Tom Chi  

Turn Off, Tune Out

November 22nd, 2003 by Tom Chi :: see related comic

Apple, Apple, Apple … What can I say? Over the years they’ve built scores of brilliant designs that have helped define the course of what computers are and should be but a curious thing has happened in the last few years. Apple has slowly transformed from a plucky young company to a glossy ad-driven behemoth. Before I offer my analysis, let me preface it by saying that Apple still employs some great designers (Ive et. al.), and that some excellent products are still being made.

Unfortunately, the companion to these products are their ad campaigns, which while brilliant from the marketing perspective, tend to distort reality in ways that are pretty distasteful. For example, iTunes music store.

I was really excited about this idea, since any model of music distribution which gives musicians a more direct channel to listeners holds the promise of the rise of the indies: (me!). Besides greater access to independents, it also held the possibility of a better breakdown of profits (instead of the 2-8% that bands typically get from labels). In their ad campaign, Apple also brandished these possibilities and invited a boatload of popular artists to all chant along. They will sell 100 million songs(!) in one year!! We’re changing the music biz! We’ll help artists and the consumer and the music industry and…!

Wait. The economic model is the same. Artists still get what they always got even though the physical channel has become electronic (and cheaper). Where do the savings go? Well they are mostly funneled off to the record company — the one party in this whole equation that I don’t care to pay more tribute to. Hm. 100 million songs though. That sounds huge. That’s going to change the world! Well… here is how much 100 million songs change the world:Size of music industry:
“In 2000 the world market of the music industry was approximately $39 billions with a total unit sales at 3.5 billions” – International Federation of the Phonographic Industry

Size of industry in US: (iTunes focuses here) ~$8 billion in sales revenue
Total revenue of 100 million songs @ $1 each: $100 million.
Fraction of U.S. Sales done by iTunes: 1.25%
Fraction of World market: 0.25%

Don’t get me wrong, 1.25% is not awful, but it’s clearly not shifting the model - especially when the underlying economics are doling out the same paltry share to artists. But think about the brilliance of the advertising though… everyone was ecstatic, the musicians, the press, the consumers and the RIAA, but really only the RIAA had reason to rejoice.

The brilliance of Apple is that they can do something that changes the market so little, and still get props. If any other company launched an initiative claiming that they would “capture 1% of the U.S. market within a year!” there obviously would be no press. What they have done with iTunes amounts to marketing black magic. It hurts more because it could have been so much more. I will take back every bit of invective if they begin to promote independent artists and offer them a better breakdown than the industry standard. Similarly, if they expand the channel to allow other creative media: film, graphic arts, comics (yes!) to be monetized, I will be in their debt.

But for the time being, don’t believe the hype. Save it for when something changes.

All in all, iTunes is an *OK* product (if you like top40 radio), but like many recent Apple products it is shrouded in a cloud of hype. Really. This is just a product, NOT a revolution. No matter what it says, marketing will not make you more creative, or allow you to jump higher on a basketball court. And the real danger in such inflated hopes is that someday people will take the product home and find out that instead of making them shiny and happy it erases their HDs. No amount of glossy full page ads can break that fall.

8 Responses to “Turn Off, Tune Out”
Joshua Kaufman wrote:

I’m sorry, but I think you missed the point.

As you’ve explained in excruciating detail, no it’s not the 100 million songs that change the world. It’s the invention ( ). $100 million is nothing in the short term. The idea is everything in the long term.

Before the iTunes Music Store, this type of distribution channel simply didn’t exist. Now that it does exist, has been copied by several others and has the potential to expand into other creative markets, your ripping on them for being the first ones to do it? Excuse yourself.

As a software product, you’re right, iTunes is just okay. It’s not a revolution, but it did start one.

By the way, have you heard Ladytron or The Rapture on a top 40 station lately? I don’t listen to the radio that much so I wouldn’t know if they’re being played, but I highly suspect they’re not.

Tom Chi wrote:

Alrighty. First off, Apple has already admitted that it makes little to no money ( ) off its iTunes music store. Its main strategy is to drive sales of iPods. That doesn’t sound like a world changing model to me *even if* they were the first to do it. In fact it sounds like a typical loss leader market strategy, and perhaps a foothold in the format (mp3, aac, wma) wars. You are in the marketing cloud with the rest of us. The collective desire to point to Apple as a leader has confused the reality behind what they’ve done.

