music labels that represented nearly the entire
music publishing industry outside of some small independent operations. He
also mentioned that at the time, tech companies and publishing
companies weren't the best of friends, largely because of the
piracy issues I just mentioned. Jobs laid the terms of
(30:01):
the agreement that applied to users. At the time of launch,
the music store had two hundred thousand tracks. Users would
be allowed to burn an unlimited number of c ds
of their music libraries, provided the CDs were for personal use. Now,
I'm not going to pat the music industry on the
back for this, since in the United States, in the
(30:23):
United Kingdom, and in lots of other places, it has
long been established that it's perfectly legal to create a
backup copy of a copyrighted work if it is for
your personal use, even if in the process of making
the backup you are transforming the way the copyrighted work
is stored. So, for example, if you have a bunch
of audio CDs, ripping those audio CDs to convert them
(30:44):
into m P three's is perfectly legal if it's for
personal use as a backup. But hey, it's so nice
that the labels agreed to abide by the rules. As
a concession to the music industry, Apple did put in
a governor in iTunes to prevent it from being used
to burn unlimited copies of the same set of songs
on two c D s. You could burn the same
(31:06):
playlist two c D ten times, but if you wanted
to do it an eleventh time, you would have to
change the playlist. In some way, you couldn't have the
exact same playlist burned on c D after c D,
and that would in theory stop people from using iTunes
to produce bootleg copies of albums, though you could just
as easily get a CD reader and a CD burner,
(31:28):
produce one CD using iTunes, and then churn out the
copies using the reader and burner that bypass iTunes altogether,
but that's a step that most people wouldn't really be
aware of or willing to take. Similarly, the agreement allowed
users to put their music on an unlimited number of iPods.
This future proofed music libraries. You didn't have to worry
(31:50):
about the new iPod coming out, but your license to
put your library on there had expired or was no
longer applicable or something. JOBS also introduced the concept of
authorizing machines to play music libraries with iTunes. For you
can load your iTunes library on up to three Mac computers.
You download to one computer, then you can burn files
(32:12):
to c D and transfer them to the other two
if they were bought from the iTunes Music store, but
you would be limited to those three Mac computers. If
you've got a new computer and you wanted to move
your library to the new one, you'd first have to
de authorize one of the three max already hosting those
tunes on your library. Jobs also revealed that songs would
(32:35):
sell for nine nine cents each and there'd be no
subscription fee on top of that. This was actually one
of the toughest battles Jobs had to fight with the
music labels, who collectively were worried that by allowing people
to buy songs all a cart the process would kill
off the concept of the record album, and record albums
were the foundation for the recorded music industry. See, people
(32:58):
would have to buy entire albums in order to get
two or three songs that they really wanted, and an
album could cost fifteen or twenty dollars, so the music
industry was raking in cash, and it didn't even have
to worry about making every track on an album a hit,
because really you just needed one or two to sell
the albums in the first place. You can understand why
(33:19):
the industry would resist the move to selling songs a
la carte the same way you could understand why music
lovers really wanted that option. Jobs was able to convince
the record labels that offering up the option to buy
songs individually would not be the end of the world,
in part because of the limitations Apple seemed to face
at the time during these negotiations. iTunes was not yet
(33:42):
available on Windows PCs. The Macintosh had its devoted followers,
but they represented a very small percentage of the overall
computer market. Less than ten of all computers were Mac computers, So,
in other words, Apple's impact would be so small that
even if people did by single songs, and even if
they did issue albums they decided the albums are no
(34:04):
longer relevant, the music labels probably wouldn't even notice. It
was too small of a group of people. Besides, file
sharing had already meant that people were downloading music song
by song, so at least with Apple's method, the labels
could make some money off of it. Another nod to
the concerns of the music industry was in the use
(34:25):
of digital rights management or d r M on the
music files from the iTunes store, which locked the music
onto Apple devices or computers running iTunes. Kind of talked
about that with the d authorizing. Whether Jobs was in
favor of this at the time or not, I don't know,
but I do know that over time he spoke out
against DRM, saying the strategy ultimately hurt the legitimate consumer
(34:48):
and that it shouldn't be used. But at the time
Apple was kind of in a place where it had
to agree to it, even if if Jobs didn't really
like it, And honestly, I don't know if that time
if Jobs had formed that opinion. Yet the songs in
the iTunes store were in a a C format encoded
at all bits per second, giving what Jobs claimed was
(35:11):
a sound quality to rival that of actual audio CDs.
He revealed that every song would have a free thirty
second preview so users can make sure that the song
they were buying was the one they actually wanted in
the first place, and every song would have album cover
art to come along with it, no longer making a
digital song library just a list of file names. The
(35:33):
crowd at the event was receptive to Jobs as announcement,
and he didn't really go into the business side on
the back end. He didn't talk about how much money
Apple would make off every sale. Generally speaking, the figure
most people cite in that regard is that Apple would
take about thirty cents off every sale. The rest would
go to the artist, or more likely to the music
(35:54):
label that then would pay out a portion to the artist.
Thirty cents a pop is pretty small, but Apple was
able to do the old cliche of making it up
in volume. Sure, a single purchase would net the company
three shiny dimes, but in mass, the company was looking
at millions and later on billions of dollars in revenue.
