Apple recently celebrated two milestones: announcing its 100 millionth download, as well as a revamped version of its world-beating MP3 player, the iPod. I'm duly impressed, but there's a big difference between a milestone and a finish line. I decided to take a closer look at Apple's progress to see where it's succeeding and where it could stand to innovate even further. This report card, which illuminates what I see as the key features of an online music store, reveals what I discovered.
Portable hardware: A+
While I've written my share of criticism toward Apple's top-notch MP3 player, I nonetheless agree with conventional wisdom that it's, hands down, the best general-purpose MP3 player out there. That's already enough to earn Apple an A+, but if it weren't, the newly announced fourth-generation iPod seals the deal. It combines the best aspects of the white iPod and the iPod Mini into a player that's cheaper per megabyte than any previous model. Chalk one up (again) for Apple's forward-thinking hardware design.
Home hardware: C
The day before the first iPod was announced, I bet an associate that Apple was going to introduce a full-featured, networked entertainment device for piping music over wireless AirPort (802.11b) connections, from computer to stereo. I had to admit defeat when Steve Jobs whipped out the portable iPod with no such abilities, and to this day, my prediction has yet to come true. Sure, you can use AirTunes to send music from your PC to your stereo, but you have to sit at your computer to control playback--which is hardly the couch-riding user experience we've come to expect from more sophisticated digital audio receivers (DARs).
Plays well with labels: A
It's hard to think of anyone else besides Steve Jobs dragging the record labels--who went kicking and screaming--into the Internet age. It certainly helped his cause that the labels saw iTunes Music Store's original Mac-only restriction as a sandbox where they could play around with online distribution without much risk. However, Jobs's charm, record of innovation, and relative respect for copyright were also factors that helped Apple's cause. (Furthermore, Jobs's other gig with animation studio Pixar makes him a major content player.) He convinced the labels to allow usage terms broad enough to overcome many consumers' innate distrust of DRM, and when the labels freaked out about the way iTunes' streaming capabilities could be used to pirate music, Jobs made sure the next version closed that loophole.
Plays well with consumers: B+
The "100 million" figure doesn't lie--iTunes Music Store has been a massive success relative to the other online music stores, and consumers have used it to buy music online as they never have before. But in my opinion, online music fans deserve lower prices (admittedly, this is the fault of the labels) and, above all, the ability to play purchased music on whatever device they please. If you want to use your Rio flash player for jogging and your iPod for everything else, that should be your prerogative. But because iTunes songs play only on iPods, you're out of luck because Apple wants you to buy an iPod Mini instead of a more resilient flash player from some other company.
That said, at least Apple makes it easy to de-authorize a computer so that you can transfer your song licenses to a new machine. The way Napster works right now, you can use only three computers--tops--for the rest of your life. Otherwise, you'll lose access to your purchased music. Yes, really.
Catalog: B+
I know, I know--Apple has in excess of 700,000 songs, which is more than any other online music store. But since labels generally either license certain songs to all the stores or none of them, the competition has most of what Apple has. And on occasion, I've been able to find a song on Napster that's not on iTunes, thanks to exclusive licensing agreements with certain labels. The good news for Apple is that its No. 1 status should enable it to nail down more exclusives than other online music stores.
Advertising: A
Why, you ask, would I include advertising in this report card? What do ads have to do with it anyway? The easy answer is that Oprah Winfrey probably wouldn't have listed the iPod as one of her favorite things about 2003 if it weren't for all of the iPod ads in the mainstream media. However, the complete answer is more complicated. An informal survey confirms that there are many more ads out there for the iPod than for any other MP3 player. This is a bad thing because it makes iPods more expensive. Conversely, this is a good thing because the ads contribute to the overall success of iPod and the iTunes Music Store, thus giving Apple more bargaining power with labels and a 74 percent share of the portable MP3 player market. Ultimately, Apple's dominance translates to a wider, deeper, and cheaper catalog of music because labels don't want to be dealt out of the hottest game in town.
Overall, Apple comes away from this semester with an A- average, screwing up the curve completely for its competitors. Even if Apple's position at the head of the class seems secure, online music distribution will continue to evolve, and Apple needs to keep innovating. I have a hunch that no one understands this more than Steve Jobs, which should make the next few years of online music even more fun to watch than the past few years have been.
