Here will we sit, and let the sounds of music Creep in our ears: soft stillness and the night Become the touches of sweet harmony."
The iPod has been an enormous success: 60 million have been sold, and even a short walk around campus suggests that thousands of those sales have been to Princeton students, for whom the distinctive white earbuds are the path through which the sounds of music creep.
In mid-October, Newsweek interviewed Steve Jobs, founder and CEO of Apple, for the fifth anniversary of the iPod. Mr. Jobs was asked whether he was worried about Microsoft's about-to-be-released iPod competitor, the Zune. His response also mentioned ears, though without Shakespeare's imagery or language. "In a word, no. I've seen the demonstrations on the Internet about how you can find another person using a Zune and give them a song they can play three times. It takes forever. By the time you've gone through all that, the girl's got up and left! You're much better off to take one of your earbuds out and put it in her ear. Then you're connected with about two feet of headphone cable."
I'm not au courant enough with today's social customs to know whether this "stick it in your ear" approach would be deemed sweet or romantic or just gross, but Mr. Jobs does know something about marketing, so I would put my money on his conclusions, if not his technique. A bit of quantitative reasoning shows that 60 million iPods at perhaps $200 each is $12 billion. That revenue would be a modest drop in any Microsoft bucket, but it's not shabby either.
At the heart of the rivalry between the iPod and the Zune is a life-and-death struggle to make money by selling something — digital music — that can be copied in unlimited amounts and distributed everywhere in the blink of an eye, and all for free. When Napster appeared in 1999 (how long ago that seems now), it showed that there was a huge demand for music, especially if the price was right, and Napster's price of zero was hard to beat.
The recording industry decided that they were losing money because people were downloading music for free instead of paying high prices for CD's with a dozen songs, only one or two of which were good. The RIAA sued Napster out of business and then began to sue potential customers, a marketing strategy that continues to this day. Apple came up with a better idea — offer songs online for a flat 99 cents and sell great portable gadgets for playing them. Apple has resisted pressures to change the pricing structure and their digital rights management has been pretty reasonable, so their business is booming.
By contrast, the Zune appears not to be as well thought out. I can send you a song wirelessly (the Zune's big selling point) but the song can only be played three times, and, no matter what, it disappears into the ether or the bit bucket after three days. Music that you might have bought earlier through Microsoft's "Plays For Sure" program won't play at all on the Zune. It doesn't work with Windows Media Player and not yet with Vista, the brand new version of Windows. Microsoft often gets things right in the end, but I suspect that the iPod will hang on to its market share for a while yet.
Let's do a bit more QR. Apple has made $1.5 billion selling songs through iTunes; that's 1.5 billion songs or about 25 songs per iPod. But a typical iPod can hold thousands of songs, so most iPods contain little if any music purchased from Apple, and I'd be willing to bet that most of the songs still come from sharing of one kind or another, in spite of the RIAA's efforts.
Meanwhile, my personal search for good music involves a weekly visit to the Princeton Record Exchange. After some initial binge buying, it became clear that discipline was called for, so now I won't buy any CD that costs more than $2. That doesn't limit me much, and my collection has exploded in the past five years. Two dollars a CD is way below 99 cents a song, and I don't lease the bits — I own them, in an open format that will never go away. With low prices and no DRM, I buy all kinds of music on speculation, and pass it on to someone else if it doesn't work out. One final QR exercise: I could rip my 600 CD's into MP3 and load them all onto a single iPod with room to spare. Maybe it's time to buy one after all.
"Come, ho! and wake Diana with a hymn: With sweetest touches pierce your mistress' ear And draw her home with music." Brian Kernighan is a professor in the Department of Computer Science and is a Forbes faculty adviser. He can be reached at email@example.com.
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