Downloading music before iTunes wasn't hard, as long as you didn't mind breaking the law. But paying for a song online and storing it legally on a hard drive? All but impossible. Major labels had responded to the digital revolution by filing lawsuits against services like Napster instead of making it easier for members of the public to access music. By April 2002, the fans were starting to get pissed off – and so was Steve Jobs.
So Apple's CEO called the president of AOL Time Warner to complain. The president quickly patched in Paul Vidich, an executive at Warner Music Group, the storied label that acts including Madonna, R.E.M. and Neil Young called home. Vidich listened as Jobs snarled that the labels' digital-music services – clunky, pricey, unpopular options like MusicNet and Pressplay – had gotten it all wrong. Jobs had something better in mind, a new product that would actually get consumers to pay for online music in huge numbers. As he shared the beginnings of an idea that would eventually become the iTunes Music Store, Vidich listened in awe. "That's exactly what we need," Vidich told him.
The vision that Jobs started sketching out that day would soon redefine the future of music. Over the next eight years, Apple went on to sell 300 million iPods and 10 billion tracks via the iTunes Store, leapfrogging Wal-Mart and Best Buy as the world's biggest music retailer. And digital music helped Jobs transform Apple into the world's most powerful technology company after years as the underdog. "It was all intuitive to him," says Vidich. "He had a passion for music, and it was that passion that led him to iTunes."
Artists, in turn, recognized Jobs' deep love of music, and many have paid tribute to the late innovator since his death this week. "He changed music, he changed film, he changed the personal computer – it's a wonderful encouragement to people who want to think differently. That's where artists connect with him," Bono tells Rolling Stone. "Steve Jobs is, in many ways, the Bob Dylan of machines. He's the Elvis of the kind of hardware/software dialectic. He's a creature of quite progressive thinking, and his reverence for shape and sound and contour and creativity – that does not come from the boardroom."
In the months leading up to the iTunes Music Store's April 28th, 2003 debut, Jobs made it a personal priority. Many tech companies had already tried and failed to convince the labels to license their vast catalogs for online use – but none of them had Steve Jobs as their lead negotiator. "He pushed us in ways we needed to be pushed," recalls Roger Faxon, who, as CEO of EMI Group, helped license the Beatles' catalog to iTunes last year. "He sometimes didn't hold the executives in very high esteem, but he always put the creators of music at the pinnacle of the business. That's what he was trying to create – a way for their music to reach consumers."
Jobs could be ruthless when he talked to the labels. Kevin Gage, then Warner's technology vice president, remembers one key meeting at Apple's Cupertino, California headquarters where he and Vidich tried to persuade Jobs that digital rights management – virtual "locks" to prevent songs from being shared – was necessary to get other labels on board. He was three slides into a PowerPoint presentation when Jobs, rocking in his chair, exploded into a tirade about how the music business just didn't get it. "He said, 'You've got your head stuck up your ass' to me a number of times," Gage recalls. "There's that side of Steve – but in a smooth kind of way. He never reacted to Roger [Ames, then Warner's CEO] the same way he reacted to Paul and myself, put it that way. When Roger came into the room, you saw Steve at his brightest and sharpest."
His biggest selling point during this period was demonstrating early versions of the iTunes Store for label executives. Everybody who saw it was ultimately willing to make a deal. "[Jobs] showed me this application and I said, 'That's a great bit of software. It does everything I need, it organizes my music, works very efficiently, has an efficient mechanism around a credit card,'" Ames, the former Warner chief, who is now Ticketmaster's top international executive, said in 2007. "My view was this was exactly what we needed." Jobs was also able to speak rock stars' language, appealing directly to major artists like Bono and power players like Eagles manager Irving Azoff to get their approval for the online store. "I've said 'no' to all of them," Azoff later told The Wall Street Journal. "But I don't like their services, and I liked [Apple's] product."
Jobs knew he had a transformative idea on his hands. When Alex Luke, iTunes' former director of music programming and label relations, interviewed at Apple in 2003, Jobs asked him why he wanted the job. "The combination of iPod and iTunes is the most amazing service anyone has put out there," Luke, now an A&R vice president at EMI, told him. "And you're going to win." Jobs responded succinctly: "I completely agree."
When the iTunes Store opened, it was a huge success. The combination of an elegant user interface and a huge library of 200,000 songs for 99 cents each proved irresistible: Within five years after it launched, the store had sold a staggering 4 billion songs. The iTunes Store's rising fortunes hastened a perhaps inevitable industry shift from high-profit CDs to low-profit 99-cent tracks, and from 2003 to 2010, music sales dropped 32 percent, according to the International Federation of the Phonographic Industry. "His stock went from $8 billion to $80 billion and ours went in reverse," Warner's Ames said in 2007. "Not his fault."
As the iTunes Store grew more powerful, many in the music industry began to complain about the deals Jobs had negotiated early on. They insisted that the 99-cent price point was too inflexible – in 2009, Jobs relented and allowed variable prices – and they carped that they deserved a cut of Apple's lucrative iPod and iPhone sales. "I think they're regretting they gave all that leverage to Apple," Kevin Conroy, former new-technology president at BMG, said in 2007. "The problem was, it created kind of a juggernaut."
But Jobs just ignored the criticism, focusing instead on his passion for music. Bringing the Beatles to iTunes became a focus: Long before he finally convinced them to license their songs last year, Jobs personally designed ads for the day when it would happen. "Steve had a lifelong love affair with the Beatles' music, and it was an incredibly important part of his whole being," EMI's Faxon says. "He wanted to present them in as fine and as exquisite a way as possible – the elegance, the polarity, the compelling nature of the presentation of the Beatles in the digital world was orchestrated and designed by Steve. You felt his passion." And no matter how influential he became, Jobs was still a Beatles fan. Former Apple executive Tony Fadell, who worked closely with Jobs as senior vice president of the iPod division, remembers a lunch when Jobs received a phone call from Paul McCartney and excitedly declared, "Oh my God! I gotta take this!"
Jobs was open to new music, but his favorite artists were the ones he got to know when he came of age in the Sixties, including Bob Dylan and Donovan. After one meeting with Interscope chair Jimmy Iovine, he returned to work and asked colleagues, "Did you know there's this really great thing called hip-hop music?"
"This was, like, 2004!" Fadell recalls fondly. "We all turned to each other and smiled."
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