CHAPTER TWENTY-NINE 4 page

family, you’re not going to cheese out. If you don’t love something, you’re not going to go the extra

mile, work the extra weekend, challenge the status quo as much.

Mr. Tambourine Man

Andy Lack’s first annual meeting at Sony was in April 2003, the same week that Apple launched

the iTunes Store. He had been made head of the music division four months earlier, and had spent

much of that time negotiating with Jobs. In fact he arrived in Tokyo directly from Cupertino,

carrying the latest version of the iPod and a description of the iTunes Store. In front of the two

hundred managers gathered, he pulled the iPod out of his pocket. “Here it is,” he said as CEO

Nobuyuki Idei and Sony’s North America head Howard Stringer looked on. “Here’s the Walkman

killer. There’s no mystery meat. The reason you bought a music company is so that you could be

the one to make a device like this. You can do better.”

But Sony couldn’t. It had pioneered portable music with the Walkman, it had a great record

company, and it had a long history of making beautiful consumer devices. It had all of the assets

to compete with Jobs’s strategy of integration of hardware, software, devices, and content sales.

Why did it fail? Partly because it was a company, like AOL Time Warner, that was organized into

divisions (that word itself was ominous) with their own bottom lines; the goal of achieving

synergy in such companies by prodding the divisions to work together was usually elusive.

Jobs did not organize Apple into semiautonomous divisions; he closely controlled all of his

teams and pushed them to work as one cohesive and flexible company, with one profit-and-loss

bottom line. “We don’t have ‘divisions’ with their own P&L,” said Tim Cook. “We run one P&L

for the company.”

In addition, like many companies, Sony worried about cannibalization. If it built a music player

and service that made it easy for people to share digital songs, that might hurt sales of its record

division. One of Jobs’s business rules was to never be afraid of cannibalizing yourself. “If you

don’t cannibalize yourself, someone else will,” he said. So even though an iPhone might

cannibalize sales of an iPod, or an iPad might cannibalize sales of a laptop, that did not deter him.

That July, Sony appointed a veteran of the music industry, Jay Samit, to create its own iTuneslike

service, called Sony Connect, which would sell songs online and allow them to play on Sony’

s portable music devices. “The move was immediately understood as a way to unite the sometimes

conflicting electronics and content divisions,” the New York Times reported. “That internal battle

was seen by many as the reason Sony, the inventor of the Walkman and the biggest player in the

portable audio market, was being trounced by Apple.” Sony Connect launched in May 2004. It

lasted just over three years before Sony shut it down.

Microsoft was willing to license its Windows Media software and digital rights format to other

companies, just as it had licensed out its operating system in the 1980s. Jobs, on the other hand,

would not license out Apple’s FairPlay to other device makers; it worked only on an iPod. Nor

would he allow other online stores to sell songs for use on iPods. A variety of experts said this

would eventually cause Apple to lose market share, as it did in the computer wars of the 1980s. “If

Apple continues to rely on a proprietary architecture,” the Harvard Business School professor

Clayton Christensen told Wired, “the iPod will likely become a niche product.” (Other than in this

case, Christensen was one of the world’s most insightful business analysts, and Jobs was deeply

influenced by his book The Innovator’s Dilemma.) Bill Gates made the same argument. “There’s

nothing unique about music,” he said. “This story has played out on the PC.”

Rob Glaser, the founder of RealNetworks, tried to circumvent Apple’s restrictions in July 2004

with a service called Harmony. He had attempted to convince Jobs to license Apple’s FairPlay

format to Harmony, but when that didn’t happen, Glaser just reverse-engineered it and used it with

the songs that Harmony sold. Glaser’s strategy was that the songs sold by Harmony would play on

any device, including an iPod or a Zune or a Rio, and he launched a marketing campaign with the

slogan “Freedom of Choice.” Jobs was furious and issued a release saying that Apple was

“stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod.”

RealNetworks responded by launching an Internet petition that demanded “Hey Apple! Don’t

break my iPod.” Jobs kept quiet for a few months, but in October he released a new version of the

iPod software that caused songs bought through Harmony to become inoperable. “Steve is a oneof-

a-kind guy,” Glaser said. “You know that about him when you do business with him.”

