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TheStreet Open House

Tim Cook's Biggest Failure at Apple

Stocks in this article: AAPL

Here's How Apple Can Rebuild iTunes and Salvage iTunes Radio

First, Apple must shed the old mindset it reportedly operates under.

Given the respect I have for Apple (and, increasingly, Tim Cook), I'm skeptical that what Billboard reported in April is 100% true. According to our friends and lovers at Billboard, Apple's scrambling to save the broken promise of iTunes Radio; it desperately wants to find a way to revive sales of music downloads, which have been trending -- for some time now -- the way of the compact disc. Whether what Billboard says is true or not, Apple has clearly been a step or three behind the curve with respect to the music business and Internet radio's trajectory.

But fine -- Steve Jobs didn't hijack Pandora (P). Instead he stuck with iTunes and facilitated Pandora's monstrous success. Clearly, given the late and underwhelming arrival of iTunes Radio, that was a mistake. Apple missed what was happening with music listener behavior right in front of its face and/or saw it, but stubbornly fought to reverse what appears to be an irreversible trend.

No big deal because there's nobody more nimble than Apple.

So get rid of the fantasy that you'll be able to get people to buy music again. Don't discourage them from doing it -- even find ways to make it attractive -- just don't make that the reason for iTunes Radio or the introduction of a Spotify-like on-demand streaming service (which Apple is reportedly considering). Use these things to build a music-related ecosystem nobody has managed to construct. Not the big boys. Not the pure plays such as Pandora or Spotify.

This could entail banishing Pandora from the App Store. Though, as a few folks pointed out in the comments section of the linked article, Apple might not want to risk consumer goodwill or an antitrust lawsuit with such a move. While I think Apple could get away with ditching Pandora, I see and respect those points. So, maybe Apple should buy Pandora after all and integrate it the way I argue other potential buyers could/should. I don't know. But I do know, however it proceeds strategically, Apple needs to use data to power and creatively monetize the music-related segment(s) of its ecosystem.

Here's how that comes together and looks ...

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