When: 1998
Where: USA and South Korea
Why: MP3 players, particularly the iPod, have transformed the music industry, ushering in today’s world of downloads and file sharing
How: The early MP3 players began the digital music revolution, but then Apple released the iPod, eclipsing all that came before it
Who: SaeHan Information Systems, Diamond Multimedia … and, most significantly, Apple
Fact: The iPod sold over 100 million units in the six years following its launch
Walk onto any bus or train nowadays and you are certain to see at least a few pairs of the iPod’s distinctive white earbuds adorning the heads of passengers. Yet just 10 years ago, the MP3 player was a device reserved for the serious technophiles of this world: lacking the essential features of platform support, competent design and ease of use.
Apple changed all that with a product that successfully utilised accompanying software as well as having a clean, attractive design to create the first MP3 player with mass-market appeal – and propelling Apple itself to unimaginable new heights. A business idea that saw the merit in making technology beautiful, the iPod has changed the way the world listens to music.
The history of the iPod can be traced back to 1987, when German company Fraunhofer-Geschellschaft began development of project EUREKA. As discussed elsewhere in this book, the Walkman had created an obvious market for music on the move; aiming to build on this success, EUREKA strove to find a way of converting digital music files ripped from a CD into files that were much smaller, but without the huge compromise in quality that this would normally entail.
Headed by the scientist Dieter Selzer, who had been working for some years on improving vocal quality over a telephone line, the standard that later became MP3 was based upon a technique called ‘perceptual coding’; certain pitches deemed inaudible to most listeners were ‘cut off’ the digital waveform, dramatically reducing the file size. Fraunhofer estimated that a file encoded in this way could be 12 times smaller than a song on a CD, without any reduction in quality.
The technology was submitted to the Moving Picture Experts Group (MPEG), which had been commissioned by the International Standards Office to find a new default standard for digital music files, and duly in 1991 MPEG-3, or MP3, was born, with the standard receiving a US patent in 1996. Two years later, Fraunhofer began enforcing its patents and all MP3 encoders and rippers were subsequently required to pay licence fees to the company.
Other digital music formats quickly appeared, building upon and improving the advances made by Fraunhofer. These included the Advanced Audio Codec (AAC), a higher-quality format officially recognised as an international standard in 1997.
Despite the standard being finalised in 1991, software programs utilising these new ergonomic formats were slow to appear. Fraunhofer released media player software in the early 1990s, but it was a dismal failure. The first popular digital music player software for PC was the free Winamp for Windows, released in 1998. Around this time, the first portable Digital Audio Players (DAP) also appeared on the market.
The Rio PMP300, retailed at $200, was notorious for falling apart, and … users could store only around eight songs on it.
Early MP3 players included MPMan, developed by South Korean SaeHan Information Systems, and the Rio PMP300, produced by Californian firm Diamond Multimedia. These pioneering models attracted considerable interest; however, the early adopters of portable MP3 players had to deal with a number of glaring flaws.
The devices were either huge and unwieldy, or small and virtually useless; the interfaces were esoteric and difficult to use and, crucially, the accompanying software was either non-existent or highly inadequate. Not only did this put the MP3 player out of the reach of the layman, it also meant that users often resorted to embryonic file-sharing services such as Napster, fuelling the boom in piracy that was beginning at the time.
Each device had its own shortcomings; for example, the Rio PMP300, retailed at $200, was notorious for falling apart, and shipped with only 32 megabytes of internal memory, meaning that users could store only around eight songs on it.
Californian technology company Apple observed these flaws and began thinking about developing a portable media player that would improve on the usability and capacity of previous devices, to bring MP3 players to the wider market for the first time. It began working with hardware company PortalPlayer in mid-2001 to create the device, which was to have a hard disk to increase the number of songs that could be stored, as well as to work seamlessly with the iTunes media player software, released on Mac a few months earlier.
The project was shrouded in complete secrecy and Apple’s then CEO and founder Steve Jobs was reputed to be obsessed with it, devoting 100% of his time to its development. Prototypes were encased in secure, shoebox-sized plastic casing, with the screen and buttons placed in random positions to ensure that the real design remained a mystery.
On 23 October 2001, Apple announced the impending release of the iPod. The first iPod had a five-gigabyte hard disk, enabling it to hold about 1,000 songs, a simple, stripped-down user interface with an innovative scroll wheel for navigation and the ability to sync with Apple’s own line of Mac personal computers through iTunes.
