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Columns > Mike Gruenberg - In My Life

Published: 2011/10/14
by Mike Gruenberg

The World of Music after Steve Jobs

In My Life

The world lost a great man as a result of the recent passing of Steve Jobs, co-founder of Apple. Accolades have been pouring in from statesman, presidents and everyday people like us proclaiming the genius of Jobs, how he has changed the modern business of music and the great loss to society his death represents.

Some people come into our lives and we are forever changed. Sometimes that change is for the better and sometimes it’s not as good as we had hoped. In the case of Steve Jobs, the changes he initiated may have been good for you or not, but the bottom line is he changed EVERYONE’S life when it come to music and how we access it. He was a pioneer, a visionary and an agent for change. Hard to believe that Jobs and Wozniak started Apple in Steve Jobs’ parents’ garage in California and today it is a multibillion dollar company employing thousands of people throughout the world.

Entire industries are affected because of the work of Steve Jobs. For example, according to Billboard, the music industry publication, Apple accounted for 33% of all U.S. recorded-music revenue in 2010. How far behind was everyone else? In second place was Wal-Mart at 10.1%.

Consider that the music industry originally geared up to sell CD’s at $12.95 and that model was obliterated by Apple’s per song price of 70 cents. And that 70 cent model is providing an incredible income for artists and record companies alike. This model, almost overnight changed the way we look at and buy music. We don’t have to buy a 12 song album of which three songs are listenable and the other nine throw-ins can best be described as filler. We buy what we want for a reasonable price. That’s the paradigm that Apple established. You like a song….you buy it.

I recently met a person whose company does business with a major retail store with locations around the world. He bemoaned the fact that the buyers for this organization dictate to him how much they are willing to pay for his products even though that price is somewhat below what he would normally charge other smaller stores similar in nature. In essence, he told me that he has to accept their price expectation and their conditions for him to do business with them. He is very well aware of the fact that his products prominently displayed in every one of these stores will bring him significant revenue. However, in this case, the customer controls all aspects of the sales process except the manufacturing of the product and they even have ideas about that too.

In the case of Apple’s single song and album price structure, the record companies really have no choice but to accept those parameters considering the amount of revenue they now derive from i-Tunes. Furthermore, it is now in the best interest of those record companies to jockey for position on the i-Tunes store website so that their artists are “front and center” to attract the visitors to the Apple site.

The good news is that the once feared subscription music services model is actually helping to increase revenue for the record companies. The bad news is that the music industry now has to accommodate a retail giant and in doing so, dance to Apple’s tune.

Marketing meetings at record companies are now centered around how their latest releases will be positioned on the i-Tunes site. Moreover, Apple does not accept advertising for the record company’s artists which allows the introduction of more independent acts that are not beholden to record company giants. Therefore, the record company executives can’t even send Apple extra cash to tout their artists because a). Apple doesn’t need the cash and b). they won’t accept it anyway.

For the music buyer, the introduction of i-Tunes has been fabulous innovation. Buy the music you want, at a reasonable price, carry it with you wherever you go and most of all, listen to an incredible sound that heretofore could only be experienced in the comfort of your home through an expensive stereo system.

Today at lunch, my friend and I discussed what a profound effect, Steve Jobs had on all our lives. My friend likened Jobs’ influence to what it must have been like to be living at the time of Thomas Edison or Henry Ford or Albert Einstein. We were blessed to have had the good fortune to live at the same time as Steve Jobs and be recipients of his visionary ideas. Someday, we can tell our grandchildren about him, much the same way as we learned about Jonas Salk and others whose discoveries and inventions transformed our lives.

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