The Perfect Thing
How the iPod Shuffles Commerce, Culture, and Coolness
by Steven Levy
Copyright © 2006 by Steven Levy
Reprinted by permission of Simon & Schuster, Inc., N.Y.
304 pages
Focus
Leadership & Mgt.
Strategy
Sales & Marketing
Finance
Human Resources
IT, Production & Logistics
Career Development
Small Business
Economics & Politics
Industries
Intercultural Mgt.
Concepts & Trends
Take-Aways
• Apple introduced iPods in 2001. By 2005, it had sold more than 42 million of them.
• That year, 61% of Apple's business came from iPods and the rest came from Macs.
• Competing products couldn't beat the iPod.
• Previous Mac-compatible MP3 players didn't meet the standards of Apple or iTunes.
• Coolness is important to Apple; CEO Steve Jobs works as much on its image as
on its computers.
• Confronted with new music-playing technology, the major record labels sued, even
though the technology could pay off for them.
• Jobs convinced five major record labels to sell music in the iTunes store.
• iTunes opened its store in 2003 with 200,000 songs; by 2006, it had more than two
million.
• Having changed the way people hear music, iPod is now changing the way they
watch TV shows and movies.
• The iPod is always cool. How cool you are depends on your playlist.
Rating
Overall
8
(10 is best)
Importance
7
Innovation
Style
7
8
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Relevance
What You Will Learn
In this Abstract, you will learn: 1) How the iPod and iTunes changed the music business;
2) Why the iPod is successful; and 3) How the iPod earned its place as a cultural icon.
Recommendation
Why do people ask for an iPod when they want an MP3 player? Other players hold as
many or more songs, and play them just as well. Owning an iPod is more about music
than about keeping up with the latest trends. That is why the iPod still holds the top spot
in MP3 player sales. Author Steven Levy explores how the iPod came to be and how
it earned its status as a cultural icon. Even the book’s iPod-looking cover could evoke
emotion from an iPod fan. getAbstract recommends this book to iPod lovers who will
relish its story. Businesspeople, trend spotters and marketers also will gain insight into
the way Apple made millions from selling music, machines and coolness.
Abstract
“No one thought
the iPod would
change the music
business, not
only the means
of distribution
but even the
strategies people
would use to
buy songs.”
Surprise: How the iPod Changed the Marketplace
What makes the iPod special? Apple didn’t expect it to have such a tremendous impact
on the company, the industry or even the world. Apple couldn’t have known that the iPod,
originally planned as a Mac enhancement, would change the company and its direction.
By 2005, four years after its debut, the iPod held 75% of the music player market and
iTunes sold more than one billion songs. Apple beamed like a proud parent as the iPod
grew, virtually creating, and then controlling, the portable music player market. With its
boom, Mac computer sales also jumped and Apple stock soared.
Apple launched the iPod in October 2001, not the best timing after September 11. Apple’s
iPod team members faced a quandary before the debut: go to work and finish the product,
or stay home after the tragedy with their families, which CEO Steve Jobs allowed them
to do. They decided to finish the iPod on schedule and, as Jobs said, “bring a little joy to
people.” Yet, many staffers weren’t willing to fly to California to see Jobs, a notorious
showman, make the big presentation.
Before There Was iPod, There Was iTunes
German computer scientists created the three-layer code/decode (codec) standard
for digitizing and compressing music. The slowest layer, which worked on personal
computers, was MP3, shorthand for Motion Picture Experts Group 1, Layer 3. It took
10 years for MP3 to change the music world radically. Its public acceptance hinged on
the developer Justin Frankel’s invention of WinAmp, a free application that let nongeeks
download music and play it on their computers.
“The iPod is
a pebble with
tsunami-sized
cultural ripples.”
The Rio PMP300, a portable digital player that could play an hour’s worth of MP3 songs,
was released in 1998. The record companies sued, believing that people who copied songs
onto media players infringed their copyrights. Yet, the record companies could have used
the MP3 to assess how many or how few CDs to market. Also, downloadable music let
them introduce new artists without “payola,” and could encourage people to buy more
albums because they could use the Internet to search for and sample music that matched
their interests. Rather than being open to change, the record labels fought.
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“Was [it] possible
for Apple itself to
build something
that could redefine
the whole field
of digital music
– to bring the
functionality and
breadth of iTunes
into a device that
you could put into
your pocket?”
“Just because
Apple was
inventing the
scroll wheel did
not mean that it
had to reinvent
the wheel in every
particular.”
“Jobs’ maniacal
attention to detail
and harsh way of
communicating
proved incredibly
effective in
producing
products that
were many cuts
above the clunky
efforts of his
competition.”
“The iPod’s
momentum was
such that every
quarter was
Christmas.”
