Markets

Apple May Finally Shutter iTunes, But the iTunes Era Ended Long Ago

Apple is widely expected to formalize the end of iTunes as we know it at its Worldwide Developer Conference in San Jose, Calif. Monday, when the company will give us a first view at the next versions of its desktop and mobile operating systems. As part of that update, Apple is poised to unveil new standalone music, TV and podcasts apps for Macbooks and desktop computers.

With that step, Apple is effectively decommissioning iTunes as an all-encompassing media app some 18 years after first introducing the software. This may seem like the end of an era, but the truth is that the iTunes era ended a long time ago.

Rip, mix, burn

When late Apple CEO Steve Jobs first announced iTunes at Macworld Expo in January of 2001, he pitched the app as the company’s take on so-called jukebox software — apps designed to rip CDs and organize music libraries. “iTunes is miles ahead of every other jukebox application, and we hope its dramatically simpler user interface will bring even more people into the digital music revolution,” Jobs was quoted saying at the time.

The release of iTunes came a couple of months before the company introduced the original iPod, and the software was clearly built with the goal of helping mainstream audiences transition into the MP3 era.

Apple wouldn’t launch its own music download store for another two years, so iTunes was first and foremost used as a tool to digitize music from CDs, and also help users who may have downloaded MP3s from file sharing networks manage their ever-growing libraries. (The news of iTunes’ demise coincides with the 20-year anniversary of the file sharing app Napster.)

The company even advertised the app, and its new iPod gizmo, with the rebellious “Rip, mix, burn” slogan — much to the chagrin of the music industry.

From physical to digital media ownership

When Apple finally launched its own digital music store in 2003, complete with unprecedented usage rights and pricing, it built the service into iTunes, effectively turning the app into the centerpiece of its digital media strategy.

This decision made digital music buying easier than most preceding services, but it also locked users into Apple’s digital ecosystem, and solidified a transactional model of music distribution: Apple’s digital media push was going to replace physical products, but not the idea of a product itself.

That decision wasn’t necessarily a given. Digital music startup Listen.com launched its own paid offering, dubbed Rhapsody, in late 2001 with a model that was later refined by Spotify: Rhapsody subscribers could stream an unlimited number of songs, including full albums, for a flat monthly fee.

Apple instead banked on ownership, which helped the company to sidestep issues around media portability for devices like the iPod, and later the iPhone. But it was also based on Jobs’ belief that consumers “don’t want to rent their music,” as he said in 2003, when he broadly argued against music subscription services. “That just doesn’t fly with customers,” Jobs said at the time. “They don’t want subscriptions.”

That focus on digital media ownership also led to Apple integrating paid TV shows into the iTunes store in 2005. Just like music, Apple first and foremost approached video as a digital product. Something that you would pay for and collect, even if most consumers likely only watched most of their $1.99 TV show episodes once or twice.

The app that Apple users love to hate

With iTunes central to Apple’s understanding of digital media, the company began to tack more and more functionality onto the app over time. Some of this had to do with the intricacies of digital rights management.

Apple’s model of digital media distribution was based on the notion of ownership. However, its contracts with rights holders stipulated that consumers didn’t actually own those songs, movies and TV shows, but merely acquired licenses for them. As a result, Apple had to implement complicated device management rules, with iTunes becoming the app to authorize and deauthorize devices.

Other features likely found their way to iTunes because there wasn’t really another good place to download podcasts, stream internet radio, activate iPhones, back up apps, or install system upgrades. Thus, iTunes slowly morphed from being a digital jukebox with a dead-simple interface to a bloated piece of software with way too many features — an app that Apple users long have loved to hate.

Be kind, for everyone you meet is fighting iTunes, too.

— Anil Dash

🥭
(@anildash) January 29, 2015

*reading the eulogy at iTunes’s funeral* I’m glad it’s dead and everyone responsible for it should be in prison

— pixelatedboat aka “mr tweets” (@pixelatedboat) May 31, 2019

The age of services

Bloatware accusations aside, the iTunes era truly ended on March 28, 2014. That’s when Apple announced the acquisition of Beats Electronics and its Beats Music service, which ultimately became Apple Music. With that acquisition, Apple admitted that consumers wanted to rent their music after all — a fact that at that time was already proven by close to 10 million paying Spotify subscribers.

That number has since grown tenfold, while Apple has amassed some 50 million subscribers worldwide. Altogether, streaming made up for three-quarters of the industry’s U.S. revenue in 2018, while digital downloads generated just 11%.

A similar transition from digital ownership to services has been happening in the video space, where Netflix now has close to 150 million paying customers worldwide, and a growing number of paid and ad-supported services are step by step replacing traditional distribution models. After years of remaining on the sidelines, Apple is set to enter this space with its Apple TV+ service later this year as well, giving the company yet another reason to move away from an app that is focused on ownership and collection.

That move to services is also reflected in Apple’s overall business. In the first three months of this year, Apple’s services business generated a whopping $11.5 billion in revenue. And while much of that money still comes from app store sales as well as lucrative contracts with companies like Google, subscriptions are a fast-growing factor: Across its own services and those of other companies using Apple’s billing, Apple had some 390 million paid subscriptions at the end of March.

In this new world of diversified services, there is no need for an all-encompassing app focused on media ownership anymore. That’s why Apple is finally blowing up iTunes, years after the age of iTunes came to pass.

Will the U.S. Break Up Big Tech? Don't Hold Your Breath Apple CEO Denies the Tech Giant Is a Monopoly but Says U.S. 'Scrutiny Is Fair' iPadOS, Dark Mode and Sign in With Apple: All the Biggest News From WWDC

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

    Variety

    Variety is the most authoritative and trusted source of entertainment business news, reaching an audience of affluent influencers. For 113 years, influential producers, executives and talent in entertainment have turned to Variety for expert film, TV, digital, music, and theater business analysis and insights.

    Learn More