Market failure and why an iPod Classic is now worth £350

If you liked music in the 1980s, the arrival of the Sony Walkman was a godsend that transformed travel. On a short commute on the bus or a long train journey you could be transported aurally via a small box, a tape player with headphones, that enabled you to take your music with you. Outside it might look as though were passing through Preston on a rainy day, but between your ears, inside your head, you had been carried to the American South or a Berlin concert hall, to Chess records in Chicago or Abbey Road studios.

Using a Walkman meant carrying a bundle of tapes around with you, and sometimes spooling out the tape if it became slack or twisted, but as an advance in human happiness for the music lover it was up there with the invention of long-playing vinyl.

If you think this doesn’t matter, please stop reading. The world is divided into those of us who like music – a lot – and those who (bafflingly) don’t see the point. If you are in the latter group there is little for you here in this post. Off you go.

In the 1990s the CD Walkman superseded and eliminated the cassette. Headphones became smaller. But you still had to carry a bundle of CD boxes, or as the taxi waited outside to take you to the airport on holiday rifle through a pile of discs (where is Pet Sounds? ah, disc two of Sign O’ the Times is missing) putting them into a little carrying case that enabled you to carry 20 or 30 CDs with you in a neat package.

All of that ended with the first iPods and other MP3 players. Their arrival and the digitisation of record collections was – to some of us in the Walkman generation – quite baffling. What weird form of wizardry was this? Hundreds of albums stored in a little slab of plastic, all accessible at the turn of a wheel and the press of a little button that was not really a button. It was an enormous improvement on what had gone before, however. Let no-one pretend otherwise. The distance travelled between the launch of the Walkman in Japan in 1979 and the release of the first iPod in 2001 was enormous.

This was market economics at its finest, although some musicians take a different view because they felt the impact of all that creative destruction and got less money when the record industry was melted down digitally and reformed. The peak achievement for the music fan – usually uncaring about the complaints of people who get to play music for a living – was the creation of Apple’s iPod Classic in 2007. This was a device with, if you wanted it, an enormous storage memory capable of holding hundreds or even thousands of albums. Your entire record collection could fit in your pocket and go anywhere you wanted.

And then they stopped production of the iPod Classic in 2014. I thought little of this at the time. They must have some even better device up their Silicon Valley sleeves, I assumed. They were always making improvements, weren’t they?

I thought so until I dropped my faithful old iPod on a flight last year to the US. “Disc corrupted” it said when I tried to plug it into my Mac. I tried everything, going to the Apple Store in New York, scouring Mac forums and finding in the process that there were thousands of music fans in mourning for the iPod Classic. You’ll have to get an iPod Touch, they said. But I don’t want an iPod touch. It is a mini-PC with a camera and all manner of other gizmos. The point of an iPod, like a Sony Walkman only more so, is that it deliberately cuts the listener off from other distractions enabling you to listen to music, either closely or soothingly washing over you. Try a Nano, others suggested, but it is has a relatively small memory and can store only a fraction of a decent-sized record collection. The Nano is a retrograde step. For the first time since the clever people at Sony invented the Walkman, the business of portable music seemed to be going backwards, its offer less plentiful. I wanted an iPod Classic, with an enormous storage capacity and no other diversions. They didn’t make them anymore.

It is for this good reason that since they ceased production iPod Classics have become valuable, coveted items, relatively speaking in a world of cheap and disposable technology. A brand new iPod Classic (some clever people bought up the final stock and waited) will now cost you somewhere between £300 and £350, ten times what the old Walkmans used to cost back in ancient history. When I pointed this out to the comedian Al Murray on Twitter he responded “Whut?!”

Whut on earth is going on? Ultimately, the iPod Classic was no good to Apple, really, beyond the initial surge in sales. Once sold to the customer it was not a source of ongoing revenue, unless the owner was daft enough to buy (rent, really) their music from the iTunes store. The person with a lot of records or high-quality downloads bought not from Apple was nothing more than an annoyance to the company, to be migrated onto new phone and web-based products and into closed networks where their money could be harvested monthly with no end in sight.

That is really what is at the root of this process. The vast and easy fortunes made by brilliant technologists in the early 2000s from one off devices are being replaced by rent-seeking under the banner of improved services, which in the case of music they are often not. Everything has become about the scramble for The Cloud (digital storage that the company owns which the customer pays – one way or another – to access) and mining the extraordinary rise of mobile and smart phones on which the consumer can jump between social media, news, photos, video subscription services, and even a burst of music from a £10 per month service claiming to offer every song in the world (it doesn’t incidentally).

If you want to opt out, and buy a device that is a genuine advance on the iPod Classic with large storage capacity and high-resolution, Sony will charge you £500. Their top-end model costs £950, meaning it is unlikely to serve a mass market.

This is a classic first world problem, I know. Grumpy forty-something wants all his records in one place. Who cares? But put my grumpiness to one side – if we can – and you might see that the phasing out of wonderful technology that works, the deliberate reduction in capacity and its replacement with something worse that is more expensive, is symptomatic of an emerging classic market failure in mass market tech. It is what happens when power is excessively concentrated, and there are too few providers, and too much of the media gets gulled into treating the business people who make this stuff like heroes or (yuk) icons.

We get fleeced, nicely, by a man in jeans, and ooh look at that new font they’ve put on the side of the box in which your device comes. Goodness, otherwise intelligent people appear to be drugged and stupefied the moment you show them the inside of an Apple Store, which let’s face it is like a capitalism meets communism nightmare, with vast queues, the staff in charge and what you really want (a battery for a four year old laptop for example) no longer produced. But look at that cool lift and the projections on the wall. This is a hugely profitable parallel universe in which Apple is seen to be in a spot of trouble when its quarterly (quarterly) profits fall to $7.8bn, as they did in the second quarter this year. That’s more than JPMorgan made in the same period, and that’s a bank integral to the economy with huge capital requirements.

The tech giants are building a digital prison for us, in which there are sufficient comforts that we just carry on paying – via direct debits we don’t notice – until we are locked inside their networks and systems, and it is too complicated or too much hassle to even consider leaving. Facebook is doing this to the news business – incredibly, helped by the desperate news business. Apple wants you to live and breathe Apple. Just wait until they can offer us Virtual Reality on direct debit.

The solution is more competition, open networks and consumer power to drive down prices, of course. Perhaps the market will produce it organically, or maybe it will take an old-fashioned politician or two (Theresa May) to wake us all up to what is going on.

My iPod Classic? It is working again, hallelujah. Someone on a Mac forum suggested a way to repair the hardware and it worked, although yesterday the eight year old device spluttered again and I had to reset. When it came back to life after a lull and worked, and the little menu popped up, I felt stupidly grateful for a second and then consumed by a frightening realisation that soon the little device I love so much will die.