Michael Robertson, who launched MP3.com, got 10,000 visitors the first day the site
went live. Visitors found it by entering MP3 in their search engines. Robertson posted
songs he got on a nonexclusive basis from bands (which he promoted on the site) that
weren’t signed with record labels. He tried to adhere to copyright laws and satisfy the
music industry. Still, the companies sued even though every online retailer working with
MP3.com sold more CDs. In 2001, Robertson sold MP3.com for $400 million.
Napster, in contrast, used peer-to-peer technology. Users opened and shared the music
files on their hard drives. Lawyer and venture capitalist Hank Barry joined Napster as
its CEO and set out to legalize it. Even though Napster popularized unknown songs and
musicians, the record companies saw it as a resource for stealing music. Instead of seeing
its marketing and sales power, they sued for copyright infringement and won. Napster
lost because of problems with its database tracking methods. After the lawsuit, other
peer-to-peer services popped up. They solved the Napster problem by not having central
databases. Instead, their networks relied on the Internet to manage their data. Music
companies set up their own downloading services, but never did as well as Napster.
In 2002, Jobs decided to woo the big five music labels to get them to cooperate in a legal,
online store that offered all the best music. To form the software genesis of iTunes, Apple
worked with SoundJam, stripped it of unneeded features and gave it iMovie’s look and
feel. With careful planning, Jobs got all five major record companies to participate in the
Mac iTunes store by agreeing to the following rules:
• Customers could keep downloaded songs forever, the same as with a CD.
• Individual purchases became available to everyone in the buyer's immediate family
since many people or families own more than one computer. Songs could be played,
initially, on three computers (this later went up to five).
• Customers could burn songs as many times as they wanted, including up to 10 copies
of the same CD with the same songs (later this went down to seven).
In the store’s first week, users legally downloaded more than one million songs, even
though iTunes initially was only compatible with Macintosh computers. Apple believed
the store worked because it wasn’t a Web site; it was a “store front” for iTunes software.
Downloading and synchronizing music was much easier with iTunes than with other filesharing sites. Of course, the record company executives were pleased with the store’s
success, since they got paid, but they also had qualms. Users now could select what
music to buy, download and play. Music buying was no longer linear, because consumers
didn’t have to buy a CD “package.” Instead of paying the full price for a CD just to get a
couple of songs they liked, they downloaded the songs for 99 cents each. Apple’s flat fee
undermined the labels’ ability to charge various rates for different music. Jobs predicted
that CDs would fade away and that users would get their music from the Internet, yet
Apple had never planned to go into the music business, much less change it.
Creating the iPod
The development idea that led to the iPod didn’t begin at Apple. It originated in the late
1990s with scientists at Digital Equipment Corporation (DEC) who devised the Personal
Jukebox (PJB), which had memory chips that held about one CDs worth of music, a long
shot from iPod’s 1,000 songs. Compaq bought DEC; later HP acquired Compaq. The
scientists who developed the PJB tried to convince Compaq executives to market their
machine, which now could hold the equivalent of 100 CD’s. The product didn’t sell. It
was laden with a $799 price and a heavy horizontal design. It had no backlight and if it
got bumped, the music skipped.
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“‘Cool‘ is a term
that seems as
strongly linked to
the iPod as white
earbuds, the Apple
logo and gripes
about battery life.“
“The wellspring
of the iPod‘s
coolness is its
unmistakable
look.“
“Not only do the
iPod‘s owners
admire the look
of their iPods, but
frequently (this
is alarming) they
display signs
of a deeper,
more physical
attraction.“
“With all your
music at hand,
in an enclosure
to die for,
this personal
experience with
the iPod goes
beyond mere
listening.“
The iPod emerged because Jobs wanted a better Mac-compatible device for playing music
from iTunes. But the Mac-compatible MP3 players then available were lousy, so Apple
hired engineer Anthony Michael Fadell and gave him eight weeks to design a good MP3
player that “would fit in your pocket.” In alignment with Apple’s culture, he kept his project
a secret. Fadell’s team handled the engineering. A team working with Jeff Robbins – the
head of the iTunes division – focused on iPod software and upgrading iTunes. Apple
designer Jonathan Ive’s team worked on the iPod’s external design. Despite Apple’s fierce
protection of its plans, the company used outside contractors on the iPod’s development.
The iPod as the Essence of Coolness
To understand how coolness is generated, turn to “technologist” Yossi Vardi, “the
godfather of the Israeli dot-com movement.” Vardi helped popularize ICQ, the fi rst
publicly-embraced instant messaging program. For three years, he did research to find
out what makes something “cool,” but he couldn’t find the magic formula. He found that
the best tactic was to produce something as perfectly as possible and hope it took off.
That is echoed in Jobs’ response when asked if he set out to make the iPod cool. “No,” he
said, “We try to make it great.” Jobs focused on branding Apple products as cool gear for
people who think differently.
The iPod’s first commercial showed a person dancing with an undocked iPod to
demonstrate its portability and simplicity. The famous ads showing people as black
“silhouettes,” with the iPod and its earbud cords in stark white against the dark figures,
debuted in 2003. iPods cropped up on TV shows and movies as symbols of coolness, not
as part of a product placement or ad campaign.
