Steve Jobs in 2004 at D2 (Enhanced Quality)
Transcript
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Well, ladies and gentlemen, Steve Jobs.
I figured no point in an introduction, you know?
Yeah.
Well, when you were here last year,
your music store, your iTunes music store,
had been out, I think, two or three weeks,
and you showed it to people, and we talked a good deal about it.
So let's start with that topic.
Legal downloading, you've been the leader in it.
Where does it stand today?
How do you think it looks for the future?
We've crossed 85 million songs,
so 100 million is within striking range.
And all the people that license music from the music companies
have to report their sales data every week to SoundScan,
which aggregates them.
It doesn't break them out by company, but it aggregates them.
And since we know what ours is and we know what the total is,
we can compute market share every week.
and we have about 70% market share of the legal downloads, which is great.
But if you look at everybody together, 100% of the legal download market,
we've gone from pretty much 0% a year ago
to about 2% of the legally sold music in the U.S.
In other words, if you take all the music sold on CDs,
all the tracks, it's about 10 billion tracks.
Now, people don't want to buy all of those,
but they have to because they come on a CD.
So they buy some that they don't,
but they buy 10 billion tracks a year,
and our industry's approximately 200 million tracks a year rate.
So 2% is not a giant number,
but if you look at it and say it's been accomplished in a year,
and you look at the trajectory,
it's not inconceivable to see it breaking through 5%
in the next 24 months, as an example, maybe sooner.
How about the illegal downloading side, though?
Do you have any way of measuring whether you think that's...
It depends on who you believe.
There are some studies that say it's gone down.
There are some studies that say it continues to go up.
We don't know.
Our take is that it's probably moderated a little bit
and come down a little bit because of the threat of the lawsuits.
But it's still bigger by some X than what you're doing, right?
It's big, yeah.
And that's what we compete with, really.
I mean, we don't compete with the 30% guys anymore.
We compete, really, with piracy and trying to offer a better product,
which is what took us so long to convince the labels of
continues to take us ongoing efforts to convince the labels
that really piracy is what we have to compete with.
Let's talk about the labels for a minute
because I think they're going to be Harvard Business School cases forever
taught about how to be really stupid in the face of technology.
The journal has been tracking,
my colleagues who cover the music industry
have been tracking what I think is just an astonishing development,
which is that one year into this, when you only have this 2% share,
there's still a ton of piracy out there.
They're actually discussing raising prices.
They're actually discussing raising the price of singles.
They've already begun, I guess, to raise the price of certain albums,
not only on your store, but all the others that have licenses with them.
What are they smoking there? What's going on?
Well, you can't speak of the labels with one voice.
There are five major labels, and even within each of the labels, there's a lot of different voices.
One of our concerns is we'd like there to continue to be five labels,
which is why we've gone on record opposing the Sony-BMG merger,
because we think right now it's better if there's five voices versus four or three or less.
But within each label, there are many voices.
And the problem is, if I said to you, you know, we're starting a record company or a movie company at Apple,
If you were in the movie business or the record business, you'd roll your eyes and you'd go,
no first-rate talent would ever go to work for them.
No good A&R people would ever go to work for Apple.
Because they can join the culture in the record industry, get paid more, get more recognition, etc.
In the same way, if you said a technology person's gone to work for a music company,
we'd kind of roll our eyes.
And we'd say, you're going to get a third-rate technology person working at a music company.
And so there are people at these music companies that are giving advice to the people making the decisions and they're giving them really bad advice.
And what's going to happen if they say to you, our hot new singles have to be $1.29, not $0.99?
Well, we've just finished renewing our deals with the music companies.
We had one-year deals and they were up in April and we renewed them all.
and we have longer-term deals now.
So we're going to be at the prices we're at for the foreseeable future.
And we had to express our opinion fairly strongly
that we think the customer doesn't want to pay more than 99 cents for a song.
I think the customers should pay less than 99 cents, actually.
Maybe they should, but we don't think they're going to pay more than 99 cents.
And it turns out the music companies make more money when we sell a song for 99 cents
than they do when they sell it on a CD.
So you think this idea of raising the price is dead?
Well, the prices aren't going up on iTunes, I can tell you that.
Let's talk for a minute about the overall direction of Apple.
I was thinking this morning that if I were talking to you when you first came back to take over the company or in the next couple of years after that,
and our discussion was primarily about selling music or the iPod, this device that's been so successful at playing music,
it would have seemed bizarre because you were a computer company.
You still are, obviously, a computer company.
You've always been sort of a hybrid of a hardware and software company but around computers.
Is Apple's future going to continue to be as primarily a company that creates and sells computers?
Well, we do a lot of stuff. I mean, we make hardware.
I think we make some of the best in the business.
We make an operating system. We make really only the second high-volume operating system in the business.
And we think it's the best now. We think Microsoft's following our tail lights again, which is kind of fun.
And that Longhorn's basically a copy of Mac OS X about a year ago.
And so that's kind of fun.
And we also make application software.
We're the largest provider of pro-video editing software in the world and things like that.
And we also make this little thing called an iPod, which is really a special purpose computer.
There's a lot of hardware and a lot of software in that thing.
And we also run a service called iTunes, which is actually pretty complicated,
but it just looks easy, it looks simple.
And you can tell that because everybody thought it looked so easy, they'd make one too.
and we've seen what's happened.
It turns out it's a little harder than it looked.
So we do all of these things, and we will do even more.
And we're having a blast.
Good. I'm glad you're happy and having fun.
But my question is, is the nature of the company,
are we seeing the beginning of a change in the nature of the company?
Most of the things you mentioned, other than the iPod and iTunes,