In the meantime Jobs and his team—Rubinstein, Fadell, Robbin, Ive—were able to keep

coming up with new versions of the iPod that extended Apple’s lead. The first major revision,

announced in January 2004, was the iPod Mini. Far smaller than the original iPod—just the size of

a business card—it had less capacity and was about the same price. At one point Jobs decided to

kill it, not seeing why anyone would want to pay the same for less. “He doesn’t do sports, so he

didn’t relate to how it would be great on a run or in the gym,” said Fadell. In fact the Mini was

what truly launched the iPod to market dominance, by eliminating the competition from smaller

flash-drive players. In the eighteen months after it was introduced, Apple’s market share in the

portable music player market shot from 31% to 74%.

The iPod Shuffle, introduced in January 2005, was even more revolutionary. Jobs learned that

the shuffle feature on the iPod, which played songs in random order, had become very popular.

People liked to be surprised, and they were also too lazy to keep setting up and revising their

playlists. Some users even became obsessed with figuring out whether the song selection was truly

random, and if so, why their iPod kept coming back to, say, the Neville Brothers. That feature led

to the iPod Shuffle. As Rubinstein and Fadell were working on creating a flash player that was

small and inexpensive, they kept doing things like making the screen tinier. At one point Jobs

came in with a crazy suggestion: Get rid of the screen altogether. “What?!?” Fadell responded.

“Just get rid of it,” Jobs insisted. Fadell asked how users would navigate the songs. Jobs’s insight

was that you wouldn’t need to navigate; the songs would play randomly. After all, they were

songs you had chosen. All that was needed was a button to skip over a song if you weren’t in the

mood for it. “Embrace uncertainty,” the ads read.

As competitors stumbled and Apple continued to innovate, music became a larger part of

Apple’s business. In January 2007 iPod sales were half of Apple’s revenues. The device also

added luster to the Apple brand. But an even bigger success was the iTunes Store. Having sold

one million songs in the first six days after it was introduced in April 2003, the store went on to

sell seventy million songs in its first year. In February 2006 the store sold its one billionth song

when Alex Ostrovsky, sixteen, of West Bloomfield, Michigan, bought Coldplay’s “Speed of

Sound” and got a congratulatory call from Jobs, bestowing upon him ten iPods, an iMac, and a

$10,000 music gift certificate.

The success of the iTunes Store also had a more subtle benefit. By 2011 an important new

business had emerged: being the service that people trusted with their online identity and payment

information. Along with Amazon, Visa, PayPal, American Express, and a few other services,

Apple had built up databases of people who trusted them with their email address and credit card

information to facilitate safe and easy shopping. This allowed Apple to sell, for example, a

magazine subscription through its online store; when that happened, Apple, not the magazine

publisher, would have a direct relationship with the subscriber. As the iTunes Store sold videos,

apps, and subscriptions, it built up a database of 225 million active users by June 2011, which

positioned Apple for the next age of digital commerce.

CHAPTER THIRTY-TWO

MUSIC MAN

The Sound Track of His Life

Jimmy Iovine, Bono, Jobs, and The Edge, 2004

On His iPod

As the iPod phenomenon grew, it spawned a question that was asked of presidential candidates, Blist

celebrities, first dates, the queen of England, and just about anyone else with white earbuds:

“What’s on your iPod?” The parlor game took off when Elisabeth Bumiller wrote a piece in the

New York Times in early 2005 dissecting the answer that President George W. Bush gave when

she asked him that question. “Bush’s iPod is heavy on traditional country singers,” she reported.

“He has selections by Van Morrison, whose ‘Brown Eyed Girl’ is a Bush favorite, and by John

Fogerty, most predictably ‘Centerfield.’” She got a Rolling Stone editor, Joe Levy, to analyze the

selection, and he commented, “One thing that’s interesting is that the president likes artists who

don’t like him.”

