Sunday, October 14, 2012

Steve Jobs Taught Me Not To Steal

For a generation that grew up on Napster, Kazaa, BitTorrent, Limewire, and an army of other file sharing tools, the idea that you get what you pay for isn’t exactly second nature when it comes to digital content. Learning this concept has required huge shifts within the digital content ecosystem. Two years after Napster changed everything, the late Steve Jobs set the foundation for a decade long process with the release of the iTunes store, making it monumentally easier to buy music. 

 By offering a single digital purchasing location, allowing a la carte song purchases, and hitting the all-important $0.99 per song price point, the dynamic between free and paid content was massively altered. All of the sudden it wasn’t a question of do I drive to the store to buy an entire album or download any song I want instantly. There was at least an equal playing field. Unfortunately (for record companies at least), Napster’s first mover advantage created a culture of digital hoarding. Even with the $0.99 price point, the average user would have to spend thousands of dollars a year to sustain their content consumption levels. That first step was enough, however, to attract the digital content world’s late adopters, repelled by the murky black market of digital content. As iTunes grew into the dominant player for both purchased and otherwise acquired digital music, and the store expanded to include video content, millions of users at least dabbled in the waters of purchased content. These initial iTunes purchases, regardless of size, had a tremendous impact on Apple’s future. 

This was one of Jobs’ greatest strategic moves, and one that has made Apple boatloads of cash. When Apple released the App Store in 2008, these initial purchases allowed for a tremendous reduction in friction. iPhone users could simply log in to their iTunes account and they would be primed and ready to purchase apps and content. This order of operations is a big reason why, to this day, the App Store leads Google Play in app profitability. Apple customers never had to take out their phone and type in their credit card number, something most consumers simply weren’t ready for. Many still aren’t. Easy, low friction purchases of cheap, relevant, and new digital content, especially apps, have created positive experiences purchasing content on this level for the piracy generation. 

 It was here that the entrepreneurs at Pandora, Spotify, Netflix, Hulu, and an army of other web companies jumped to continue this process of guiding the evolution of the digital consumer, experimenting with an array of monetization and content delivery models. 

Continued innovation has proved far more effective in shifting consumer behavior than RIAA and MPAA litigation ever was. While I grew up with this evolution, watching record stores shutter their doors and seeing ‘friends’ amass massive digital content libraries, I didn’t really notice how far things had come until a few weeks ago, when I began assisting in the sale of “Flashlight ®,” a massively successful paid utility app. Launched immediately after the release of the iPhone 4, the app was one of the first to use the newly added LED flash, but it faced a slew of free alternatives that made the $0.99 price point a tough sell. Despite the slower and less pleasant execution, it wasn’t like the free versions were turning off after 15 seconds to inform users they had exceeded their trial period. The end result was pretty similar. 

But with over $1.4 million in sales to date, Flashlight is one of many success stories that prove digital consumers have learned to pay for quality. I see this as paradigm shift as one of the most important legacies of the late Steve Jobs. From the dark ages of piracy that nearly destroyed the global recording industry, the massive transition that Jobs began now bears fruit. A new and profitable digital content ecosystem has emerged that empowers creators, massively improves discovery, and delivers an incredible volume of fresh, relevant, and easily accessible content to consumers. 

I would venture to say that for the first time there is a fair fight between paid, pirated, and add supported content. Whoever wins, my money is on the entrepreneurs.

Article By: Greg Salwitz

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  1. Can you please include a link back to the original article at the top of this -

  2. Hi Sir Greg,

    This has been executed.