(36:16):
In fact, according to Apple, people bought more than a
million songs in the first week of the iTunes music
store going live. The company also stated that more than
half of those songs purchased were in the form of
album purchases, which helped allay the fears that iTunes was
going to render the concept of albums completely moot. And,
(36:36):
perhaps more impressively, Apple announced that more than half of
the two thousand songs that initially made available had been
purchased at least once, making three hundred grand within one
week of launching a brand new online store is pretty sweet.
But it got better for Apple because the company also
saw a big jump in iPod sales. So Apple had
(36:58):
just introduced the third generation I Pod and it was
a hot commodity. Now Apple was making money both off
the hardware side and the service side of digital music.
Apple had launched the store in April two thousand three
and updated it in October of that year, adding some
features like the option to buy online gift certificates for
family and friends, and also an allowance feature that let
(37:20):
users create sort of a music bank account. They could
put money into this allowance and that would help them
budget their entertainment purchases. So they'd say, all right, well,
I'm gonna put ten bucks aside, and that's all I
can use this month. So I'm gonna put that in
my allowance, and once that's gone, I have to wait
until the following month before I put another ten dollars
in there. It was kind of a way to control purchases.
(37:42):
Oh and it was also in that update that iTunes
would finally come out to the Windows PC market. Now,
as someone who got iTunes around that time for a
Windows PC, I can tell you that the effortless experience
enjoyed by the Mac users wasn't quite the same one
I had when I used iTunes, which felt like a
(38:03):
sluggish behemoth on my Windows machine. But we'll chat more
about the differences in the next episode. Apple was able
to get the music labels on board with this move
to Windows, largely because Jobs had user data to support
his argument. The labels saw that people were eager to
purchase music online if it was an easy experience. They
(38:25):
didn't have to worry about downloading a corrupted file or,
worse yet, accidentally getting a hold of malware when they
were trying to download a song. They also knew that
the quality of the recording would meet their expectations because
it was all coming from Apple and the users hadn't
ditched the concept of purchasing albums. So iTunes had made
itself a home over on Windows machines with the blessing
(38:48):
of the music labels, and it was a license to
print money. By the end of the year, the iTunes
music store reportedly sold more than seventy million songs. That's
a lot of music. Many factor contributed to Apple's phenomenal
growth in the two thousand's, but I don't think it's
hyperbole to say that iTunes contributed an enormous amount to
(39:09):
the financial success of the company. It certainly would prove
to be a powerhouse in the years to come. By
two thousand four, the music store contributed to two hundred
seventy eight million dollars in revenue from quote other music
products end quote, according to Apple's annual financial report. Now,
that category wasn't just iTunes Music Store, It also included
(39:32):
iPod accessories. The iPod itself was separated from that category
as well as iPod related services. Now, just to peek
into our crystal ball for a second, on the tenth
anniversary of the music store launching, that would be in
two thousand thirteen, analyst Horace, did you estimated that the
store generated revenue in excess of twelve billion dollars. Now,
(39:57):
I'll put that into perspective Apple the company, the whole
company reported a total revenue of eight billion dollars in
two thousand four, So a decade after launching, the iTunes
Music store was generating far more revenue than the entire
company had managed during its launch period. But we've got
(40:18):
some more stuff to talk about between the years two
thousand four and two thousand and thirteen, So join me
for the next episode where we'll continue the iTunes story
and how the program grew, and maybe even talk about
why it grew beyond all reason before it finally met
its end in the summer of twenty nineteen. But this
(40:39):
wraps up this episode. If you have suggestions for future episodes,
whether it's a company, a specific technology, a person in tech,
or any other technologically oriented topic, sent me an email
the addresses tech stuff at how stuff works dot com,
or drop on by our website that's tech stuff podcast
dot com. You'll find in our kind of all of
(41:01):
our episodes over there, plus links to our social media
presence and a link to our online store, where every
purchase you make goes to help the show, and we
greatly appreciate it, and I'll talk to you again really soon.
Text Stuff is a production of I Heart Radio's How
(41:21):
Stuff Works. For more podcasts from I heart Radio, visit
the I heart Radio app, Apple Podcasts, or wherever you
listen to your favorite shows.
Welcome to tech Stuff, a production of I Heart Radios,
How Stuff Works. Hey there, and welcome to tech Stuff.
I'm your host, Jonathan Strickland. I'm an executive producer with
How Stuff Works and I Heart Radio and I love
all things tech. And On June three, two thousand nineteen,
(00:25):
at Apple's Worldwide Developers Conference or w w d C
for those who like initialisms, Apple announced that the company
was going to officially sunset the venerable iTunes program. In
its place will be three Mac desktop apps that are
pretty similar to what you can find on iOS devices
(00:47):
Apple mobile devices. In other words, So today I thought
it might be fun to trace the history of iTunes,
how it came to be, how it changed the music
industry and helped create the business I'm in, which is
podcasting in case you haven't caught on yet, and why
Apple decided to finally say goodbye. We'll also explore how
(01:08):
people felt about iTunes, because it's not all sunshine and roses,
particularly if you ever had to deal with the Windows
based version of the program. Oh and before I go
any further, I should mention that when Apple talked about
ending iTunes, they were really just talking about Max at
the time of this recording, the company hasn't said anything
(01:29):
about what it's planning for the PC version. PC mag
reported that there's no immediate plan for it to disappear
from Windows. So there's that, okay, so iTunes. Let's talk
about the program and where Apple was when it was
first announced back in two thousand one, because it was
a very different company from the one we're used to today.
