Is Steve Jobs Rolling In His Grave or Did He Dig One for Apple's iTunes?

NEW YORK (TheStreet) -- In one corner of the nutshell, Tim Cook's doing everything right at Apple (AAPL). And I really believe iPhone 6, the forthcoming Android killer, will be a hit that Apple went about developing and introducing the right way.

However, in that corner of the nutshell where I'm often tempted to wade, I gotta wonder not only about Cook as CEO, but about what's happening at Apple in general. The key question though -- do these concerns matter? Or are they merely nitpicks over issues that will not impact Apple's core business of selling tens of millions of units of premium hardware?

In any event ...

Case in point -- a well-done (as usual) article by Ed Christman and Alex Pham over at Billboard: Underwhelming Start to iTunes Radio Lights Fire Under Apple.

I use bold type because the entire headline as well as the context Christman and Pham support it with blows my mind. I can't believe what we're seeing from Apple with respect to digital music downloads and streaming radio. When this story hit Wednesday I went on a non-stop Christopher "Mad Dog" Russo-like rant.

First, nobody should be surprised by an Underwhelming start to iTunes Radio ... If the people at Apple are surprised by this, they set expectations too high. That's what most of the financial and tech media did. As iTunes Radio rolled out, however, I made it clear that it would not be a Pandora (P) killer.

See, for example, Pandora has nothing to fear from Apple's iTunes Radio (June 11, 2013 via Canada's The Globe and Mail) and Why Pandora Blows Apple's iTunes Radio Away (October 4, 2013 via TheStreet).

iTunes Radio exists -- or should exist -- as merely another part of the software and services ecosystem that drives sales of Apple mobile devices. While it's understandable why Apple would view the Pandora knock-off as a way to drive digital music downloads in the old-fashioned iTunes Store, that's an idea born to lose and destined to fail.

But this should come as no surprise either ...

On June 5, 2013, I published Is Apple Screwing the Music Industry?. Then, on June 28, 2013, Apple Should Be Ashamed of Itself hit.

You should read both articles, but the theses, particularly at the second link, state that Apple scored a sweet deal from record labels who signed on with iTunes Radio by holding out the (obviously false and horribly misleading) hope that the streaming radio service would reignite digital music downloads. Apple scored thousands of royalty-free plays in exchange for ... absolutely nothing.

It was painfully obvious then, as it is now, that downloads were dying and will soon be dead. They have gone the way of the CD.

Consider reviewing June 7, 2013's Pandora: The Hand That Feeds the Ungrateful Music Industry and, from August 1, 2013, Downloads Die, Apple Lives, Music Industry Suffers. Today, the trend continues with download sales already down 13.3% in 2014, as per Digital Music News.

Now we're getting closer to understanding why it might be Steve Jobs, not Tim Cook who's responsible for this lunacy. 

Right when you're ready to believe Apple's the smartest person in the room, it forces you to think otherwise. If we're to believe the Billboard story -- and knowing the quality of work they do I have no reason not to -- Apple's not only bent out of shape by iTunes Radio weak start, it's working feverishly to find a way to boost digital music downloads. That's why we're hearing about a possible iTunes Radio redesign (already) and/or on-demand streaming modeled after Spotify.

This should shock and maybe even concern you because Apple's supposed to be the company that sees trends coming before they're actually trending. Apple's the company that's supposed to blow up old business models, not feebly try to find ways to save them. How could a twerp like me vision the future with such accuracy while Apple's still tinkering with where to put the "BUY" button? And, worse yet, thinking that its location will actually make a difference. 

Lots of people have used the Steve Jobs must be rolling in his grave line since he passed. But, on this foul up, he really must rolling in his grave.

But wait. Stop the record ...

Steve Jobs was alive when Pandora took off. In fact, Pandora exploded, in large part, because Apple not only included the app on the first iPhone but Jobs himself brought Pandora on stage to help show people how the thing works.

At my first meeting with Pandora co-founder (and former Chief Strategy Officer) Tim Westergren, the first thing he did was pull his iPhone out of his pocket and say something to the effect of This is why we are where we are right now. Jobs was witness to all of this. And you mean to tell me he didn't have sight lines somewhere over the next several years to start extricating Apple from the music download business and move it toward a streaming model.

So we can't put this all on Cook. Jobs deserves a considerable portion, if not all of the blame. Maybe Jobs was perfectly happy relying on third party apps to provide the iOS music experience outside of the iTunes Store and your iTunes collection. Maybe he never would have done iTunes Radio. Maybe he didn't see the need for it. We'll likely never achieve certainty with respect to any of this.

But here's what we do know -- Apple did not anticipate the death of the iTunes Steve Jobs built. And now it's almost as far behind the curve as the music industry. And it's displaying an uncharacteristic patheticism as it flails ineptly trying to not merely keep up, but save a business model that simply cannot be saved. We're not buying music anymore. We're buying apps, but we're not buying music. And there's nothing Apple can do to change this.

iTunes Radio, the motivation behind it and the reported brainstorming in the aftermath of its launch might be Apple's biggest miscalculation and strategic embarrassment in the post-iPod era.

--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a full-time columnist for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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