Thinking about apples

Apple – a model for the future?

Apple has become one of the most valuable companies on the planet through the rise of it’s music business.  Yet it started as a business making boxes.  Although many have praised Apple  (rightly so) I’ve got a nagging doubt about the way Apple  (and businesses like Spotify) are being valued.  They are after all, just shops.  Apple’s success has been built on it’s ecosystem of Macbook > iPod > iTunes > iPhone.  Now this is fine and makes sense in a normal business model.  But Apple’s model is built on it’s control of the vast library of music. And this is the bit which is an anomaly for me.  Apple’s success can only exist because it has not been involved in any way in the costs of creation of the music it now (almost) monopolises. (OK no shops have direct links into the products they sell – but they pay a rate for the products which suits the manufacturers of the products.  I’m not sure that Apple does this.)  It’s almost the ultimate marketing dream machine, but it make no product.  How many man-hours of musicians,  producers, writers, lyricists,studio time, etc, etc have gone in to creating the music library which is Apple’s key asset?   Classical economic theory about the price of goods says the price should reflect the labour used to create the item.  It seems to me that Apple’s business model doesn’t do this.  Maybe this was Steve Job’s biggest stroke of genius?  Spotify and others are similar.  Without all the millions and millions of pounds and dolars spent making the music/product they’d have no business.

So I wondered – in the digital economy, can this be replicated?  Maybe perhaps in other niches. Scotland has a business which is a world leader in the digitisation of ancestry archives.  This is following a similar model to Apple/Spotify.  Making available something people will want to access in a digital format without having to bear all the costs of the manufacturing the product in the first place. It’s smart, it’s profitable.  What other niches exist?  Apply to me on the back of a postcard please.  I’ll go halfers on the profits with you.

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