“Simply handing over your iPod to a friend, your blind date, or the total stranger sitting next to

you on the plane opens you up like a book,” Steven Levy wrote in The Perfect Thing. “All

somebody needs to do is scroll through your library on that click wheel, and, musically speaking,

you’re naked. It’s not just what you like—it’s who you are.” So one day, when we were sitting in

his living room listening to music, I asked Jobs to let me see his. As we sat there, he flicked

through his favorite songs.

Not surprisingly, there were all six volumes of Dylan’s bootleg series, including the tracks Jobs

had first started worshipping when he and Wozniak were able to score them on reel-to-reel tapes

years before the series was officially released. In addition, there were fifteen other Dylan albums,

starting with his first, Bob Dylan (1962), but going only up to Oh Mercy (1989). Jobs had spent a

lot of time arguing with Andy Hertzfeld and others that Dylan’s subsequent albums, indeed any of

his albums after Blood on the Tracks (1975), were not as powerful as his early performances. The

one exception he made was Dylan’s track “Things Have Changed” from the 2000 movie Wonder

Boys. Notably his iPod did not include Empire Burlesque (1985), the album that Hertzfeld had

brought him the weekend he was ousted from Apple.

The other great trove on his iPod was the Beatles. He included songs from seven of their

albums: A Hard Day’s Night, Abbey Road, Help!, Let It Be, Magical Mystery Tour, Meet the

Beatles! and Sgt. Pepper’s Lonely Hearts Club Band. The solo albums missed the cut. The Rolling

Stones clocked in next, with six albums: Emotional Rescue, Flashpoint, Jump Back, Some Girls,

Sticky Fingers, and Tattoo You. In the case of the Dylan and the Beatles albums, most were

included in their entirety. But true to his belief that albums can and should be disaggregated, those

of the Stones and most other artists on his iPod included only three or four cuts. His onetime

girlfriend Joan Baez was amply represented by selections from four albums, including two

different versions of “Love Is Just a Four-Letter Word.”

His iPod selections were those of a kid from the seventies with his heart in the sixties. There

were Aretha, B. B. King, Buddy Holly, Buffalo Springfield, Don McLean, Donovan, the Doors,

Janis Joplin, Jefferson Airplane, Jimi Hendrix, Johnny Cash, John Mellencamp, Simon and

Garfunkel, and even The Monkees (“I’m a Believer”) and Sam the Sham (“Wooly Bully”). Only

about a quarter of the songs were from more contemporary artists, such as 10,000 Maniacs, Alicia

Keys, Black Eyed Peas, Coldplay, Dido, Green Day, John Mayer (a friend of both his and Apple),

Moby (likewise), U2, Seal, and Talking Heads. As for classical music, there were a few recordings

of Bach, including the Brandenburg Concertos, and three albums by Yo-Yo Ma.

Jobs told Sheryl Crow in May 2003 that he was downloading some Eminem tracks, admitting,

“He’s starting to grow on me.” James Vincent subsequently took him to an Eminem concert. Even

so, the rapper missed making it onto Jobs’s iPod. As Jobs said to Vincent after the concert, “I don’

t know . . .” He later told me, “I respect Eminem as an artist, but I just don’t want to listen to his

music, and I can’t relate to his values the way I can to Dylan’s.”

His favorites did not change over the years. When the iPad 2 came out in March 2011, he

transferred his favorite music to it. One afternoon we sat in his living room as he scrolled through

the songs on his new iPad and, with a mellow nostalgia, tapped on ones he wanted to hear.

We went through the usual Dylan and Beatles favorites, then he became more reflective and

tapped on a Gregorian chant, “Spiritus Domini,” performed by Benedictine monks. For a minute

or so he zoned out, almost in a trance. “That’s really beautiful,” he murmured. He followed with

Bach’s Second Brandenburg Concerto and a fugue from The Well-Tempered Clavier. Bach, he

declared, was his favorite classical composer. He was particularly fond of listening to the contrasts

between the two versions of the “Goldberg Variations” that Glenn Gould recorded, the first in

1955 as a twenty-two-year-old little-known pianist and the second in 1981, a year before he died.

