Introduction and Sales:

Steve Jobs begins by focusing on the iPod, describing its slim design and convenient docking feature. He shares that the storage capacity has been significantly increased, now accommodating up to 10,000 songs. Jobs highlights the product’s competitive pricing, with three models available starting at $299.

Sales and Market Share:

Steve Jobs proudly reports on the iPod’s impressive sales figures, stating that they have sold 1.4 million units to date. He emphasizes the fast-paced sales rate, with 336,000 iPods sold in the last quarter alone. The iPod leads the market, capturing 31% unit market share and 56% revenue market share in MP3 players.

New Features:

Jobs moves on to introduce new features, specifically targeting ‘dockable’ iPods—iPods that can fit into a dock for charging and data transfer. The first new feature is voice recording, which has been developed in partnership with Belkin. A $49 accessory allows high-quality voice recording that syncs effortlessly with iTunes. The second major feature is photo storage, another collaborative effort with Belkin. For $99, users can upload photos from their digital cameras directly to their iPods, which then sync to iPhoto upon docking.

Software Update and Advertising:

Jobs announces that these features will be available via a free software update (version 2.1), exclusively for dockable iPods. The company has been aggressively advertising the iPod, with campaigns across print, outdoor, and television. The latest ads feature popular music and have received a favorable public response.

Jobs concludes by expressing his excitement for the ongoing success and future potential of the iPod, teasing that there are even more features that he doesn’t have time to discuss.

Introduction of iTunes:

Steve Jobs discusses the revolutionary impact of iTunes since its launch on April 28 of the same year. The primary objective was to compete directly with illegal downloading rather than ignoring or suing it.

Addressing Shortcomings of Illegal Downloads:

Jobs points out the unreliable and low-quality nature of illegal downloads. iTunes countered these issues by providing fast, reliable downloads and high-quality encoding.

Feature Highlights:

iTunes introduced user-friendly features such as 30-second high-quality previews, album cover art, and one-click downloads. Jobs notes that these features contribute to “good karma” by supporting artists rather than stealing from them.

User Experience:

The platform was designed for seamless user experience. It combined a music store with a jukebox application, allowing users to buy and organize music within a single app. The songs were priced at 99 cents each, with no subscription fees, acknowledging that people prefer owning music to renting it.

Consumer Response:

The results were overwhelmingly positive, with 13 million legally downloaded songs within less than six months. iTunes had captured 70% of the legal download market, even though it was only available on Macs at that time.

Next Steps and Quality Control:

Jobs announces the second generation of iTunes, promising an expansion from 200,000 to 400,000 quality tracks by the end of the month. He emphasizes that quality control is essential, turning down low-quality submissions to maintain a high standard.

Collaboration with Labels:

iTunes partnered not just with the big five record labels but also added over 200 independent labels to provide a wide range of quality songs.

The discourse paints a picture of iTunes as a transformative force in the music industry, successfully pivoting consumers towards legal downloading and setting new standards for digital music distribution.

Audiobooks Introduction:

Steve Jobs discusses the integration of audiobooks into iTunes, marking a significant expansion of the platform’s offerings. A multi-year exclusive deal with Audible.com enables iTunes to host over 5,000 books, equivalent to more than 20,000 hours of spoken content. This collection includes not just books but also popular public radio shows.

Highly User-Friendly System:

The audiobooks come with a highly intuitive browsing system built into iTunes. They are categorized by genre, authors, and types, making it easier for users to find what they are looking for. One-click shopping simplifies the purchasing process.

Device Synchronization:

Jobs emphasizes the “round-tripping” feature that allows seamless transition between devices. When a user stops listening on one device, the content picks up right where they left off after syncing with another device, such as an iPod. This feature is exclusive to iTunes.

Gift Certificates:

He also introduces iTunes gift certificates as the most requested feature. A user-friendly interface allows individuals to send gift certificates via email, ranging from $10 to $200. The recipient can redeem these for songs, albums, or audiobooks.

Allowances for Children:

The “Allowance” feature is aimed at parents who want to provide their children with a monthly stipend to spend on iTunes without giving them access to a credit card. The process for setting this up is simple and secure.

