iTunes debuted several years ago, and I continue to be impressed with the simplicity and superiority of Apple’s value chain for music–from the iPod to the Mac/PC all the way up to the store itself. Not so much for video delivery, but that’s a subject for another Sunday. The point is, iPod and iTunes accomplished a far-sighted vision incubated by Jobs and immediately lampooned by lots of naysayers. Of course, Jobs had the last laugh.

But while the last laugh he may’ve had, the last frontier for iTunes isn’t music, and it certainly isn’t merely video. It’s GOT TO BE community-generated content. Look at YouTube. They’ve taken the medium and empowered a collective of independent, usually amateur, video producers by giving an outlet for their art, for their skull-cracking skateboard accidents, and sometimes, for their influence. Isn’t that the heart of Web 2.0?

Steve Jobs’ recent comments dissing Digital Rights Management as a repressor of the greater media industry got me thinking: What would iTunes be like if it were given the 2.0 treatment? Here are my ideas for ya Steve, free of charge:

1. Allow anyone–ANYONE–to submit music to the iTunes site. Then, allow these independent producers to create communities around that music. Free and open user ratings and reviews of the content, just like the commercial stuff that’s in the iTunes Store. The good stuff will be rewarded and bubble to the top, while the crap will languish at the bottom of the bit barrel, just as it should be.
2. Empower Mac users to create superior content–it bolsters the growth of the platform in way that shoddy .Mac cannot. In other words, give Logic Express and GarageBand features which allow pain-free submission of user-generated music by indy producers. Take your cues from MacJams.com, but make it look Apple-pretty and make it stupidly easy for all us musical blockheads.

3. Share revenue with independent producers who submit music–they’re a lot less likely than Warner Bros. or Arista Records to squeeze you for 94% of the revenue generated, or whatever you’re paying now. Paying indy producers for content sold accomplishes three things–(a) it rewards and encourages the community while increasing the influence of Apple in the musical entertainment space (b) it allows a pathetically stagnant indy music business to be scrappy against the payola wagon at Clear Channel and compete with the big record companies, who would rather publish three platinum albums per year than twenty gold albums, and (c) it could create deflationary pressure on the big labels currently participating in the iTunes franchise, lowering prices and increasing thru volume. Everybody wins.

4. Keep community-submitted music DRM-free. Mindshare is the reward for excellent art. In keeping indy submissions free of DRM, you can prove your point to the big labels.

Steve, you acted like you had a pair of rocks when you mouthed off about DRM. Now, it’s time to prove it. Apple is in a unique position to create a whole new arena for democratized indy music. Where MP3.com failed, Apple can succeed, because it already has a captive audience with iTunes.