Monday, August 29, 2011

Apple Inc's former CEO Steve Jobs reigned in a kingdom of altered landscapes

This year, I wrote a column about the publishing industry's resistance to the terms Apple was imposing for subscriptions on the iPad. Soon after, an email was followed by a phone call and Steve Jobs was on the line to straighten me out.

At the time, publishers were profoundly unhappy. Apple was not only proposing to take a third of the revenues, but it was also requiring that the transaction go through Apple, meaning publishers would get none of the consumer data that had such high value to advertisers.

Jobs was friendly enough - I can recall a less pleasant conversation about the criminal case involving a stolen iPhone prototype - but he thought it was silly for publishers to whine about sales without data. After all, he said, they already did a tremendous business on the physical newsstand that did not provide a lick of data about their buyers.

The exchange we had was more of an example of Jobs as micromanager than as technological visionary. But the perspective it showed is indicative of a pattern for Apple and Jobs. Again and again, he would step up to entrenched players in the media with calcified business models and explain their business to them in ways they did not recognize from the inside.

Apple is a technology company, but as someone who writes about the insular kingdom of media, I can't think of a bigger player on the board in the last 10 years. In music, in movies, in publishing - television has been another story, so far, though there are rumors that the company is turning its guns on television in a big way - Apple has upended long-standing paradigms and altered the media landscape.

So what secret tunnel did he use to bypass and overcome traditional media businesses? One carved by consumers. By placing sexy, irresistible devices in the hands of the public, he reverse-engineered the business model of the industries that produce the content for Apple's gorgeous hardware.

When the iPod and iTunes were unveiled in 2001, the music industry was under siege from piracy, with sites like Napster thriving on the free use of its content. Jobs' take-it-or-leave it deal gave Apple control over pricing, data, distribution and platform, a proposal of towering hubris. But the industry, kicking and screaming all the way, eventually went along, and 10 billion song downloads later, digital revenue is a fundamental part of the business.

In the process, Apple brought a practical end to the album format - allowing people to buy individual songs and create their own playlists.

ITunes not only supplied a legitimate, easy-to-use alternative to piracy, it created a runway for services like Pandora and Spotify.

"He took a locked system, one that was controlled by the record companies, and cracked it open," said Jim Guerinot, the longtime manager of The Offspring, Trent Reznor and Nine Inch Nails, and Gwen Stefani. "That disruption created opportunities for everything that has happened since."

Jobs did not so much see around corners; he saw things in plain sight that others did not. "It's not the consumer's job to know what they want," he explained.

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