Steve Jobs on the Music Industry
Published December 10, 2003
Has it been difficult wooing artists to the iTunes store?
Most successful artists control the online distribution of their music. So even though they could do a deal with, say, Universal Music, the largest in the business, these companies weren't able to offer us their top twenty artists. So we had to go to each artist, one by one, and convince them, too. A few said, "We don't want to do that."Others said, "We'll let you distribute whole albums but not individual tracks." And we declined. The store is about giving the users choice.
Do you expect that one day Apple will start signing musicians — and, in effect, become a record label?
Well, it would be very easy for us to sign up a musician. It would be very hard for us to sign up a young musician who was successful. Because that's what the record companies do.
We think there are a lot of structural changes that are probably gonna happen in the record industry, though. We've talked to a large number of artists who don't like their record company, and I was curious about that. The general reason they don't like the record company is because they think they've been really successful, but they've only earned a little bit of money.
They feel they've been ripped off.
They feel that. But then again, the music companies aren't making a lot of money right now . . . so where's the money going? Is it inefficiency? Is somebody going to Argentina with suitcases full of hundred-dollar bills? What's going on?
After talking to a lot of people, this is my conclusion: A young artist gets signed, and he or she gets a big advance — a million dollars, or more. And the theory is that the record company will earn back that advance when the artist is successful.
Except that even though they're really good at picking, only one or two out of the ten that they pick is successful. And so most of the artists never earn back that advance — so the record companies are out that money. Well, who pays for the ones that are the losers?
The winners pay. The winners pay for the losers, and the winners are not seeing rewards commensurate with their success. And they get upset. So what's the remedy? The remedy is to stop paying advances. The remedy is to go to a gross-revenues deal and tell an artist, "We'll give you twenty cents on every dollar we get, but we're not gonna give you an advance. The accounting will be simple: We're gonna pay you not on profits — we're gonna pay you off revenues. It's very simple: The more successful you are, the more you'll earn. But if you're not successful, you will not earn a dime. We'll go ahead and risk some marketing money on you. But if you're not successful, you'll make no money. If you are, you'll make a lot more money." That's the way out. That's the way the rest of the world works.
Craig Lyndall rants, raves and writes other stuff at FilteringCraig.com and at The Cleveland Sports Curse
- Steve Jobs on the Music Industry
- Published: December 10, 2003
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- Section: Sci/Tech
- Filed Under: Sci/Tech: Internet, Culture: Media, Sci/Tech: Software, Music: News
- Writer: Craig Lyndall
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Comments on this articleComments
I was amazed when I downloaded ITunes at what a great library manager it is as well. It is far and away the best way to manage different playlists and also to create mix cd's from all my MP3's. I didn't know that the experience could be that good, but it is.
What's with Jobs flat-out lying about the customes the other services have, though? He claims 50,000 forall the otherservices combined - there are hundreds of thousands.
Also, he dismsses the subscription model, which I think will end up being what the masses latch onto.
The only thing I can think of for you first question is that the interview was done a little while ago, or he is lying.
Also, I don't know about the subscription model either. I think there are a whole lot of people who want to get their stuff a download at a time. Plus that is also what makes the profits easy to trace and filter back to the appropriate parties. I guess with the subscription model you could do statistics to make sure people were paid properly, but it seems simpler with the individual download to me.
i hate the subscription model with a passion. The only truly helpful and best value subscription model is the one used by magazines.
I don't want to be locked into something if i decide several months before my subscription ends that i don;t want to use it anymore. Or if i forget about it for a long period of time, or simply cannot make us of it (e.g. if my pc breaks and doesn't get fixed for a few weeks)
The point about never being able to fully protect digital content is part of a larger, more general truism - it's impossible to develop a fully secure copy protection system for digital content of any kind, because there will always be people determined to break copy protection and invariably, because none of it is perfect, cracks are found
Yes, but with 60 million people now used to getting what they want, when they want it for free, the closer a pay system is to that, the better they will do, I think.
i've gotta agree with eric here.
kids are used to downloading stuff for free....and having to pay per download will not add to the experience. it seems like it'd be much more convenient to pay once and then forget it.
this coming from a guy who has no interest in downloading aside from the occasional "what that person sound like" kind of thing (and a subscription model would support that...at least for me).
I think the key is to make it "feel like free"
yea, that's right.
i used to use napster to do just the kind of sampling i spoke of (more often than not leading to a cd purchase).
i don't use kazaa at all because it's a pain in the ass (at least to me).
if there was a service that had a reasonable subscription fee (and was easy to use), then i'd probably sign up.
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I agree with a lot of what was said in that article. I used to use KAAZA and Napster because I wanted the CHOICE. If I only wanted one song, I wanted ONE song. Now with iTunes I get everything I want. I pay for it, and am glad to pay for a service I want.
Artists like the Beatles who refuse to allow their stuff on iTunes are stuck in the past and don't get it.