Steve Jobs' Magic Kingdom

Polarizing figure
In the wake of the Disney-Pixar deal, the question is how Jobs can apply his unique skills to the media industry. From record labels to music studios, many execs are only reluctantly experimenting with technological change. Besides being concerned that piracy protections aren't strong enough, they're petrified of losing control since it's unclear how they'll make money in the new world. And Jobs is a polarizing figure. While the major music labels were excited by the possibilities opened up by Apple's iPod, they're now leery that Jobs has pulled a fast one. Apple reaps billions from selling its hit music player, but there are sparse profits from the songs being sold over the Net.

The Disney deal may help give Jobs some additional credibility in the media world. While he had a major stake in Pixar in the past, he now sits on the board of one of the biggest media companies in the country. That means he has a fiduciary responsibility to protect the company's assets, from "Desperate Housewives" to Mickey Mouse.

Iger's assets and Jobs' vision could prove a potent combination. They've already shown how they can experiment in new areas and then create enough consumer excitement that others are compelled to follow. After Iger agreed to put ABC's shows on iTunes for downloading to video iPods, the other major networks followed suit. The same day as the Disney-Pixar agreement, iTunes began offering short films from the early days of Mickey and Goofy. How long before protective movie studio chiefs are digging through back catalogs in hopes of bringing in extra revenues?

It's one more way in which iTunes is evolving into something much more powerful than a simple music store. Besides songs, TV shows, and short films, it offers music videos and podcasts from National Public Radio and independents like Brian Ibbott, creator of the cover song show Coverville. In December alone, 20 million people visited the site, triple the number the year before.

What could the future according to Jobs look like? For starters, no radical changes will occur overnight. Given Apple's powerful branding, it's easy to forget that Jobs hasn't typically been the first to pioneer new areas. Many MP3 players existed before the iPod, and Microsoft has been slogging away for years on PCs fit for entertainment in the living room. Apple has taken the first steps in this direction by adding the ability to control a Mac from the couch via the Apple Remote and FrontRow software.

Speculation is rife that Jobs will move Apple fully into the living room, and there's little reason he wouldn't. The most likely scenario is that Apple would build a version of its Mac mini that could be attached to a TV and entertainment center so the mini could store family photographs and home videos along with music and videos downloaded from iTunes. Taken to the extreme, the living room of 2010 may no longer need to have a CD-rack, DVD player, TiVo, set-top box, or stereo. All those capabilities could be built into a single box, an Apple TV, or an Apple-branded home entertainment center.

MORE FROM BUSINESSWEEK

BusinessWeek Section Front

Experts Talk About FOMC Minutes, GDP, and Home Prices Stock Picks: Hewlett-Packard, Analog Devices Stocks Fall on Economic Data Checking the Health of the Housing Recovery Stocks Gain on Home-Sales Data Unions, Business Oppose Tax on 'Cadillac' Care Wall Street: Is It Good to Apologize for Greed? Stocks Slip on Dell Earnings Apple's Schiller Defends iPhone App Approval Process Dell Stock Gains May Slacken BusinessWeek Section Front