(01:49):
In fact, it really behooves us to look over Apple's
history leading up to that moment, because the company had was,
let's call it, it was in a transition, to put
it gently, so really had been through an existential crisis. Arguably,
the crisis began when Steve Jobs inserted himself into the
(02:11):
development process of various products like the Macintosh line of computers,
and then complicated a process and alienated many over at
Apple in the same go, and this eventually precipitated in
his being fired, or at the very least, he was
pushed aside so far away that he would leave the
(02:32):
company in nineteen Steve Wozniak, the other co founder of Apple,
also left the company around that time, though he had
sort of stepped back quite a bit already after surviving
a plane crash in nine. Over the next few years,
lots of things would change at Apple. John Scully, who
(02:53):
was the guy who came over to Apple from Pepsi
and had served as the president of the company. He
was also of the man who was responsible for pushing
out Steve Jobs, would become chairman of Apple in nine
Michael Spindler would become the CEO. Then just a few
months later, Scully resigned his position as chairman and he
(03:14):
was replaced by Mike Markula. Markula, in turn, would step
down just a couple of years later. Gil Emilio would
become chairman and CEO of Apple in nine six. By
this point Apple was struggling. Son Microsystems had offered to
acquire the company, but Emilio turned down that proposal, and
you could call that a great decision, But Emilio also
(03:37):
made some questionable choices, such as allowing other companies to
sell macclone computers by running Mac operating System software on
non Apple computers. This gave other companies the opportunity to
sell computers running Mac operating System at a lower price
than what Apple was charging. And making matters worse was
(03:58):
that Microsoft had real least Windows, which was a significant
update to the Windows platform, while the Mac operating system
was looking more than a little dated at the time.
Emilia was also unhappy with the progress or lack thereof,
on the next version of the Mac operating system, code
named Copeland. In an effort to solve that problem, Emilio
(04:20):
led the charge for Apple to acquire a company called
Next in e x T. That company happened to be
the brainchild of one Steve Jobs, who founded Next after
leaving Apple in the nineteen eighties, and that set the
scene for Jobs to become the next CEO of Apple.
He first served as an advisor to the company, but
(04:41):
he began maneuvering with the board of directors in an
effort to become chairman again. Emilio eventually left the company
after butting heads with Steve Jobs, though to be fair,
Emilio was also at the helm during the worst financial
quarter in Apple's history. June seven was the final day
(05:01):
of that horrible quarter in which Apple lost fifty six
million dollars. So just let that sink in and just
three months the company lost more than fifty million bucks.
No wonder many people predicted that Apple was not long
for this world. Steve Jobs was named by the board
as the interim CEO. He would actually refer to his
(05:22):
own title as I CEO. Cute, right, but it was serious.
Business Analysts predicted that Apple was about three months away
from bankruptcy when Jobs took over, so he had a
huge hurdle to overcome, and he made some really big changes.
Some were seen as cute, like the iMac. Some were
(05:42):
seen as the deepest of betrayals, like when Apple and
Microsoft announced a partnership in a five year agreement to
have office software come over to the Mac. And while
not all his decisions were lauded by the Apple faithful,
he did get the ship turning around. At the Macworld
conference in he announced that Apple had ended the first
(06:02):
quarter of ninety eight with a forty five million dollar profit.
By the end of that year, the company had earned
three hundred nine million dollars in two thousand. Steve Jobs
made the transition from interim CEO to honest the Goodness
CEO and behind the scenes at Apple, where it was
progressing on a trio of big projects that would transform
(06:24):
the company. One of them was the OS ten operating system,
which is still the basis of Mac operating systems today,
one was iTunes and one that would come out a
little bit after the other two was the iPod. Now
keep in mind, at this stage Apple had not yet
fully re established itself. Steve Jobs could still fill a
(06:46):
room for a press conference, but this was years before
Apple would wow crowds with the iPhone or surprise skeptics
like me with the iPad. Apple the company was still
on uncertain footing, though it had been an upward trajectory
after nearly falling apart in the late nineteen nineties. One
thing Jobs new to do was to pay attention to
(07:08):
emerging trends. One of those trends that was just starting
to gain traction involved the MP three audio compression format.
Early adopters were starting to rip music from CDs to
their computers, and a couple of companies had created portable
MP three players, the digital equivalent of a Sony Walkman
(07:28):
cassette player, but one that could hold a library's worth
of music. And a couple of former Apple employees named
Bill Kincaid and Jeff Robin had created an interesting program
that could turn a computer into a digital jukebox, specifically
a Mac computer. Now, both Kincaid and Robin had worked
(07:48):
on Copeland, that Mac operating system version that Emilio had
discarded in favor of the next platform from Steve Jobs.
Once the decision was made to ditch the work they
had done on Opland, both Kincaid and Robin had left
Apple and they went on to pursue work at different companies.
