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(RYAN ANSON)
(RYAN ANSON)

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How the iPod changed everything Add to ...

It was the size of a deck of cards, had enough space for about 1,000 songs and no one knew what to make of it.

On Oct. 24, 2001, The New York Times published a story about a quirky new portable music player made by a computer company that was small enough to fit in just about anyone's front pocket.

The story appeared on page 8 of the newspaper's business section. Not exactly prime real estate.

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Analysts were bemused. The device had limited commercial potential, they said. After all, it was only compatible with less than 5 per cent of the computers in the United States. To the rest of the Windows crowd, “it doesn't make any difference,” one observer opined.

Indeed, it was an inauspicious start for the iPod.

The day before the Times story appeared, Apple Inc. co-founder and chief executive officer Steve Jobs unveiled his creation and laid out his vision of the future to a gathering of technology journalists and analysts in California.

“Interestingly enough, in this whole new digital revolution, there is no market leader,” he told them. “No one has found the recipe yet for digital music. And we think not only can we find the recipe, but we think the Apple brand is going to be fantastic, because people trust the Apple brand to get their great digital electronics from ... we're introducing a product today that takes us exactly there, and that product is called iPod.”

And with that, Mr. Jobs pulled the white, rectangular device out of the front pocket of his jeans and held it up for the audience. Polite applause. Many looked like they didn't get it.

That was just fine with Mr. Jobs. They'd understand soon enough.

Perhaps no other company has benefited from the rise of digital media as much as Apple.

Before music lovers downloaded billions of songs from iTunes, before white ear buds became as common as sunglasses on a morning commute and before the iPhone was the most sought-after consumer gadget in the world, Apple was a computer company with a small – albeit devoted – following.

Although the Cupertino, California-based company revolutionized home computing in the mid-1980s, by 1997, the company was a bit player in an industry dominated by Microsoft Corp.'s Windows operating system. It's stock price hovered between $13 and $22 a share (today it's closer to $130 a share).

But consumer demand for digital media, and the iPods to play it on, transformed Apple from a niche PC maker into a consumer electronics juggernaut. Today, Apple enjoys a stranglehold over the market for digital music players, controlling a 70 per cent market share in 2008, is the largest retailer of music in the United States – digital or otherwise – and with the iPhone, has evolved into one of the most powerful technology companies on the planet and is now worth around $115-billion.

Not bad for page 8.





Apple Computer Inc. unveiled a new portable music player, the iPod, MP3 music player on October 23, 2001. The device can hold up to 1,000 songs.

However, the story of Apple is merely the tip of the iceberg when it comes to how digital media has transformed the business world. Few industries, from retail operations to artistic production; from newspapers to telecommunications have been immune to the shifting habits of mass consumption. Digital media has fundamentally altered financial models that existed for more than a century, and in the process has redrawn the power map in the corporate world.

Any company in the business of producing artistic content and intellectual property – be it words, music, photos, motion pictures or other forms of interactive entertainment such as video games – now must contend with the Internet. The ability to reproduce endless digital copies of media by reducing it to the ones and zeroes of binary code has upended industries that once depended on billions of dollars of infrastructure devoted to producing, distributing and marketing physical products.









“Every movie has had its price reduced to zero,” Chris Anderson, editor in chief of Wired Magazine said in an interview. “Every bit of music, every bit of content, every bit of software has had its price reduced to zero. Now, it's not the only version in the marketplace, there's also a version in the marketplace that has a price of whatever the creator intended, but it's happened and there's nothing new about it.”

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