On October 23, 2001, Apple introduced the iPod, a portable digital music player. Its signature features included an LED, easy to use interface, and a large capacity drive (initially 5 GB) which was enough to hold approximately 1,000 songs. It was quite large when compared to the 20–30 songs of Flash-based players of the time. Apple has since revised its iPod line several times, introducing a slimmer, more compact design, Windows compatibility (previous iPods only interacted with Macintosh computers), AAC compatibility, storage sizes of up to 160 GB, and easier connectivity with car or home stereo systems. On October 26, 2004, Apple released a color version of their award winning iPod which can not only play music but also show photos. In early 2005, Apple unveiled a smaller iPod: the iPod Shuffle, which is about the size of a pack of gum. Speaking to software developers on June 6, 2005, Steve Jobs said the company’s share of the entire portable music device market stood at 76%.
Apple has revolutionized the computer and music industry by signing the five major record companies to join its new music download service, the successful iTunes Music Store, now known as iTunes Store. Unlike other fee-based music services, the iTunes Store charges a flat US$0.99 per song (or US$9.99 per album). Users have more flexibility than on previous on-line music services. For example, they can burn CDs including the purchased songs (although a particular playlist containing purchased music may only be burned seven times), share and play the songs on up to five computers, and, of course, download songs onto an iPod.
The iTunes Music Store commercial model is one-time purchase, which contrasts with other commercial subscription music services where users are required to pay a regular fee to be able to access musical content (but are able to access a larger volume of music during the subscription).
The iTunes Music Store was launched in 2003 with 2 million downloads in only 16 days; all of which were purchased only on Macintosh computers. Apple has since released a version of iTunes for Windows, allowing Windows users the ability to access the store as well. Initially, the music store was only available in the United States due to licensing restrictions, but there were plans to release the store to many other countries in the future.
In January 2004 Apple released a more compact version of their iPod player, the 4 GB iPod Mini. Although the Mini held fewer songs than the other iPod models at that time, its smaller size and multiple colours made it popular with consumers on debut with many stores having “sold out” their initial inventories of the devices.
In June 2004 Apple opened their iTunes Music Store in the United Kingdom, France, and Germany. A European Union version opened October 2004 (actually, a Eurozone version; not initially available in the Republic of Ireland due to the intransigence of the Irish Recorded Music Association (IRMA) but eventually opened Thursday January 6, 2005.) A version for Canada opened in December 2004. On May 10, 2005, the iTunes Music Store was expanded to Denmark, Norway, Sweden, and Switzerland.
On December 16, 2004, Apple sold its 200 millionth song on the iTunes Music Store to Ryan Alekman from Belchertown, Massachusetts. The download was The Complete U2, byU2. Just under three months later Apple sold its 300 millionth song on March 2, 2005.On July 17, 2005, the iTunes Music Store sold its 500 millionth song. At that point, songs were selling at an accelerating annualized rate of more than 500 million.
On January 11, 2005, an even smaller version of the iPod was announced, this one based on flash memory instead of using a miniaturized hard drive. The iPod Shuffle, like its predecessors, proved so popular that it sold out almost immediately, causing delays of up to four weeks in obtaining one within a single week of its debut. This is despite the fact that critics had gawked at the lack of LCD screen in the Shuffle, a norm in almost all current flash memory based mp3 players.
The iPod is giving an enormous lift to Apple’s financial results. In the quarter ending March 26, 2005, Apple earned US$290 million, or 34¢ a share, on sales of US$3.24 billion. The year before in the same quarter, Apple earned just US$46 million, or 6¢ a share, on revenue of US$1.91 billion.
In July 2005, the iPod was given a color screen, merging the iPod and iPod Photo.
On September 7, 2005, Apple replaced the iPod Mini line with the new iPod Nano. While some consumers were put off by the high price tag (US$199 for 2 GB), and easily scratchable surface, the Nano had sold 1 million units in the first 17 days.
A month later, on October 12, 2005 Apple introduced the new 5th generation iPod with video playback abilities. The device is also 40% thinner than a 4th generation iPod and has a larger screen.
On October 25, 2005, the iTunes Store went live in Australia, with songs selling for A$1.69 each, albums at (generally) A$16.99 and music videos and Pixar short films at A$3.39. Briefly, people in New Zealand were able to buy music off the Australian store. However, that loophole was quickly closed.
On February 23, 2006, the iTunes Music Store sold its 1 billionth song.
The iTunes Music Store changed its name to iTunes Store on September 12, 2006 when it began offering video content (TV shows and movies) for sale. Since iTunes’ inception it has sold over 2 billion songs, 1.2 billion of which were sold in 2006. Since downloadable TV and movie content was added 50 million TV episodes and 1.3 million movies have been downloaded.
In early 2010, Apple celebrated the 10 billionth song downloaded from the iTunes Music Store.