They were separated and working on individual opportunities. Now, the
(08:12):
origins of what would become iTunes should be pretty relatable
to anyone out there. One day, Bill Kincaid was driving
up to a race track to practice driving his race
car at super high speeds. I mean, we've all been there,
right Anyway, he was listening to NPR when he heard
(08:32):
a bit about the Diamond Rio MP three player. Kincaid
wrote that this was actually the first time he had
even heard of the MP three file format, which is
kind of interesting because it was definitely in the news
because of file sharing. But I'll get into that more
than a bit. Toward the end of the report on NPR,
(08:52):
the person on the radio said something like it won't
work with Max, and Kincaid, being a former Apple employee,
thought he could do something about that, and he ended
up in listing his former co worker Robin in the effort.
So Kincaid built the back end of the program and
enlisted Jeff Robin to work on the front end, the
user interface side, and the result was software called sound
(09:15):
jam MP and it worked on Max and it was
interoperable with the Diamond Rio MP three player. Jobs somehow
heard about this software and was impressed with the work
done by the former Apple employees, so he had Apple
purchase the application. They also hired Kincaid and Robin to
come back into the fold at Apple, and Robin, by
(09:37):
the way, was in charge of iTunes all the way
up to its dissolution. Kincaid and Robin joined a team
that took sound jam MP and they began to transform
it into something new, something belonging to Apple. And this
leads us up to January nine, two thousand one, when
Steve Jobs took the stage at the back World conference.
(09:59):
He started off talking out O S ten and he
moved on to talk about hardware for a while, and
about an hour into the presentation, somewhere around fifty five minutes,
he segued over to talking about music. Now, this was
months before the company would reveal the iPod that was
still a secret. So at this stage, Jobs was talking
(10:19):
about the process of taking music CDs and ripping the
music to your computer. Jobs talked about stuff that I
think we all take for granted these days. He talked
about the opportunity to take a music collection, rip it
to a hard drive, and then create playlists from that music.
You can mix and match anything you like. You could
have a playlist with two songs from the New York Dolls,
(10:41):
three from Iggy Pop, half a dozen from David Bowie,
four from the Talking Heads, and gosh, I'd really like
to listen to a playlist like that. Anyway. You can
make the digital equivalent of an old mix tape on cassette,
or you could turn your computer into a digital jukebox,
but unlike a cassette, you could reorder those songs any
way you liked, any time you liked. You would never
(11:04):
be stuck in one particular configuration. The beauty of having
your music in a digital format is that you have
tons of options, so you can shift things around, or
even listen to your entire music library on shuffle, so
that you never have the same listening experience twice in
a row. Beyond that, you could use the program to
burn your playlist to a c D. Now, in this case,
(11:27):
you'd be stuck with whatever order you decided upon when
you made the CD, unless you were using a rewriteable
c D, in which case you could wipe it and
start again. But back in those days, burning a c
D could take several minutes, and most of us didn't
have the patients to do it again if we realized
we had fudged the order of the songs. Jobs then
went on to talk about portable MP three players, again
(11:48):
without hinting that Apple was making one of their own.
He talked about how it was necessary to have software
on a computer that could interface with m P three
players to transfer music from computer to player. This was
necessary because back in those days, MP three players required
a wired connection to synchronize with a host computer. There
really were no WiFi MP three players in the early days,
(12:11):
so you had to pair your MP three player with
a computer using a cable. I know, it's like the
Stone Age, right. Steve Jobs finished his introduction before actually
unveiling iTunes, by talking about internet radio stations. These were
pretty young in two thousand one, but we're growing in popularity.
Audio compression had allowed stations to stream radio over the Internet,
(12:33):
giving them the ability to reach many more listeners than
terrestrial radio, particularly for radio stations that had lower powered transmitters.
Now this leads us up to the actual introduction of iTunes,
which I'll talk about in just a moment after we
take this quick break. Now, I know all those features
(12:59):
are news to us today. It's been nearly twenty years
since Steve Jobs gave that presentation. And let's be fair,
iTunes would not be the first program to help people
organize a digital music library. There were others that already existed,
but Apple always had a certain style to it, and
Apple designers are genuinely really good at what they do
(13:21):
and typically create intuitive, powerful interfaces. So it wasn't just
that iTunes could do these things. It's that it could
do those things and look good at the same time.
It was easy to understand. It wasn't so cluttered or
complex as others, and Jobs took opportunity to really hammer
home how iTunes, unlike most of the popular digital music
(13:44):
applications that were on the market, already, was much easier
to use and to understand. He contrasted iTunes with other
media software. He criticized how the competition made everything to
cluttered and confusing. He said that companies just had confused
options with operability. Jobs also said that the competition put
in arbitrary restrictions in their programs in an effort to
(14:07):
convince users to upgrade to the paid version of those programs.