“They’re like night and day,” Jobs said after playing them sequentially one afternoon. “The first is

an exuberant, young, brilliant piece, played so fast it’s a revelation. The later one is so much more

spare and stark. You sense a very deep soul who’s been through a lot in life. It’s deeper and

wiser.” Jobs was on his third medical leave that afternoon when he played both versions, and I

asked which he liked better. “Gould liked the later version much better,” he said. “I used to like

the earlier, exuberant one. But now I can see where he was coming from.”

He then jumped from the sublime to the sixties: Donovan’s “Catch the Wind.” When he noticed

me look askance, he protested, “Donovan did some really good stuff, really.” He punched up

“Mellow Yellow,” and then admitted that perhaps it was not the best example. “It sounded better

when we were young.”

I asked what music from our childhood actually held up well these days. He scrolled down the

list on his iPad and called up the Grateful Dead’s 1969 song “Uncle John’s Band.” He nodded

along with the lyrics: “When life looks like Easy Street, there is danger at your door.” For a

moment we were back at that tumultuous time when the mellowness of the sixties was ending in

discord. “Whoa, oh, what I want to know is, are you kind?”

Then he turned to Joni Mitchell. “She had a kid she put up for adoption,” he said. “This song is

about her little girl.” He tapped on “Little Green,” and we listened to the mournful melody and

lyrics that describe the feelings of a mother who gives up a child. “So you sign all the papers in

the family name / You’re sad and you’re sorry, but you’re not ashamed.” I asked whether he still

often thought about being put up for adoption. “No, not much,” he said. “Not too often.”

These days, he said, he thought more about getting older than about his birth. That led him to

play Joni Mitchell’s greatest song, “Both Sides Now,” with its lyrics about being older and wiser:

“I’ve looked at life from both sides now, / From win and lose, and still somehow, / It’s life’s

illusions I recall, / I really don’t know life at all.” As Glenn Gould had done with Bach’s

“Goldberg Variations,” Mitchell had recorded “Both Sides Now” many years apart, first in 1969

and then in an excruciatingly haunting slow version in 2000. He played the latter. “It’s interesting

how people age,” he noted.

Some people, he added, don’t age well even when they are young. I asked who he had in mind.

“John Mayer is one of the best guitar players who’s ever lived, and I’m just afraid he’s blowing it

big time,” Jobs replied. Jobs liked Mayer and occasionally had him over for dinner in Palo Alto.

When he was twenty-seven, Mayer appeared at the January 2004 Macworld, where Jobs

introduced GarageBand, and he became a fixture at the event most years. Jobs punched up Mayer’

s hit “Gravity.” The lyrics are about a guy filled with love who inexplicably dreams of ways to

throw it away: “Gravity is working against me, / And gravity wants to bring me down.” Jobs

shook his head and commented, “I think he’s a really good kid underneath, but he’s just been out

of control.”

At the end of the listening session, I asked him a well-worn question: the Beatles or the Stones?

“If the vault was on fire and I could grab only one set of master tapes, I would grab the Beatles,”

he answered. “The hard one would be between the Beatles and Dylan. Somebody else could have

replicated the Stones. No one could have been Dylan or the Beatles.” As he was ruminating about

how fortunate we were to have all of them when we were growing up, his son, then eighteen,

came in the room. “Reed doesn’t understand,” Jobs lamented. Or perhaps he did. He was wearing

a Joan Baez T-shirt, with the words “Forever Young” on it.

Bob Dylan

The only time Jobs can ever recall being tongue-tied was in the presence of Bob Dylan. He was

playing near Palo Alto in October 2004, and Jobs was recovering from his first cancer surgery.

Dylan was not a gregarious man, not a Bono or a Bowie. He was never Jobs’s friend, nor did he

care to be. He did, however, invite Jobs to visit him at his hotel before the concert. Jobs recalled:

We sat on the patio outside his room and talked for two hours. I was really nervous, because he was one

of my heroes. And I was also afraid that he wouldn’t be really smart anymore, that he’d be a caricature

of himself, like happens to a lot of people. But I was delighted. He was as sharp as a tack. He was

everything I’d hoped. He was really open and honest. He was just telling me about his life and about

writing his songs. He said, “They just came through me, it wasn’t like I was having to compose them.