As for the music… perhaps my tastes are too far off the norm, since there is a wide range between top 40 and full-on indie. I have heard of The Rapture and Ladytron, in fact my photos are on their official site . But as for my experience with iTunes to date, I’ll excerpt by blog:

“Then I foolishly tried using the search feature. I searched for rainer maria, rilo kiley, helio sequence, the black sea, the pilfers, ed rush, freskanova, and freestylers — all to no avail. Then I searched for “this sucks” which actually returned a lot of results. In the list was DJ Shadow’s “Why Hip Hop Sucks in ‘96″ so I previewed it for old times sake. This made me notice that this 40 second song is available for sale for $1. That’s stupid. I can hear 30 seconds in the preview, including the main point of the song: HipHop sucks in 96 because “it’s the money” which is running everything. Mildly symbolic? I dunno.”

I definitely wasn’t excepting to find a lot of non-mainstream music there, but finding 1 or 2 in my searches would have given me a lot of faith in the store. So I conclude that I’m not in the target market for the iTunes store, but an inventory of my apt will show that the retail value of all the music that I’ve bought is more than the combined value of everything else I own… seems like the sort of customer a music store would want.

Really the point I was trying to make is that this cloud of flashy marketing can really set up consumers for that fall. I was unbelieveably psyched when the store launched, but things turned around quickly when I saw the selection and found that the economics were unchanged.

Joshua Kaufman wrote:

Yes, Apple’s main strategy is to drive sales of iPods. I know that. I also know that it’s not a world changing model. I didn’t say it was. If that was part of your original point, perhaps you should have mentioned it in the article?

You’re clearly a music lover and definitely the type of customer Apple wants for the store. But the iTunes Music Store only opened this year. It’s still a baby. If you open a new store, you want to appeal to the widest possible audience. For Apple, that meant striking agreements with all the major labels. Over time, they’ll hopefully include more independent labels. Apple including many of them in their first year - while it would have been wonderful - was clearly unrealistic to me.

Tom Chi wrote:

Hm, well I think the jist of my article was that Apple marketing would have you believe that everything they do is part of a world-changing innovation. I didn’t state that since I just assumed we’d all seen the ads. The number crunching was simply to say: ‘no, really it’s not really as incredible as it sounds’.

Since we both agree that it is not world-changing, and that the selection of the music store could be better, then really there is not much we disagree on. I would not have been disappointed with the selection if I hadn’t heard all the hype about how it would be a boon to indies. Maybe they could have pushed off that part of the campaign for a year to when they started actually signing them up.

That’s the danger I alluded to at the end of the article. Hype is great for getting the word out, but it can also create unrealistic expectations. The problem with those expectations is that even when a company puts out something pretty cool, it just isn’t everything they said it would be.

Kevin Fox wrote:

Anyone have stats on CD sales their first year of mass availability? I’m pretty certain it was less than 1.25% of the US market. This would have been around ‘84…

Tom Chi wrote:

You are right of course, in the year of their introduction, CDs had less than 1% share. Check here and scroll down to 1983:

Also note that only 30k CD players had been sold. I think the 1% comparison is not valid because the infrastructure was not in place for CDs to take off. In that context, in the year of introduction, 800,000 CDs, or about 10 million songs were sold to an audience of only 30k. iTunes is being launched to an audience of closer to 100 million: which 30x bigger, with a well hyped target of 100 million songs (only 10x bigger).

That would mean even when they hit their goal they would have tracked to be only 1/3 as successful as CDs in their introductory year.

Chris Connors wrote:

How did iTMS Change the world?

By changing the views of the Record labels. By making them understand that digital music is not the devil. By convincing them to accept some pretty unobtrusive DRM - a DRM policy that maps very closely to actual fair use. By getting all the labels to accept the same DRM (check buymusics byzantine EULA for another approach). By making the digital music OWNED by instead of licensed to the purchaser.

It has nothing to do with the quantity of sales (how many CDs were sold during their first year of availability? go google hounds go!), and everything to do with getting the hardheaded labels to accept a new way of doing things.

And, if you want to offer your music on iTMS, go for it:

Tom Chi wrote:

I will let Steve Jobs speak for himself:

Chris is right that Apple has gone through great pains to convince Record Execs that iTunes is viable. That is definitely admirable. I guess as a musican and artist I am just eager to see the rise of the indies and the advent of merit based compensation for creative work (as opposed to marketing behemoth driven compensation).

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OK/Cancel is a comic strip collaboration co-written and co-illustrated by Kevin Cheng and Tom Chi. Our subject matter focuses on interfaces, good and bad and the people behind the industry of building interfaces - usability specialists, interaction designers, human-computer interaction (HCI) experts, industrial designers, etc. (Who Links Here) ?