He said that the software would throttle the ripping and
burning speeds for CDs, as well as use lower quality
settings to encode music into MP three files. So yeah,
you could download one of these applications and it technically
would work, but it would purposefully hinder itself and give
(14:31):
you a substandard experience. And this was all done in
an effort to upsell the user to a pro version
of that software, which would remove those restrictions, so said Jobs,
these companies weren't offering an improved piece of software for
a premium. Rather, they had purposefully downgraded their software's capabilities
(14:52):
to create the incentive for people to cough up cash
for the full version. It seems like a backwards way
to go about it now. In a demonstration, Jobs ripped
love Shack off, an album by the B fifty two,
so you know, good choice. He explained that the program
that his iTunes would read the data off the c D,
(15:14):
then searched the c D database and retrieved the track
titles to match with the actual tracks, because that information
was not encoded on the compact discs themselves. And then
it would allow you to listen directly from the CD,
or you could rip it to the computer. Jobs showed
off how the user could build a music library and
(15:34):
browsed through that library and play stuff easily. Interestingly, he'd
include a few examples by the Beatles. I say interestingly
because it would take a long time before the Beatles
discography made its way to Apple. But this is before
the iTunes store. Anyway, there was no way to buy
music on iTunes at this point. It was all about
ripping music off c d s, So at the stage
(15:57):
iTunes was really only a music management application. So iTunes
debuted in two thousand one as a way to build
and organize a music library, and there was no music
story yet. To put songs on iTunes, you would either
do one of two things. You would rip songs off
a c D or you would use some other means
(16:18):
to get the music files. So that could include peer
to peer sharing networks where you are technically pirating music
that would become a big part of jobs is discussion.
What's the iTunes music store would debut a couple of
years later. Now you could use iTunes to port songs
over to an MP three player, and you could use
(16:38):
it to listen to internet radio stations, and you could
use it to burn your own CDs. But that was
about it. Oh, except the one more thing. Apple included
an option to run a graphics application that would create
trippy visuals as you listen to music, sort of a
kaleidoscope effect as you're listening. And then they played about
two thirds of love Shack So as a Georgia native
(17:00):
and B fifty twos or from Georgia, I approve of
that music choice, but at that point they should have
just played the whole darn song. I mean, if you're
gonna play that much, might as well let it go
all the way through. Jobs boasted that iTunes wouldn't brattle
c D speeds, it would allow users to encode MP
three files at a higher quality than competitors were allowing,
and most importantly, it would be free to download for
(17:22):
Mac users. The tagline for iTunes was rip mix burn,
and Jobs announced that it was available right then and
there for any Mac running OS nine, and the crowd
went banana. A week after the presentation, Apple reported that
the iTunes software had been downloaded two hundred seventy five
(17:43):
thousand times. Remember it was only available for the Mac
computers at that time, Matt computers running OS nine for
that matter, and the Mac had a very small market share,
so topping a quarter of a million downloads in a
week was actually pretty ppressive. Apple gave a quick update
a few months later in March two thousand one, with
(18:05):
iTunes one point one. The major part of that update
was making iTunes compatible with Mac OS ten systems. Now
skip ahead ten months. Steve Jobs appeared at a special
Apple Music event. He took a different approach at this
event and talked about value see The first version of
iTunes would burn CDs as normal music CDs, not as
(18:29):
MP three c ds. A normal c D can hold
a little more than an hour's worth of audio, and
m P three CD can hold more than one hundred
songs as data, but it could only be read by
special CD players with MP three capability. Those were slowly
becoming more prevalent, including in vehicles, so it was something
(18:51):
that was worthwhile, and then you had MP three player options,
the newest of which would be the iPod. Jobs talked
about how the iPod would hold a thousand songs on
it while fitting in your pocket. Again, it's old news
to us, but at the time it was a sweet
sales pitch. Never mind that other MP three players had
(19:12):
been on the market for quite some while. Jobs had
even alluded to them back in the initial iTunes announcement.
And this isn't an episode about the iPod, so I'm
not going to dwell on it for too long. But
at that same event, Jobs announced some updates to the
iTunes software. Now iTunes two point oh could burn MP
three files to CDs rather than creating a new audio CD,
(19:35):
and that would allow users to put way more songs
on a single disc. As long as they had a
player capable of reading MP three files, they'd be good
to go. Apple added a couple of other options to
iTunes at that stage as well, namely cross fading and
an equalizer. While Steve Jobs was setting things in motion
to blast Apple off into the stratosphere, iTunes continued to evolve.
(19:59):
When i Tunes three released in July two thousand two,
it was with a few new features. Now, users could
assigned songs of star rating, which allowed them to sort
their music library by how much they liked particular songs.
So if you wanted to just listen to songs you
really loved, you could choose the max rating and include
all those other, you know, songs that you had said
(20:22):
were fantastic, and exclude all the ones that you know
aren't really your groove at that moment. Notably, that was
a feature supported in an earlier digital media player application,
a different one one called Audion. Now. According to Cable Sasser,
who was co creator of Audion, he had met with
Steve Jobs and had a back and forth about the
(20:44):
differences between iTunes and sound Jam and the Audion digital
media player, and he had pointed out how Audion had
some features that iTunes did not, which would give their
software a chance in the market against the giant tunes.
