LIKE THOUSANDS of others, I got an iPod nano for Christmas. It’s a gorgeous object. But in use the striking thing about Apple’s iconic music player is neither its sexy looks nor even its playback performance – which is much the same as that of a dozen rivals. This tiny object does a lot more than play music: as part of a larger system with iTunes and the iTunes music store, it defines a new relationship between customer and producer and reshapes an industry. One day all products and services will be like this.

The first unexpected thing the iPod has done is make estranged customers like me music buyers again. I haven’t bought music regularly for years – CDs aren’t attractive in themselves, prices and reissuing policies are as cynical as ever, and the ‘retail experience’, hunting for what you want in the big record stores, is about as tempting as a visit to an emergency ward. (I don’t need to add that today’s bands are crap.)

But iTunes changes all that. Via the music store, I know when the Rolling Stones or Dr John have a new album out (what a giveaway). What’s more, it’s possible to buy on impulse: hearing something on a film soundtrack or radio show, you no longer have to go to HMV or Amazon (or more likely just forget about it), you download it straight away – instant gratification. The saviour of the industry is not ‘pounds 50 man’ but ’79p anyone with broadband’. No thanks to the record industry, but I’m enjoying being a customer again because it’s on my own terms.

And that’s the second thing about the iPod: it puts you, not them, in control. Basically, the record labels are devotees of the Henry Ford business model: ‘You can have any music you want so long as it’s what I want to give you.’ But using the cyberspace jukebox, you’re no longer at their mercy. You don’t have to pay for the four filler tracks on every album. You don’t have to buy albums at all. You can put country next to classical, punk next to jazz, Barry Manilow next to Placido Domingo (wait, that’s a joke).

And you can play them in the same way. Indeed, by plugging the iPod into a pair of speakers, many people are dispensing with a traditional home hi-fi set up altogether. The sound quality isn’t as good (purists say), but it’s good enough, and for many – perhaps most – of us the gain in control and simplicity easily outweighs the disadvantages. So the iPod signals the end of another, if less malign, producer tyranny – hi-fi manufacturers beware.

Understand that this is not a puff for Apple. The iPod is certainly not perfect. Incompatibility with other formats means that at one level it perpetrates its own version of Henry Fordism: ‘You can have anything you like so long as it’s Apple.’ This is the more irritating because the music store’s coverage is by no means universal.

Nevertheless, the things it has got right hold key lessons for companies trying to woo customers in any industry, whether product- or service-based.

One lesson is the importance of using the right medium, and executing it properly. The iPod is a textbook example of getting applications – for playing, organising and buying music – to work seamlessly together through the net without dropping you between the gaps. The second is simplicity. The more complicated the product, the harder it has to work to make you love it. A large part of the iPod’s appeal is how easy it is to use – put another way, the fact that nothing gets between you and what you want from it.

This leads to the third, most important and least obvious of the iPod’s trumps: the power of ‘pull’. Most companies distribute their product by ‘push’. They estimate demand, build according to the estimate and then sell (‘push’) what they have built. This is essentially business as central planning, and it works little better at company than at country level – hence the need for advertising and promotional price-cuts to reconcile sales with estimates, extra features to help sell the product and, finally, huge computer power to keep track of all the product variations, sales estimates and production plans.

When, as with iTunes, the product is ‘pulled’ by the customer, on the other hand, the engines required for ‘push’ are redundant. It’s like using gravity instead of fighting against it. Pull inherently uses fewer resources tells managers directly what consumers want and above all delivers on customers’ own terms.

In their book The Support Economy, Shoshana Zuboff and Jim Maxmin charge that the rising tide of consumer discontent amid material plenty is the result of companies failing to change along with their customers. People are no longer grateful for what companies give them they want what they want, in the form they decide. Part of the iPod’s phenomenal success is that as one of the first of a new breed of products to put customers on equal terms with producers, it begins to respond to this need.

That said, don’t go thinking you don’t have work to do, Apple. Some colleagues were grousing that you can’t download sleeve notes from iTunes. It’s ridiculously hard to transfer a track downloaded for one iPod to another. And why does the database still not contain LaVern Baker’s ‘Saved’?

The Observer, 28 May 2006