Thread by @BowTiedRobin

In 2002, the music industry was losing billions of dollars.

It was a massive disaster.

But Steve Jobs saw an opportunity to fix the industry with technology

Here's how he did it:

🧵👇

It was 2002 and music revenue was bringing in $12.9 billion revenue

Down from the $14.6 billion peak in 1999 when albums were dominant.

And the industry was in flames.

Billions of music files were being shared online.

And the industry was losing out on billions.

They tried launching their own online music sites but they all failed due to poor management.

And in this crisis a renewed Steve Jobs appeared with iTunes and the iPod.

Apple had created the perfect music ecosystem.

iTunes - download music.
iPod - listen/enjoy music.

All that Apple had to do was convince the music industry.

The Big 5.

MI Records, Sony, Vivendi Universal, AOL Time Warner and BMG.

Steve presented iTunes as the legal way to enjoy music in Apple's ecosystem and as a way to unify the disjointed process.

It even had DRM and anti-privacy.

And yet the music industry dug their heels in and balked at Jobs.

They were so attached to their precious albums that they were not noticing the ground was shifting under them with the internet and Napster.

People will filling their hard drives and iPods with pirated music.

And here Steve was giving the music industry a legal way to sell their music but the music industry wasn't waking up.

Steve's thesis at the time was that ease of use and customers choice are key for competing with pirated music.

If you make the service so easy to use and make privacy a hassle most people will pay a nominal fee for the convenience.

And that's exactly why he offered the price at exactly 99 cents a song.

It was cheap and an afterthought for most users.

It's just 99 cents.

Record companies would walk away 2/3 of all revenue and Apple with 1/3.

Eventually the industry agreed to sell their music in the iTunes store.

But man oh man they were stubborn, it was a better deal for them than physical albums.

On April 23, 2003 Apple officially launched the iTunes store.

It sold a million songs in six days.

And 2 years later it sold 1 billion.

Apple eventually launched the store on Windows, despite Steve's fervent war against the idea.

3 years later, Apple had sold 58 million iPods and the iPod-iTunes business contributed to 61% of Apple's total revenue.

Talk about a revolution!

It was also the first cultural revolution of the internet and computers.

iPods and their corresponding white earbud became fashion statements and a signal to know if someone was hip and modern.

The iPod put Apple on the path to becoming the world's most valuable company.

Let's zoom forward 20 years into the future.

2022.

Or Today.

The music industry has changed a lot.

It's still dominated by a few companies.

Just 3 record labels.

- Sony BMG
- Universal Music Group
- Warner Music Group

But thanks to Apple, the industry is forever different.

We have the big 3 streaming services.

- Spotify
- Apple Music
- Amazon Music

And there's a brand new revolution on the horizon.

Music NFTs which are set to get rid of labels and streaming services.

These platforms can create moats where users just go straight to the NFT platforms to stream.

Artists are compensated properly by a few super fans.

Goodbye labels and streaming services!

Discovery services like TikTok and other social media will likely be safe from this disruption.

Consumers are hungry for a few things:

- A large library of music.
- The ability to share music with their friends.
- The ability to discover music.
- A chance to connect with artists.

Looking to the future, the world of music is changing just like it did in 2002.

And this time will likely be greater.

Be ready and invest in the next Taylor Swift.

That was the story of how Apple disrupted the music industry..

If you'd to hear more stories like this, let me know.

Follow me @BowTiedRobin for more threads on the rise of Web3 and the Metaverse.

I'll be covering more #MusicNFTs going forward.

Do you think they'll change the world?

Or are they are nothing?

Will the music industry adapt?

Let me know!

p.s.

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