Jobs actually pointed out that the version of iTunes that
Sasser was talking about was just version one point oh,
(21:07):
and that subsequent versions would add features features like the
ones Audience had. Sasser also said that he found out
Apple had allegedly originally intended on purchasing Audion and turning
Audion into iTunes, and that sound Jam was technically Apple's
second choice, but Audion at the time was in negotiations
(21:31):
with a different company and it kind of put Apple
on hold and the opportunity passed them by. And on
a side note, today Audion is no more. It was
actually discontinued in two thousand four. And whether this was
another example of one of Steve jobs favorite quotes frequently
attributed to Pablo Picasso that being good artists borrow, great
(21:52):
artists steal, That's beyond my knowledge, but it does seem
plausible that Apple might have taken some inspiration from Audion
after having that meeting in two thousand one. Another new
feature in iTunes three was the introduction of smart playlists. Essentially,
a smart playlist allowed iTunes users to set certain rules
(22:15):
that the program would follow moving forward in order to
automatically create playlists. So let's say you're a big fan
of the band The shut Ups. You have a playlist
of all their songs, and you could just keep adding
to that playlist as new albums come out from The
shut Ups. But with smart playlists, you could set up
a rule so that every time you added new songs
(22:37):
to your library from the shut ups, those songs would
automatically get added onto that particular playlist. iTunes also had
a play count for songs added in iTunes three, so
you could create a playlist of the songs you listen
to the most frequently. That list would change dynamically the
more you used iTunes to listen to stuff. So maybe
(22:58):
one month you find and you're just really fixated on
the classic song Come a little Bit Closer by J
and the Americans, and because you've listened to it a
billion times, it pops up on your most played playlist.
But over time you get out of this whole fixation
on the song, and eventually it gets swapped out for
(23:18):
some other song that now you are totally focused on.
iTunes three also added a feature called sound check. The
purpose of sound check is to act as a sort
of level izer for volume. And maybe you've experienced this
kind of thing where you're listening to digital music and
one song it's pretty quiet, so you're turning the volume
way up so you can hear it properly, and then
(23:40):
the next one comes on and it's way too loud.
It's blasting your ear drums. To minimize that kind of experience,
sound check would attempt to bring the volume of different
songs closer together to the same level to avoid a
jarring experience. One last thing that iTunes three added was
support for audible dot Com audio books. Back then, audible
(24:01):
dot Com was its own standalone company. It would actually
be a few more years before Amazon would acquire it now.
I add this because I imagine Apple and Amazon are
kind of competitive with each other on most occasions. Audible
dot Com is known for audiobooks, and this would also
help pave the way for a future form of media
to emerge the podcast. While iTunes three added in some
(24:24):
features that increased the digital jukebox programs functionality, it would
be the fourth version of iTunes that would really bring
it along with a component that would have a massive
impact on the entertainment industry. In April two thousand three,
Apple unveiled iTunes for which included a little thing called
the iTunes Store. The music business would never be the
(24:47):
same again. At the two thousand three Apple Music event,
Steve Jobs took the stage to talk about the new
changes to iTunes. He talked about how iTunes would now
support advanced audio coding or a sea files, which is
an audio compression format similar to m P three's but
with generally better sound quality. And then he talked about
(25:08):
the iTunes store and how Apple was going to change
the way we acquire music, which I'll talk about more
in just a second after we take this quick break.
Upon the initial release of iTunes and up through two three,
(25:29):
Apple's official line was that you would add music to
iTunes by ripping tracks off of c d s you
had purchased. But even in two thousand one, when iTunes
first debuted, that was really being pretty coy. Back in
the late nineties, services like Napster allowed users to share
and download files, including ripped audio tracks. All you needed
(25:52):
was the Napster software and an Internet connection, and you
can start pulling music off the Internet to add to
your own personal library for free. The greatest fears of
the music industry were realized. People had the chance to
pirate music to their hearts content, and lots of people
really went hog wild with that concept. The music industry
(26:13):
struck back, and Napster itself was first shut down in
two thousand one, but the cat was out of the bag.
There were numerous other services that were doing effectively the
same thing, and people were rapidly acquiring massive libraries of
music because it seemed like everything was available all the
time always, But argued Jobs, what if buying music online
(26:36):
was really easy. One of the reasons piracy existed, he argued,
is that buying music online was really a non option.
There was no legal way of doing it, and the
few places where you could get a digital track made
it a real hassle. You had existing services like Rhapsody,
but they required a subscription, so you couldn't just pop
(26:58):
on to buy the tracks you wanted, and there was
no guarantee you'd be allowed to download the track you
liked in the first place. Another similar service was called
press Play, and that was another subscription service, and you
could download songs from press Play and from Rhapsody, but
they would require you to spend an extra amount on
top of your subscription fee in order to download a track,
(27:21):
and Jobs pointed out, at least with press Play, if
you let your subscription lapse, you would no longer be
able to play your downloaded music. There was drm attached
to it, so that only if your subscription was current
would you be able to listen to the music you
had downloaded to your machine. You would have files on
your computer you would not be able to access, your
library would be locked off from you. No one out
(27:44):
there was big enough to create the sort of marketplace
where major labels could strike deals to have their catalogs
available for purchase and download. No one was offering the
software for free without the need for any sort of subscription,
and no one was giving users the free they wanted
to download songs and play them where and when they
wanted to, and that ended up being the pitch for
(28:07):
the iTunes Music store. On a side note, one of
the most interesting things about this two thousand three presentation,
which you can find on YouTube, by the way, is
that Jobs takes time to dismiss the idea of subscription
services for music streaming. He pointed out that for decades,
the model for consumers was to go out and buy music,
(28:29):
either on LP albums, cassette tapes, c D s, singles,
or whatever. He argued that this would become an intrinsic
part of how we as consumers relate to music. Were
used to owning copies of it, and therefore the subscription
model opposed how we preferred to interact with music now.
