I was reading the new Steve Jobs biography last week, and the author briefly touched on the roll-out of the iTunes store. Prior to the launch of the store, iTunes was just another place to organize songs, most of them no doubt stolen via Napster, which was terrorizing studios at the time.
Even with a promise to monetize digital albums, Apple had a tough go of getting all the major labels onboard. Were it not for the energetic push from one of the studio heads to corral the other five studios, it may not have happened. And were it not for charismatic Jobs behind the push, and Apple seen as a minor player, it might not have happened. It’s useful to remember that Apple had very little market share at the time; Windows was dominate. Jobs assured the studios that the iTunes store would not be made PC-compatible, which soothed the CEOs and bean-counters. The PC version would launch within the year, and within a few years, music stores would begin to shutter as listeners moved eagerly to digital.
The hesitation by studios to sign the iTunes agreement was largely due to the fear that they’d lose control of distribution, that they’d alienate existing retail partners, and that the then-existing model of selling entire albums just so fans could get the one or two tunes they wanted would wreck how music was produced and packaged. They were right to be worried, of course. These things came to pass. But they were wrong if they thought they could stop the change from happening.
Book publishers have been much more coordinated in their attempts to slow digital adoption, perhaps learning from music studios’ mistakes. The history of Amazon and Jeff Bezos getting publishers on board the Kindle store, and the subsequent pricing of ebooks at $9.99, similar to Jobs’ push to price songs at 99 cents, all have incredible parallels. Publishers eventually went to the enemy of the music studios for salvation, agreeing to a deal with Apple at the launch of the iPad to uniformly raise ebook prices and beat that $9.99 price point. But the fight against digital adoption had been going on long before that.
It started with a process called “windowing,” which meant delaying the ebook until after the hardback edition had its run. When readers revolted and peppered Amazon book pages with 1-star reviews on any release windowed like this, publishers gradually gave in on select titles. They next began protecting print editions with high prices on the ebooks, often higher than the eventual paperback edition. This, despite the paperback needing to be printed, shipped, warehoused, and often returned and pulped. The claim that ebooks cost just as much to produce as paperbacks always rang hollow, but the claim was debunked by publishers themselves with the release of these slides to investors. Continue Reading →