That doesn’t happen anymore, I just can’t write them that way anymore.” Then he paused and said to

me with his raspy voice and little smile, “But I still can sing them.”

The next time Dylan played nearby, he invited Jobs to drop by his tricked-up tour bus just

before the concert. When Dylan asked what his favorite song was, Jobs said “One Too Many

Mornings.” So Dylan sang it that night. After the concert, as Jobs was walking out the back, the

tour bus came by and screeched to a stop. The door flipped open. “So, did you hear my song I

sang for you?” Dylan rasped. Then he drove off. When Jobs tells the tale, he does a pretty good

impression of Dylan’s voice. “He’s one of my all-time heroes,” Jobs recalled. “My love for him

has grown over the years, it’s ripened. I can’t figure out how he did it when he was so young.”

A few months after seeing him in concert, Jobs came up with a grandiose plan. The iTunes

Store should offer a digital “boxed set” of every Dylan song every recorded, more than seven

hundred in all, for $199. Jobs would be the curator of Dylan for the digital age. But Andy Lack of

Sony, which was Dylan’s label, was in no mood to make a deal without some serious concessions

regarding iTunes. In addition, Lack felt the price was too low and would cheapen Dylan. “Bob is a

national treasure,” said Lack, “and Steve wanted him on iTunes at a price that commoditized

him.” It got to the heart of the problems that Lack and other record executives were having with

Jobs: He was getting to set the price points, not them. So Lack said no.

“Okay, then I will call Dylan directly,” Jobs said. But it was not the type of thing that Dylan

ever dealt with, so it fell to his agent, Jeff Rosen, to sort things out.

“It’s a really bad idea,” Lack told Rosen, showing him the numbers. “Bob is Steve’s hero. He’ll

sweeten the deal.” Lack had both a professional and a personal desire to fend Jobs off, even to

yank his chain a bit. So he made an offer to Rosen. “I will write you a check for a million dollars

tomorrow if you hold off for the time being.” As Lack later explained, it was an advance against

future royalties, “one of those accounting things record companies do.” Rosen called back fortyfive

minutes later and accepted. “Andy worked things out with us and asked us not to do it, which

we didn’t,” he recalled. “I think Andy gave us some sort of an advance to hold off doing it.”

By 2006, however, Lack had stepped aside as the CEO of what was by then Sony BMG, and

Jobs reopened negotiations. He sent Dylan an iPod with all of his songs on it, and he showed

Rosen the type of marketing campaign that Apple could mount. In August he announced a grand

deal. It allowed Apple to sell the $199 digital boxed set of all the songs Dylan ever recorded, plus

the exclusive right to offer Dylan’s new album, Modern Times, for pre-release orders. “Bob Dylan

is one of the most respected poets and musicians of our time, and he is a personal hero of mine,”

Jobs said at the announcement. The 773-track set included forty-two rarities, such as a 1961 tape

of “Wade in the Water” made in a Minnesota hotel, a 1962 version of “Handsome Molly” from a

live concert at the Gaslight Café in Greenwich Village, the truly awesome rendition of “Mr.

Tambourine Man” from the 1964 Newport Folk Festival (Jobs’s favorite), and an acoustic version

of “Outlaw Blues” from 1965.

As part of the deal, Dylan appeared in a television ad for the iPod, featuring his new album,

Modern Times. This was one of the most astonishing cases of flipping the script since Tom

Sawyer persuaded his friends to whitewash the fence. In the past, getting celebrities to do an ad

required paying them a lot of money. But by 2006 the tables were turned. Major artists wanted to

appear in iPod ads; the exposure would guarantee success. James Vincent had predicted this a few

years earlier, when Jobs said he had contacts with many musicians and could pay them to appear

in ads. “No, things are going to soon change,” Vincent replied. “Apple is a different kind of brand,

and it’s cooler than the brand of most artists. We should talk about the opportunity we offer the

bands, not pay them.”

Lee Clow recalled that there was actually some resistance among the younger staffers at Apple

and the ad agency to using Dylan. “They wondered whether he was still cool enough,” Clow said.

Jobs would hear none of that. He was thrilled to have Dylan.