I just wanted to mention this that because today we
(28:53):
are back to a lot of subscription based services, that's
the new prevalent model out there, many of which have
an ad supported free tier and a paid for ad
free experience. And it's interesting that the environment Jobs was
dismissing in two thousand three is now the reality in
two thousand nineteen. And that's not to say I think
(29:16):
that Jobs was wrong when he said that. I think
for the time he was absolutely right, and the success
of iTunes is evidence supporting that stance. But things would
change over time. All right back to iTunes, Jobs laid
out how establishing the iTunes store was actually a pretty
tough endeavor. To make it happen, Apple had to meet
(29:38):
with what we're known as the Big Five. These were
the five big music labels that represented nearly the entire
music publishing industry outside of some small independent operations. He
also mentioned that at the time, tech companies and publishing
companies weren't the best of friends, largely because of the
piracy issues I just mentioned. Jobs laid the terms of
(30:01):
the agreement that applied to users. At the time of launch,
the music store had two hundred thousand tracks. Users would
be allowed to burn an unlimited number of c ds
of their music libraries, provided the CDs were for personal use. Now,
I'm not going to pat the music industry on the
back for this, since in the United States, in the
(30:23):
United Kingdom, and in lots of other places, it has
long been established that it's perfectly legal to create a
backup copy of a copyrighted work if it is for
your personal use, even if in the process of making
the backup you are transforming the way the copyrighted work
is stored. So, for example, if you have a bunch
of audio CDs, ripping those audio CDs to convert them
(30:44):
into m P three's is perfectly legal if it's for
personal use as a backup. But hey, it's so nice
that the labels agreed to abide by the rules. As
a concession to the music industry, Apple did put in
a governor in iTunes to prevent it from being used
to burn unlimited copies of the same set of songs
on two c D s. You could burn the same
(31:06):
playlist two c D ten times, but if you wanted
to do it an eleventh time, you would have to
change the playlist. In some way, you couldn't have the
exact same playlist burned on c D after c D,
and that would in theory stop people from using iTunes
to produce bootleg copies of albums, though you could just
as easily get a CD reader and a CD burner,
(31:28):
produce one CD using iTunes, and then churn out the
copies using the reader and burner that bypass iTunes altogether,
but that's a step that most people wouldn't really be
aware of or willing to take. Similarly, the agreement allowed
users to put their music on an unlimited number of iPods.
This future proofed music libraries. You didn't have to worry
(31:50):
about the new iPod coming out, but your license to
put your library on there had expired or was no
longer applicable or something. JOBS also introduced the concept of
authorizing machines to play music libraries with iTunes. For you
can load your iTunes library on up to three Mac computers.
You download to one computer, then you can burn files
(32:12):
to c D and transfer them to the other two
if they were bought from the iTunes Music store, but
you would be limited to those three Mac computers. If
you've got a new computer and you wanted to move
your library to the new one, you'd first have to
de authorize one of the three max already hosting those
tunes on your library. Jobs also revealed that songs would
(32:35):
sell for nine nine cents each and there'd be no
subscription fee on top of that. This was actually one
of the toughest battles Jobs had to fight with the
music labels, who collectively were worried that by allowing people
to buy songs all a cart the process would kill
off the concept of the record album, and record albums
were the foundation for the recorded music industry. See, people
(32:58):
would have to buy entire albums in order to get
two or three songs that they really wanted, and an
album could cost fifteen or twenty dollars, so the music
industry was raking in cash, and it didn't even have
to worry about making every track on an album a hit,
because really you just needed one or two to sell
the albums in the first place. You can understand why
(33:19):
the industry would resist the move to selling songs a
la carte the same way you could understand why music
lovers really wanted that option. Jobs was able to convince
the record labels that offering up the option to buy
songs individually would not be the end of the world,
in part because of the limitations Apple seemed to face
at the time during these negotiations. iTunes was not yet
(33:42):
available on Windows PCs. The Macintosh had its devoted followers,
but they represented a very small percentage of the overall
computer market. Less than ten of all computers were Mac computers, So,
in other words, Apple's impact would be so small that
even if people did by single songs, and even if
they did issue albums they decided the albums are no
(34:04):
longer relevant, the music labels probably wouldn't even notice. It
was too small of a group of people. Besides, file
sharing had already meant that people were downloading music song
by song, so at least with Apple's method, the labels
could make some money off of it. Another nod to
the concerns of the music industry was in the use
(34:25):
of digital rights management or d r M on the
music files from the iTunes store, which locked the music
onto Apple devices or computers running iTunes. Kind of talked
about that with the d authorizing. Whether Jobs was in
favor of this at the time or not, I don't know,
but I do know that over time he spoke out
against DRM, saying the strategy ultimately hurt the legitimate consumer
(34:48):
and that it shouldn't be used. But at the time
Apple was kind of in a place where it had
to agree to it, even if if Jobs didn't really
like it, And honestly, I don't know if that time
if Jobs had formed that opinion. Yet the songs in
the iTunes store were in a a C format encoded
at all bits per second, giving what Jobs claimed was
(35:11):
a sound quality to rival that of actual audio CDs.
