I got a brief interview with Apple's chief executive, Steve Jobs, right after Tuesday's launch of iTunes music store in the UK, France and Germany. We didn't get to use much in the final piece so, given the level of interest in the story, I thought I'd post a fuller, edited transcript of our chat here. Students of Jobs interviews - and I know there are some - will note his comments on the iPod's changing role for Apple (it's not seen as a flag-bearer for the whole Mac OS any more) and Jobs' repeated statement of admiration for Sony. Conspiracy theorists, start your engines...
NM: What's the rationale behind the pricing of music on the store? SJ: "We want to offer a really good product at a really aggressive price. We want to be the price leader. OD2 announced a price of 75p, but it's from 75p. We looked at their store and we could only find very few songs. Most songs were at 99p.
NM: Was it also down to the fact that, unlike in the US where you pretty much had the market to yourselves, in the UK the market is more developed… SJ: "But it's not more developed here. It's still very, very tiny. In the UK, the numbers are only about 50,000 songs being sold here a week. We sell 2.5m songs a week in the US. The market really hasn't been opened here. We hope that iTunes does that. The thing to keep in mind is there's not a lot of money to be made running an online music store. Most of the money goes to the record labels. I've always wondered why small companies would want to do it. We're the largest, and we're breaking even, making a very small profit, but the other guys must be losing money. And they don't have an iPod business. If you're not selling iPods, and you have a tiny market share, you must be losing a lot of money. Why would a small company like Napster or OD2 want to be in this business? But that's their business, not ours. I'm sure they have their reasons."
NM: When the iPod was launched, you said it might lead people to the Mac platform. Does you still believe that? SJ: "No. We brought the iPod to Windows. That was a big decision. That was basically a decision not to use the iPod to drive people to Macs. We're going to use it as a music device, and we're going to put it on Windows. The majority of iPods we sell are used on Windows."
NM: You've gone back to renegotiate with the labels after the first year. Have attitudes changed towards you? SJ: "Oh sure. Absolutely. The labels are really happy with the success that we've shown. We told them we were going to go do a bunch of things, and we did them. And they weren't used to that. So I think there's a lot of trust that's been built up."
NM: They're also more likely to be keen on you - you're shifting a lot of songs, and putting some marketing muscle behind it… SJ: "We're investing a lot in this, and they like that".
NM: Coming to Europe, were the negotiations more difficult than those you had in the US? SJ: "No, they weren't more difficult. But the difficult thing was the rights. In the US, a company has the right to distribute a song. But in the UK, a different company has the right to distribute that same song. And maybe in Germany, a third company will have the right. And there's no central database that tells you who to pay when you sell a song in the UK, versus Germany, versus France. We had to sit down with the labels and figure all this out. And that's what took a long time – figuring out the rights issues. "On other services, every song has a different set of rights attached to it. We didn't want that. The user should never have to worry about that. When they buy a CD they don't have to worry about what rights they have, and they're the same for every CD they have. So I think what the big breakthrough for iTunes was that the rights – and the price – are the same for every song."
NM: What's happening with the indie labels? You appear to have some, but by no means all. SJ: "We have over 500 indies in the US, and most will be coming here. We have dozens signed here, but there are a few – probably many – that we don't. But we're open for business now, and we'll obviously have time now to sign those guys up over the next several weeks."
NM: Your competitors are quick to point out iTunes Music Store only works with the iPod, and that their services works with dozens. SJ: "Right, but nobody buys those. iPod has over 50% market share. And, more than that, if you look at the market share of in use players – and there's no data on this – but we guess the share is closer to 75% because that 50% includes comparing iPod with the $50 MP3 players that only hold 16 songs. When you get one of those as a gift, you don't use it."
NM: Do you have any data on the market share in hard-disk based players? SJ: "Oh – in the 90s. iPod works with anything – you can put any MP3s from any jukebox, any computer. You can rip your CDs from any jukebox, any computer. With iTunes, we decided to work with the most popular music player – and that's by far the iPod. Rather than support all these other guys, we'd rather use the engineering to innovate. So far the customers have said that's what they want."
NM: I was speaking to an academic yesterday who was finding that digital music is changing our listening habits – we have a far broader taste in music than any radio station would give us credit for, especially. SJ: "I agree with that. Another thing that's new is shuffle – there was never real shuffle before the iPod. You could shuffle a CD, but there would be only 12 songs. So you've got 1000 songs and you put it on shuffle in your iPod, and you're listening to things you haven't heard in a couple of years. It's a new way to discover things both on the iTunes music store, but also to discover your own music library again. People are listening to lots more. I think there's a renaissance in music that this is going to ignite. Sony did a great job of this in the 70s and 80s. They had the best CD players, and we look at them as a role model in this new digital age – a lot of people have said this iPod is the Walkman for the digital age."
NM: But the download and play model holds – streaming, for instance, isn't something you're interested in doing at this stage? SJ: "It's not something the customers seem interested in doing. We haven't seen a lot of interest."
NM: And a la carte pricing is what people want too? SJ: "It was proved long before iTunes – it was proved with LPs, it was proved with cassettes, it was proved with CDs. People want to own their music."