People feel emotionally connected to their iPods. The sleek, small box’s unique look and
feel contribute to its coolness. The design team – led by Jobs and Ive – focused heavily on
little details, not just the overall design. They also poured energy into the iPod’s packaging.
They believe that many companies approach design the wrong way, as if it only deals with
appearance. Jobs and Ive also stressed function. For instance, Apple’s iMac was a pretty,
colorful computer, but it also ran quietly, booted quickly and played great sound.
Podcasting’s Beginnings
Citizens band – CB radio – was expected to become “the people’s broadcasting,” but
it went away with all the other fads. Instead, the iPod gave people a way to broadcast.
Online stores, such as Audible, let iPod owners download books and magazines, and take
them along. Museums used iPods to provide audio commentary and clever entrepreneurs
sold iPods loaded with special content, such as 2,000 hours of Talmudic commentary.
Podcasting finally filled the public broadcasting void left by CB radio. However, podcasting
wasn’t the first use of the Internet for broadcasting. Tech writer Carl Malamud created
an interview program called “Geek of the Week,” but listening required high-powered
computers, high bandwidth and extra techie know-how, so in 1993 its audience was
pretty esoteric.
Former MTV veejay Adam Curry – who, with radio’s David Slusher, coined the term
“podcast” –– had a vision of mixing radio with the Internet. He met with software whiz
Dave Winer, who then created the technology behind Really Simple Syndication (RSS),
a method for subscribing to Web site content through feeds. Curry wanted to use the
feed to distribute audio programming. Users could download the feed into iTunes, which
could make it appear automatically in the iPod for listening.
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In 2005, Apple released iTunes with podcasting built-in. It caught on fast. In October
2005, a search for “podcast” led to 2,700 results. By March 2006, the number had grown
to 215 million. The Nano was introduced in September; in October, Apple released the
fifth-generation iPod, and announced that it would distribute videos and version 6.0 of
iTunes. By now, Apple had not only changed music, but it had also changed the way
people viewed television – on iPod’s small screen.
“Taking full
advantage of
the flexibility and
fungibility of digital
technology, the
iPod changed our
behavior…and
made everything it
touched just a little
bit cooler.”
“The iPod era
doesn‘t mark the
end of snobbism
but a scary
acceleration of it.”
“It’s a product
that‘s truly
revolutionizing
the way people
listen to music.
You don’t spend
$250 or $300
for something
because you want
to be trendy.”
[ – Steve Jobs]
Podcasting may or may not last, but it already has made a bigger impact than CB radio
because of its ability to move digital media. What’s more, Apple has filed patents for
wireless technologies for handheld devices, so more surprises could be coming.
Judging a Person by the Playlist
Some people judge others by their clothing, but today’s hot criterion is the quality
of your iPod playlist. One writer described feeling humiliated when he had to share
his playlist with a fellow subway rider during a glancing iPod war, “where…owners
compare playlists to see whose has more character,” a game of “musical one-upmanship.”
Reporters frequently asked celebrities, including the U.S. president, what they have
loaded on their iPods. In fact, Rolling Stone magazine once analyzed President George
Bush’s baby boomer playlist. Knowing the influence of a playlist, some people load up
on “cool” songs in hopes of improving their social status. Playlists also help people share
favorite songs and widen their musical horizons. Some users even wipe out their own
playlists (which reappear when they sync their iPods with iTunes), and replace them with
a friend’s list to get closer to the other person and pick up new favorites.
An Apple Revival
Though Apple employees admit that Jobs is difficult to work for, they also agree
that the company never would have created its most innovative products without his
aggressiveness. Those who worked on the Macintosh remember a grueling but fulfilling
project. Despite his obsession for perfection, Jobs never backed off of tasks that others
deemed impossible. He launched the iMac during a downturn for Apple. The company
lost $25 million in the 2001 dot-com crash, but instead of cutting back on spending, Jobs
invested in innovation and the iPod entered the picture.
The iPod originally only worked with Macs, so Jobs launched the “switcher” campaign
to get Windows users to switch to Macintosh. He didn’t want to create a Windowscompatible iPod, but after much debate, he eventually changed his mind. Apple modified
its thinking from “switch to a Mac” to “buy an iPod for Windows,” just to get an Apple
product into the hands of Windows users. iPods for Windows appeared in 2002. At
first, compatible software was an issue, but now the iPod works well with both major
operating systems and Apple has maintained its reputation for creating something easy
to use with a sleek interface.
Dell’s CEO, Michael Dell, once commented that he would have sold Apple if he were Steve
Jobs. On January 13, 2006, Apple’s market capitalization surpassed Dell’s by $1 million.
About The Author
Steven Levy, a technology reporter, writes for Newsweek magazine and has written five
other books including Crypto, Hackers and Insanely Great.
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