Jobs became obsessed by every detail of the Dylan commercial. Rosen flew to Cupertino so

that they could go through the album and pick the song they wanted to use, which ended up being

“Someday Baby.” Jobs approved a test video that Clow made using a stand-in for Dylan, which

was then shot in Nashville with Dylan himself. But when it came back, Jobs hated it. It wasn’t

distinctive enough. He wanted a new style. So Clow hired another director, and Rosen was able to

convince Dylan to retape the entire commercial. This time it was done with a gently backlit

cowboy-hatted Dylan sitting on a stool, strumming and singing, while a hip woman in a newsboy

cap dances with her iPod. Jobs loved it.

The ad showed the halo effect of the iPod’s marketing: It helped Dylan win a younger

audience, just as the iPod had done for Apple computers. Because of the ad, Dylan’s album was

number one on the Billboard chart its first week, topping hot-selling albums by Christina Aguilera

and Outkast. It was the first time Dylan had reached the top spot since Desire in 1976, thirty years

earlier. Ad Age headlined Apple’s role in propelling Dylan. “The iTunes spot wasn’t just a run-ofthe-

mill celebrity-endorsement deal in which a big brand signs a big check to tap into the equity of

a big star,” it reported. “This one flipped the formula, with the all-powerful Apple brand giving

Mr. Dylan access to younger demographics and helping propel his sales to places they hadn’t been

since the Ford administration.”

The Beatles

Among Jobs’s prized CDs was a bootleg that contained a dozen or so taped sessions of the Beatles

revising “Strawberry Fields Forever.” It became the musical score to his philosophy of how to

perfect a product. Andy Hertzfeld had found the CD and made a copy of it for Jobs in 1986,

though Jobs sometimes told folks that it had come from Yoko Ono. Sitting in the living room of

his Palo Alto home one day, Jobs rummaged around in some glass-enclosed bookcases to find it,

then put it on while describing what it had taught him:

It’s a complex song, and it’s fascinating to watch the creative process as they went back and forth and

finally created it over a few months. Lennon was always my favorite Beatle. [He laughs as Lennon stops

during the first take and makes the band go back and revise a chord.] Did you hear that little detour they

took? It didn’t work, so they went back and started from where they were. It’s so raw in this version. It

actually makes them sound like mere mortals. You could actually imagine other people doing this, up to

this version. Maybe not writing and conceiving it, but certainly playing it. Yet they just didn’t stop.

They were such perfectionists they kept it going and going. This made a big impression on me when I

was in my thirties. You could just tell how much they worked at this.

They did a bundle of work between each of these recordings. They kept sending it back to make it

closer to perfect. [As he listens to the third take, he points out how the instrumentation has gotten more

complex.] The way we build stuff at Apple is often this way. Even the number of models we’d make of

a new notebook or iPod. We would start off with a version and then begin refining and refining, doing

detailed models of the design, or the buttons, or how a function operates. It’s a lot of work, but in the

end it just gets better, and soon it’s like, “Wow, how did they do that?!? Where are the screws?”

It was thus understandable that Jobs was driven to distraction by the fact that the Beatles were not

on iTunes.

His struggle with Apple Corps, the Beatles’ business holding company, stretched more than

three decades, causing too many journalists to use the phrase “long and winding road” in stories

about the relationship. It began in 1978, when Apple Computers, soon after its launch, was sued

by Apple Corps for trademark infringement, based on the fact that the Beatles’ former recording

label was called Apple. The suit was settled three years later, when Apple Computers paid Apple

Corps $80,000. The settlement had what seemed back then an innocuous stipulation: The Beatles

would not produce any computer equipment and Apple would not market any music products.

The Beatles kept their end of the bargain; none of them ever produced any computers. But

Apple ended up wandering into the music business. It got sued again in 1991, when the Mac

incorporated the ability to play musical files, then again in 2003, when the iTunes Store was

launched. The legal issues were finally resolved in 2007, when Apple made a deal to pay Apple

Corps $500 million for all worldwide rights to the name, and then licensed back to the Beatles the

right to use Apple Corps for their record and business holdings.

Date: 2015-12-17; view: 631