This summer, a clever 17-year-old New Jersey high-school student named George Hotz made headlines by breaking AT&T's lock on the iPhone, using a soldering gun and software to enable its use on another carrier of his choice, namely T-Mobile. It's not that Hotz was especially devoted to T-Mobile--he just didn't like the idea that somebody was dictating which cellular service he should use simply because they manufactured the phone.
Hotz's little experiment demonstrates a new attitude emerging among those who've come of age in the digital world--that is, just because you created the hardware doesn't mean you can control its use. While a few companies have historically managed to wield enormous power through their tight grip on entertainment and communications technology, consumers such as Hotz are now climbing the ramparts.
In a flat, digital world, walls don't need to be torn down. Thanks to online file sharing and social networking, people are able to go over, under and through walls. Methodologies, software and ultimately personal preferences pass from person to person, machine to machine, network to network. Exclusivity has quickly become an endangered business model.
How is it then that one of the world's most innovative technology companies has managed to erect its own exclusive, and so far impregnable, kingdom? A relatively small percentage of world music sales occur through digital downloads. But, those that do, happen mainly through iTunes, Apple's online music store. It's hard to remember any one company establishing such total control over a segment of our culture as Apple has on digital music. The iPod accounts for 70 per cent of personal music player sales, while iTunes is estimated to direct more than three-quarters of all music downloads.
Apple has maximized its dominance of the digital music market with a double lockdown.
The combined clout of iPod and iTunes is mutually reinforcing and gives Apple enormous marketing leverage. The company is fast becoming the arbiter of what many young people -- those most accustomed to obtaining their music digitally -- are listening to. The company has become the digital disc jockey of our age.
Some majors are bristling at Apple's new leverage: In certain cases, they have gone so far as to play an A&R role, suggesting what songs should or shouldn't be included on an album in order to get promotion, earning the enmity of label executives.
For many listeners, Apple has become a commanding influence, mediating their exposure to new music through a strong editorial filter. Like any good retailer, its store highlights new songs and albums, offers recommendations based on a user's past purchases, provides discounts and even staff picks. A song or album displayed on the iTunes home page can gain thousands of times the click-through it would have generated otherwise.
And yet, even as its power appears to grow with each new product launch, the example of Greg Hotz is illustrative. Consumers will not accept a single tastemaker forever. Music lovers are realizing that their listening device is meant to set them free, not limit their choices by corporate fiat.
In the digital music arena, several recent trends are starting to converge, promising greater diversity for consumers and a more competitive marketplace for new content.
As digital devices diversify and the restrictions around digitally recorded music loosen, music lovers will inevitably seek digital music from a multiplicity of sources. At present, numerous sites offer access to virtually any recording a person might seek; iTunes is the default site for those wishing to pay for digital music because most digital music consumers have iPods.
In the near future, however, sites offering digital music will differentiate themselves by the quality of their information--by how well they help people find new music to love. Increasingly, we expect that fans will turn to niche sites specializing in genre tastes--say, country, electronica or jazz. Among the interesting new specialty destination sites being introduced are La Curacao's Pasito Tunes, which focuses on Latin music, and Ways & Means' GospelDepot.com, dedicated to Christian and gospel fare.
Two decades ago, Apple projected its image as a creative insurgent in its famous "1984" commercial, which implicitly cast IBM as the Orwellian "Big Brother" imposing dull conformity on the world. How ironic that Apple has now become the Big Brother of the digital music scene. Fortunately, with the advent of new-generation MP3 players, along with new avenues for bringing more special interest music online--plus a growing cadre of fed-up consumers like Hotz, who don't take kindly to top-down decisions--we'll all have a fresh bite at the musical apple.
Alan McGlade is president and CEO of MediaNet Digital, which enables some of the world's best-known consumer-brand digital-music services, supporting subscriptions and downloads of music and video through online and portable devices.