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For six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul

Friday, April 27, 2007

Looking back on the Rolling Stone interview with Steve Jobs

Rolling Stone is a surprisingly good magazine, which I know because I've been mysteriously receiving it this year despite having never ordered or paid for it. (I assume it was a gift.) Anyway, three years ago they interviewed Steve Jobs. Here are some key excerpts, which are interesting today given how things turned out.

Regarding DRM:
When we first went to talk to these record companies ... 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.
Apple went on to make a fairly unspectacular DRM called FairPlay. However, despite its technical inferiority to Windows Media DRM, FairPlay has clearly won out in the market, thanks to the success of the iTunes Store and the iPod. Game, set, match.

Regarding subscription music services:
These [music subscription] services that are out there now are going to 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.
I still feel that subscription music services are a great idea, because people's musical tastes change over time, and if you're active buying music, there's no better way to find new music. Indeed, if Apple ever did add a subscription option to iTunes, it'd be a huge success, no doubt about it. Part of the problem with today's services is that they're too expensive. $15 a month is just way too much.

Regarding digital music sales and success:
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.
Certainly, Apple is on the way. What hasn't happened is that digital music has yet to make up for the drop in traditional CD sales.

Regarding digital movie sales:
Movies are very different than music. First of all, they're a hundred times larger. There's only been one way to buy your music -- that's on a CD. Look at the ways there are to legally buy a movie -- you can see it at the theater, you can buy it on home video, you can buy on DVD. But you can also rent it at Blockbuster or Netflix. You can watch it on pay-per-view. You can also watch it on cable or network TV. There are a lot of ways to legally get a movie. There was only one way to legally get music. That's a really big difference. The distribution is much more highly evolved in the movie industry than it ever was in the music industry

People who just make the leap that movies are next are wrong.
And yet, Apple jumped right into movie (and TV) sales, right after music. Though Apple is no doubt now the most popular online service for movies, it's had a slow start. The problem is, unlike music, most people don't want to watch most movies more than once. $10 to $15 for a standard definition digital movie is too much money.

Regarding what happens when Microsoft copies the iPod:
There are a lot of examples of people offering services, Internet-based services, that have done quite well [against Microsoft].

One of the reasons Apple was able to do what we did was because we are perceived by the music industry as the most creative technology company. And now we've created this music store, which I think is nontrivial to copy. I mean, to say that Microsoft can just decide to copy it, and copy it in six months -- that's a big statement. It may not be so easy.
And sure enough, Microsoft did copy iTunes, first with MSN Music, then with URGE, and then completely with Zune Marketplace. It took quite a bit of time, and Microsoft has certainly not made much of a dent in the iTunes armor so far. I guess I don't expect them to.

Thanks Eddis.

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