Steve Jobs

songs that was simple, safe, and legal.
    The music industry also faced a challenge. It was being plagued by a bestiary of piracy services—Napster, Grokster, Gnutella, Kazaa—that enabled people to get songs for free. Partly as a result, legal sales of CDs were down 9% in 2002.
    The executives at the music companies were desperately scrambling, with the elegance of second-graders playing soccer, to agree on a common standard for copy-protecting digital music. Paul Vidich of Warner Music and his corporate colleague Bill Raduchel of AOL Time Warner were working with Sony in that effort, and they hopedto get Apple to be part of their consortium. So a group of them flew to Cupertino in January 2002 to see Jobs.
    It was not an easy meeting. Vidich had a cold and was losing his voice, so his deputy, Kevin Gage, began the presentation. Jobs, sitting at the head of the conference table, fidgeted and looked annoyed. After four slides, he waved his hand and broke in. “You have your heads up your asses,” he pointed out. Everyone turned to Vidich, who struggled to get his voice working. “You’re right,” he said after a long pause. “We don’t know what to do. You need to help us figure it out.” Jobs later recalled being slightly taken aback, and he agreed that Apple would work with the Warner-Sony effort.
    If the music companies had been able to agree on a standardized encoding method for protecting music files, then multiple online stores could have proliferated. That would have made it hard for Jobs to create an iTunes Store that allowed Apple to control how online sales were handled. Sony, however, handed Jobs that opportunity when it decided, after the January 2002 Cupertino meeting, to pull out of the talks because it favored its own proprietary format, from which it would get royalties.
    “You know Steve, he has his own agenda,” Sony’s CEO Nobuyuki Idei explained to
Red Herring
editor Tony Perkins. “Although he is a genius, he doesn’t share everything with you. This is a difficult person to work with if you are a big company. . . . It is a nightmare.” Howard Stringer, then head of Sony North America, added about Jobs: “Trying to get together would frankly be a waste of time.”
    Instead Sony joined with Universal to create a subscription service called Pressplay. Meanwhile, AOL Time Warner, Bertelsmann, and EMI teamed up with RealNetworks to create MusicNet. Neither would license its songs to the rival service, so each offered only about half the music available. Both were subscription services that allowed customers to stream songs but not keep them, so you lost access to them if your subscription lapsed. They had complicated restrictions and clunky interfaces. Indeed they would earn the dubious distinction of becoming number nine on
PC World
’s list of “the 25 worst tech products of all time.” The magazine declared, “The services’stunningly brain-dead features showed that the record companies still didn’t get it.”
    At this point Jobs could have decided simply to indulge piracy. Free music meant more valuable iPods. Yet because he
really
liked music, and the artists who made it, he was opposed to what he saw as the theft of creative products. As he later told me:
From the earliest days at Apple, I realized that we thrived when we created intellectual property. If people copied or stole our software, we’d be out of business. If it weren’t protected, there’d be no incentive for us to make new software or product designs. If protection of intellectual property begins to disappear, creative companies will disappear or never get started. But there’s a simpler reason: It’s wrong to steal. It hurts other people. And it hurts your own character.
     
    He knew, however, that the best way to stop piracy—in fact the only way—was to offer an alternative that was more attractive than the brain-dead services that music companies were concocting. “We believe that 80% of the people stealing stuff don’t want to be, there’s just no legal alternative,” he told Andy Langer of
Esquire.
“So we said, ‘Let’s create a legal alternative to this.’ Everybody wins. Music companies win. The artists win. Apple wins. And the user wins, because he gets a better service and doesn’t have to be a thief.”
    So Jobs set out to create an “iTunes Store” and to persuade the five top record companies to allow digital versions of their songs to be sold there. “I’ve never spent so