Steve Jobs warned Amazon founder that iTunes would kill CD sales

By

Jeff Bezos
Steve Jobs told Jeff Bezos about iTunes for Windows prior to its release.
Photo: Seattle City Council/Wikipedia CC

Over a platter of sushi, Steve Jobs once bragged to Amazon CEO Jeff Bezos that Apple had created the greatest Windows application ever built. The Apple co-founder then suggested, in a roundabout way, that the software could kill a major stream of revenue for Amazon.

Jobs was referring to iTunes for Windows, which Apple introduced in October 2003 (and which Jobs later referred to as the equivalent of “giving a glass of ice water to somebody in hell.”) Bezos got a look at iTunes for Windows before the rest of the world did. And he also endured a typically Jobsian dig about CDs and Amazon’s future.

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The anecdote comes from an excellent new book, titled Working Backwards: Insights, Stories, and Secrets From Inside Amazon. It’s written by Amazon employees Colin Bryar and Bill Carr, both of whom joined the company in the late 1990s.

In the book, the authors recount a fall 2003 meeting in which Bezos, Bryar and Diego Piacentini — a former Apple VP who had jumped to Amazon — traveled from Seattle to Cupertino to meet with Jobs:

“Jobs and another Apple employee greeted us, then ushered us into a nondescript conference room with a Windows PC and two platters of takeout sushi. We had an informal discussion about the state of the music industry (note: this was not long after Apple launched iTunes) while doing some serious damage to the sushi platters, for it was already past dinnertime. After dabbing his mouth with a napkin, Jobs segued into the real purpose of the meeting and announced that Apple had just finished building their first Windows application. He calmly and confidently told us that even though it was Apple’s first attempt to build for Windows, he thought it was the best Windows application anyone had ever built.”

iTunes lands on Windows

At the time, iTunes on Windows was big news. Prior to this, PC users ran software made by a company called MusicMatch to use iPods with their Windows machines. But Jobs characteristically wanted to control as much of the user experience as possible. That meant porting iTunes to Windows — which also meant renegotiating Apple’s deal with music labels.

The idea of Jobs giving Bezos a sneak preview of iTunes for Windows is kind of neat. The two had, after all, worked together before. Back in 1999, Amazon introduced its revolutionary one-click payment feature. Jobs loved it, and licensed it for Apple for $1 million by phoning up Amazon directly. In other words, the two had a working relationship of sorts.

But after the demo, Jobs made a comment to Bezos that you could interpret in a couple of ways.

“Amazon has a decent chance of being the last place to buy CDs,” Jobs said. “The business will be high-margin but small. You’ll be able to charge a premium for CDs, since they’ll be hard to find.”

At the time, Amazon sold lots of CDs, since they were small and easy to mail. Jobs’ comment wasn’t, therefore, really a business proposition to Amazon, so much as it was saying: We’re destroying a big part of your business.

Was Jobs trying to rile Bezos?

The authors of Working Backwards suggest that Jobs could have been trying to rile Bezos. Alternatively, it could have been “an attempt to goad Jeff into making a bad business decision by acting impulsively.” That could have led to Bezos immediately launching an ill-conceived rival to iTunes.

Ultimately, Bezos stayed calm, and the rest of the meeting proved uneventful. But the book’s authors think this could have been a key step in making Bezos realize that physical sales of some products would likely go away.

Not too long after, Amazon launched the Kindle, invested more heavily in the cloud, and took other steps that lessened its reliance on physical media like books and CDs.