Steve Jobs: The Rolling Stone Interview

How did the the record companies react when you initially approached them about getting on-board with Apple?
Well, there's a lot of smart people at the music companies. The problem is, they're not technology people. The good music companies do an amazing thing. They have people who can pick the person that's gonna be successful out of 5,000 candidates. And there's not enough information to do that — it's an intuitive process. And the best music companies know how to do that with a reasonably high success rate.

I think that's a good thing. The world needs more smart editorial these days. The problem is, is that that has nothing to do with technology. And so when the Internet came along, and Napster came along, they didn't know what to make of it. A lot of these folks didn't use computers — weren't on e-mail; didn't really know what Napster was for a few years. They were pretty doggone slow to react. Matter of fact, they still haven't really reacted, in many ways. And so they're fairly vulnerable to people telling them technical solutions will work, when they won't.

Because of their technological ignorance.
Because of their technological innocence, I would say. When we first went to talk to these record companies — you know, it was a while ago. It took us 18 months. And at first we said: None of this technology that you're talking about's gonna work. We have Ph.D.'s here, that know the stuff cold, and we don't believe it's possible to protect digital content.

Of course, music theft is nothing new. Didn't you listen to bootleg Bob Dylan?
Of course. What's new is this amazingly efficient distribution system for stolen property called the Internet — and no one's gonna shut down the Internet. And it only takes one stolen copy to be on the Internet. And the way we expressed it to them is: Pick one lock — open every door. It only takes one person to pick a lock. Worst case: Somebody just takes the analog outputs of their CD player and rerecords it — puts it on the Internet. You'll never stop that. So what you have to do is compete with it.

At first, they kicked us out. But we kept going back again and again. The first record company to really understand this stuff was Warner. They have some smart people there, and they said: We agree with you. And next was Universal. Then we started making headway. And the reason we did, I think, is because we made predictions.

We said: These [music subscription] services that are out there now are going to fail. Music Net's gonna fail, Press Play's gonna fail. Here's why: People don't want to buy their music as a subscription. They bought 45's; then they bought LP's; then they bought cassettes; then they bought 8-tracks; then they bought CD's. They're going to want to buy downloads. People want to own their music. You don't want to rent your music — and then, one day, if you stop paying, all your music goes away.

And, you know, at 10 bucks a month, that's $120 a year. That's $1,200 a decade. That's a lot of money for me to listen to the songs I love. It's cheaper to buy, and that's what they're gonna want to do.

They didn't see it that way. There were people running around — business-development people — who kept pointing out AOL as the great model for this and saying: No, we want that — we want a subscription business. We said: It ain't gonna work.

Slowly but surely, as these things didn't pan out, we started to gain some credibility with these folks. And they started to say: You know, you're right on these things — tell us more.

Well, despite the success of iTunes, it seems that it's a little early to call all of your competitors failures. Real Network's Rhapsody, for example, has already won over some critics.
One question to ask these subscription services is how many subscribers they have. It's around 50,000. And that's not just for Rhapsody, it's for the old Pressplay and the old MusicMatch. 50,000 subscribers, total.

The subscription model of buying music is bankrupt. I think you could make available the Second Coming in a subscription model and it might not be successful.

When you went to see music execs, was there much comment about Apple's "Rip, Mix, Burn" campaign? A lot of music execs regarded it as a subtle invitation to steal music. Well, when we did the Rip, Mix, Burn thing — I mean, "rip" is the phrase that means "take the bits off the CD and put 'em on your hard drive." Rip the bits off your CD — as if you're physically ripping them off and putting them on your hard drive. The person who assailed us over it was Michael Eisner. Because he didn't have any teenage kids living at home, and he didn't have any teenage kids working at Disney that he talked to, so he thought "rip" meant "rip off." And when somebody actually clued him in a to what it meant, he did apologize.

Lately, the recording industry has been threatening to throw anyone caught illegally downloading music in jail. How smart is that?
Well, I empathize with 'em. I mean, Apple has a lot of intellectual property. We told 'em that, too. We said: We really get upset when people steal our software. So I think that they're within their rights to try to keep people from stealing their product.

Our position, from the beginning, was that 80% of the people stealing music online don't really want to be thieves. But that it is such a compelling way to get music: It's instant gratification. You don't have to go to the record store; the music's already digitized, so you don't have to rip the CD. It's so compelling that people are willing to become thieves to do it. And to tell them that they should stop being thieves — without a legal alternative, that offers those same benefits — rings hollow. We said: We don't see how you convince people to stop being thieves, unless you can offer them a carrot — not just a stick. And the carrot is: We're gonna offer you a better experience ... and it's only gonna cost you a dollar a song.

You've sold about 20 millions songs on iTunes so far — it sounds like a big number, until you realize that some 35 billion music files swapped in a year.

Well, we don't even have to go that far. There are approximately 800 million CD's sold in the U.S. a year, I believe. That's about 10 billion tracks, right? About 10 billion tracks in the U.S. — sold legally. Our next milestones are to get up to 100 million tracks a year, then a quarter a billion, and then half a billion, and then a billion. And that's gonna take a little bit of time. But we can see a path that people will buy a billion tracks a year online. From us and others. And that'll be 10% of the music that's sold today in the country, and then it will keep going from there. And, someday, maybe all of the music will be delivered online — 'cause the Internet was built to deliver music. I mean, if nothing else, Napster proved that.