He revealed that every song would have a free thirty
second preview so users can make sure that the song
they were buying was the one they actually wanted in
the first place, and every song would have album cover
art to come along with it, no longer making a
digital song library just a list of file names. The
(35:33):
crowd at the event was receptive to Jobs as announcement,
and he didn't really go into the business side on
the back end. He didn't talk about how much money
Apple would make off every sale. Generally speaking, the figure
most people cite in that regard is that Apple would
take about thirty cents off every sale. The rest would
go to the artist, or more likely to the music
(35:54):
label that then would pay out a portion to the artist.
Thirty cents a pop is pretty small, but Apple was
able to do the old cliche of making it up
in volume. Sure, a single purchase would net the company
three shiny dimes, but in mass, the company was looking
at millions and later on billions of dollars in revenue.
(36:16):
In fact, according to Apple, people bought more than a
million songs in the first week of the iTunes music
store going live. The company also stated that more than
half of those songs purchased were in the form of
album purchases, which helped allay the fears that iTunes was
going to render the concept of albums completely moot. And,
(36:36):
perhaps more impressively, Apple announced that more than half of
the two thousand songs that initially made available had been
purchased at least once, making three hundred grand within one
week of launching a brand new online store is pretty sweet.
But it got better for Apple because the company also
saw a big jump in iPod sales. So Apple had
(36:58):
just introduced the third generation I Pod and it was
a hot commodity. Now Apple was making money both off
the hardware side and the service side of digital music.
Apple had launched the store in April two thousand three
and updated it in October of that year, adding some
features like the option to buy online gift certificates for
family and friends, and also an allowance feature that let
(37:20):
users create sort of a music bank account. They could
put money into this allowance and that would help them
budget their entertainment purchases. So they'd say, all right, well,
I'm gonna put ten bucks aside, and that's all I
can use this month. So I'm gonna put that in
my allowance, and once that's gone, I have to wait
until the following month before I put another ten dollars
in there. It was kind of a way to control purchases.
(37:42):
Oh and it was also in that update that iTunes
would finally come out to the Windows PC market. Now,
as someone who got iTunes around that time for a
Windows PC, I can tell you that the effortless experience
enjoyed by the Mac users wasn't quite the same one
I had when I used iTunes, which felt like a
(38:03):
sluggish behemoth on my Windows machine. But we'll chat more
about the differences in the next episode. Apple was able
to get the music labels on board with this move
to Windows, largely because Jobs had user data to support
his argument. The labels saw that people were eager to
purchase music online if it was an easy experience. They
(38:25):
didn't have to worry about downloading a corrupted file or,
worse yet, accidentally getting a hold of malware when they
were trying to download a song. They also knew that
the quality of the recording would meet their expectations because
it was all coming from Apple and the users hadn't
ditched the concept of purchasing albums. So iTunes had made
itself a home over on Windows machines with the blessing
(38:48):
of the music labels, and it was a license to
print money. By the end of the year, the iTunes
music store reportedly sold more than seventy million songs. That's
a lot of music. Many factor contributed to Apple's phenomenal
growth in the two thousand's, but I don't think it's
hyperbole to say that iTunes contributed an enormous amount to
(39:09):
the financial success of the company. It certainly would prove
to be a powerhouse in the years to come. By
two thousand four, the music store contributed to two hundred
seventy eight million dollars in revenue from quote other music
products end quote, according to Apple's annual financial report. Now,
that category wasn't just iTunes Music Store, It also included
(39:32):
iPod accessories. The iPod itself was separated from that category
as well as iPod related services. Now, just to peek
into our crystal ball for a second, on the tenth
anniversary of the music store launching, that would be in
two thousand thirteen, analyst Horace, did you estimated that the
store generated revenue in excess of twelve billion dollars. Now,
(39:57):
I'll put that into perspective Apple the company, the whole
company reported a total revenue of eight billion dollars in
two thousand four, So a decade after launching, the iTunes
Music store was generating far more revenue than the entire
company had managed during its launch period. But we've got
(40:18):
some more stuff to talk about between the years two
thousand four and two thousand and thirteen, So join me
for the next episode where we'll continue the iTunes story
and how the program grew, and maybe even talk about
why it grew beyond all reason before it finally met
its end in the summer of twenty nineteen. But this
(40:39):
wraps up this episode. If you have suggestions for future episodes,
whether it's a company, a specific technology, a person in tech,
or any other technologically oriented topic, sent me an email
the addresses tech stuff at how stuff works dot com,
or drop on by our website that's tech stuff podcast
dot com. You'll find in our kind of all of
(41:01):
our episodes over there, plus links to our social media
presence and a link to our online store, where every
purchase you make goes to help the show, and we
greatly appreciate it, and I'll talk to you again really soon.
Text Stuff is a production of I Heart Radio's How
(41:21):
Stuff Works. For more podcasts from I heart Radio, visit
the I heart Radio app, Apple Podcasts, or wherever you
listen to your favorite shows.
TechStuff News
Hosts And Creators
Oz Woloshyn
Karah Preiss
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