You Can Change Your Name...

It was December 2006, I distinctly remember and Christmas had come early. I lovingly held the gift I'd been pining for months in my palm - the latest pink iPod Nano.

Finally, I've arrived to the digital era where my world was no longer defined by CDs that held 15-20 tracks on them. No longer did I have to find space for the endless stacks of CDs that filled an entire desk drawer. It was music on my terms and in one space. It was a beautiful thing.

Fast forward thirteen years and I still own that pink iPod Nano. Sure, it's a little banged up (mostly at the edges where I dropped it), the storage is pitiful compared to what my iPhone XS can hold and the battery is weak (I'm lucky to hold a charge more than a week) but it works. And I still use it. It's no longer a staple of my everyday life where during my final year of high school or college I could be seen with it everywhere. It was my first and probably longest tech obsession.

As someone who prides herself on being a relatively early adopter on most technologies, streaming music is the one area I've resisted. Yes, I'm a streaming laggard. To this day, I still prefer to buy music on iTunes and listen to it on my iPhone XS or that trusty old iPod Nano.

Now, I'm not completely against streaming. I use both Pandora and YouTube to listen to music (as evidenced by earlier blog posts) at work, while in the car or on my connected device. However, when given the choice, I still prefer owning music - having it within the tap of an app's reach rather than keeping it in the cloud. As someone who travels a significant amount, I cannot afford to be without tunes for long stretches of time. It's why I have over 3GB of downloaded music on my iPhone. There are some days when I simply need to drown out the world and jam out to old albums of Taylor Swift or go through an album from start to finish.

So, you can imagine my trepidation this week when Apple announced that iTunes, my music haven for the last decade, is going away. My immediate reaction was paramount to "The Scream" by Edvard Munch.

Quick recap for those who have not seen the headlines -

• June 3

• WWDC 2019

• Apple announced it was discontinuing iTunes in its current form

• iTunes would be split into three distinct apps

1. Apple Music

2. Apple TV

3. Apple Podcasts

After I took a few deep breaths and read the full press release and visited my favorite tech blogs - my blood pressure dropped considerably. Was all of my purchased music going away? No. Would I have to download a new app? No. Would I have to sign-up for a new subscription service? No.

What a relief.

But what exactly was changing then? And what gives? Why all the hoopla around the "supposed" death of iTunes? If you did a simple Google search among the news outlets - you'll see inflammatory headlines proclaiming "ITUNES IS DEAD" from Wired or "Apple is killing iTunes" from CNET. What's going on here?

From my perspective, this was a simple rebranding and categorization exercise by Apple. If you recall, iTunes was the O.G.A. (that's "original gangster (music) app") on the iPhone. Over the years, it has become the "catch all" place for Apple - music, movies, tv shows, podcasts and books.

Originally, this all made sense - let's put everything in one place. Until everything and everyone moved online. And there simply was too much stuff to adequately categorize.

Side note - I've run into this problem multiple times. Try and search for something like "Rome" in iTunes and you will get hundreds of results about the city, the tv show, the Shakespearean play "Romeo and Juliet." It's maddening and inefficient.

By separating the apps, Apple is cleaning house. It signals a move from the owners economics model to the sharing model. As I highlighted a few months ago, Apple has seen declining sales in its marque product - the iPhone, a non-recurring services product. One time purchasing is no longer the cash cow that made Apple a wealthy company. It needs to find alternative revenue streams. In particular, it has its eye on monthly recurring services.

It has laid the foundation - it has Apple Music. It has the App Store. And very soon it will move into tv shows and movies with AppleTV+ which it announced in 1Q19. The only non-services product it had was….

iTunes.

There's another reason why iTunes was on the chopping block. It's reputation. Like many bloggers, in recent years, I had become disenchanted with iTunes.

The iTunes library I once loved to spend time on - making playlists, purchasing new music or uploading my current CDs - became a bother. With the move to my iPhone, I dreaded syncing my iPhone to my iTunes account on my computer. Especially as I moved laptops - moving my iTunes library became a nightmare. And let's not even start on the U2 album that mysteriously showed up in my library back in 2014 that I never wanted.

Simply put, I outgrew iTunes. I no longer had a need for it with the exception of purchasing my music. I started spending money elsewhere and I was not the only one. Consumers buying habits changed as they moved from purchasing to streaming.

But is Apple killing a golden goose? It's one thing to say that consumer habits have changed and the company wants to move into services. However, does it make sense to kill a profitable business stream? The answer here is more complex. iTunes makes money. In 2018, Apple revealed that iTunes, Apple Music and Apple Pay grossed $10 billion in 4Q18. That's a lot of money.

Note - Apple does not break out these three individually, therefore, it's unclear how much iTunes independently brought in.

Besides overall revenue, there is another metric we can use to determine iTunes contribution to the bottom line: music and video download/streaming revenue in the United States. Unsurprisingly, this tells a different story than the $10 billion in revenue.

The International Business Times has the best info-graphic on downloads vs. streaming revenue. Using data from the RIAA, the hyperlinked article above shows that downloads (aka what iTunes specialized in) began declining in 2014 and has continued to either plateau or lose ground to streaming services. A similar dynamic can be observed in video with the downward beginning in 2013.

Thus, with the move to services and changing consumer habits iTunes had to go.

So for the time being readers, you can rest easy. iTunes the name may be riding off into the sunset but the framework established by Apple - the ability to purchase music, to move music from CDs or to sync my iPod Nano to my library - still exists. It just has a different name.

Score one for streaming.