The product initially met with some scepticism from the press, which pointed to the rather high retail cost (around $400), the fact that it worked only with Macs and the scroll wheel. The wheel was seen by some as an unnecessary gimmick. Nevertheless, the product began to grow in popularity, with users drawn to the attractive, clean design and the ease of use of the device, as well as the potential for carrying an entire library of music around with you. Just a few weeks after the European launch in November, the first unofficial tools for syncing the iPod from a PC began to spring up, a signal of the wide, latent demand for the device.
Taking note of this, Apple released the second-generation iPod in 2002 with added compatibility with Windows PCs, as well as a touch-sensitive scroll wheel instead of the manual kind found on the first-generation device. These later iterations also added more capacity and greater battery life. In 2003 the iPod Mini was released, a smaller version of the vanilla iPod, designed to take on the high-end Flash-based music players with which the iPod was competing. However, the greatest leap forward for the iPod during this period was not a hardware feature but the addition of the iTunes Music Store in summer 2003. Integrated with the eponymous media player, the Music Store sold individual tracks for download at 99 cents and albums for $10, allowing users to access a world of instant music legally.
Later iterations of the iPod added video support and capacities of up to 160 gigabytes, and Apple began to focus on diversifying the product line past the basic model, with the company now offering Shuffle, Nano, Touch and Classic versions of the device.
A host of renowned manufacturers have tried to knock Apple off its perch at the top of the MP3-player market, but most attempts have been fruitless. One of the biggest failures has been Microsoft’s Zune, a line of digital media players that seemed to imitate the iPod in several key respects, notably its rectangular shape, large screen and scroll wheel. In July 2010, it was found that the iPod commanded 76% of America’s MP3 market; Zune had just 1%.
While the iPod has established pre-eminence in the digital audio player market, iTunes has become the world’s biggest music store, having passed the remarkable landmark of five billion track purchases in June 2008. In June 2010, iTunes occupied over 70% of the downloads market in the USA, and 28% of music sales overall.
The iPod, iTunes and their rivals in the MP3-player market have played an instrumental role in re-shaping the music industry, creating a new user relationship based on digital downloads rather than physical copies. In America, for example, digital album sales increased by almost 17% in 2010, while sales of physical albums declined. This trend has underpinned the growth of download sites such as Napster and eMusic; on the other hand, it has heralded a period of anxiety and drastic restructuring for traditional music stores.
Hundreds of independent record shops have had to close down, and even the industry’s biggest names have proved vulnerable. In May 2011 British retail giant HMV announced a plan to close 60 stores over a 12-month period, in response to a sharp fall in sales; meanwhile Virgin Megastores has closed down in several countries, including the UK, America, Spain and Australia.
The MP3 player has also fostered a huge illegal industry, based on piracy. In 2008, the International Federation of the Phonographic Industry estimated that 95% of music downloads were illegitimate, and such rampant boot-legging played a significant role in damaging the music industry’s overall revenues, which fell by 4.8% in 2010. Over recent months, many successful recording artists have been pressured into cutting the prices of their releases so as to compete with sites that share them for free.
The iPod, iTunes and their rivals in the MP3-player market have played an instrumental role in re-shaping the music industry.
Having conquered the portable media-player world and revolutionised the way in which many people download music, Apple has shifted its focus. It has taken on the portable device market in general, beginning with the launch of the iPhone in June 2007 (covered elsewhere in this book). The iPhone combines the features of an iPod with a phone and camera, and it has also enjoyed phenomenal success, with sales passing 100 million in June 2011.
However, more recently iPod sales have begun to plateau. In fact, a report in April 2011 revealed that sales were down 17% year-on-year. Industry analysts believe this slump is largely attributable to the rise of streaming sites such as Spotify, which allow users to listen to a song straight away, without having to download or buy it. Many also believe that Apple, by pricing the iPhone at the same level as the iPod, has played a key role in damaging the latter’s popularity; given all the extra features available on an iPhone, it’s easy to see why someone would prefer it to an iPod, for the same cost.
Now that Spotify has moved into the American market, and smartphones are gaining new features all the time, the iPod could face a real battle to retain its market dominance. In fact, the future of the MP3-player market is far from certain. However, no matter what happens, few would dispute the critical role of the MP3 player in shaping the music industry as we know it today.