Steve Jobs: The father of Apple's iTunes.
of launch, iTunes was the top music retailer in the U.S.; last quarter alone, the store moved $2.4 billion in music, movies, apps and books.
That's more than Universal Music Group paid to buy EMI Music last year--and an excellent illustration of how quickly the tables have turned in an industry still undergoing rapid reinvention.
But if Apple isn't careful, its musical flagship could be headed the way of the eight-track tape.
The mp3 ended the era of the compact disc, first through illegal file-sharing services like Napster, later through legal downloading destinations like the iTunes Store. The latter came about thanks largely to the efforts of Steve Jobs, who was able to play record labels off against each other and eventually stock his virtual record store with over 26 million songs.
“Steve Jobs totally re-invented how we as artists market, sell and promote our music,” Rolling Stones keyboardist Chuck Leavell told me shortly after Jobs passed away in 2011. “And of course, he re-invented how people purchase, receive, store and enjoy their music.”
Streaming music is the next revolution, and it may soon do to digital downloads what mp3s did to CDs. Without Jobs at the helm, Apple has continued to watch as services like Spotify and Rdio have gobbled up more and more listeners.
“People have built up libraries,” BTIG's Walter Piecyk explained earlier this year. “But the functionality of something like Spotify and the fact that it works across multiple devices reduces the interest in buying songs through iTunes and reduces that as a point of differentiation for Apple.”
Some insiders estimate that more music is already consumed via streaming services than through digital or physical collections. And despite iTunes' current gaudy numbers, that could spell trouble down the line.
Apple's best bet is to ask, "What would Steve do?"
Fortunately for the company and its shareholders, it seems some in Cupertino have been doing exactly that--Apple's long-rumored iRadio appears close to fruition.
That might take a bite out of iTunes, but if executed properly, it could ensure Apple's place in the music business for the next decade.
For more on the business of music, check out my Jay-Z biography Empire State of Mind and my upcoming book on Michael Jackson. You can also follow me on Twitter.