Celebrity Playlists:

Jobs introduces Celebrity Playlists, where renowned artists share their own favorite songs that have influenced or inspired them. These playlists offer users a new way to discover music.

Summary:

This segment of the presentation serves as an announcement of iTunes’ expansion into audiobooks, the introduction of highly requested gifting features, and unique Celebrity Playlists. These additions aim to make iTunes a more versatile and user-friendly platform.

Introduction of iTunes for Windows:

Steve Jobs announces that the second generation of iTunes will be available not just on Mac but also on Windows. He emphasizes that this is not a stripped-down version; it’s the “whole thing.” iTunes for Windows is designed to run seamlessly on Windows XP and Windows 2000.

Comparing iTunes with Competing Jukeboxes:

Steve Jobs draws a comparison between iTunes and the two most popular jukeboxes on Windows at the time: Microsoft’s and MusicMatch. He stresses the point that iTunes offers better MP3 encoding and CD burning options, while Microsoft and MusicMatch have either limited or “crippled” these features, often requiring an additional payment to unlock them.

Seamless iPod Integration:

The new iTunes for Windows is designed to work perfectly with the iPod, unlike Microsoft’s jukebox and MusicMatch, which offer restricted functionality. Jobs notes that Windows iPod users have been clamoring for iTunes because it offers the best experience.

Music Sharing:

iTunes for Windows allows users to share their music among different computers, both Windows and Mac, using built-in Rendezvous music sharing. Neither Microsoft’s jukebox nor MusicMatch offer this feature.

Consumer-Centric Philosophy:

Jobs highlights that iTunes for Windows comes without hidden costs. All features, like fast MP3 encoding and CD burning, are built-in and free. He accuses competitors of playing games with consumers by limiting features unless additional fees are paid.

Unified Music Store Across Platforms:

Lastly, Jobs mentions that iTunes for Windows also incorporates the best music store, with identical music, policies, and prices across both Mac and Windows platforms. According to him, they have one store that sets the “gold standard for personal use rights.”

Through this presentation, Steve Jobs aims to show that iTunes for Windows is not merely a software application but a comprehensive music ecosystem designed to offer the best experience in terms of encoding, burning, sharing, and purchasing music.

Striking a Balance:

Steve Jobs discusses the balance they’ve tried to strike between the rights of content owners and the rights of legal users. He emphasizes that iTunes provides ownership of music without subscription fees, offering unlimited CD burning for personal use.

Flexibility and Control:

The platform allows you to burn unchanged playlists up to 10 times and store your music on up to three computers. Importantly, computers can be authorized and deauthorized, providing a level of control over where your music can be played. These features are standard on both Mac and Windows.

Market Leadership:

Steve Jobs notes that iTunes holds a 70% market share and provides seamless integration with the iPod. The platform also supports cross-platform sharing between Macs and Windows computers.

Platform Demo:

Steve Jobs goes on to demo iTunes on a Windows PC for the first time, showcasing its features like smart playlists, iTunes radio stations, and shared music.

Music Store:

The iTunes music store, described as the best music store in the world, is shown to be fully functional on Windows. It offers an expansive range of music and even exclusive content.

Enhanced Features:

The platform includes advanced search options and sort functions, artist biographies, and recommendations. It also allows sorting by album name, bestsellers, or release date.

Genre and Audiobooks:

iTunes extends its range to different genres of music, each with its own detailed genre page. The store also includes audiobooks, with a large selection available. All this new content can be previewed, bought with one click, and played on an iPod.

Steve Jobs positions iTunes as not just a product but an extensive platform offering a multitude of features and content, now available to both Mac and Windows users.

Celebrity Playlists:

Steve Jobs introduces the concept of “celebrity playlists” on iTunes. These are curated lists of songs by famous artists like Dave Brubeck and Sting. Users can explore these playlists to discover new music or to understand the musical tastes of these celebrities. The songs can be bought individually or collectively, and there’s also an option to listen to previews.

Gift Certificates:

Jobs shifts focus to the ease of sending gift certificates through iTunes. By simply clicking on the “Gift Certificates” button, users can choose the amount and recipient, and then confirm the purchase. The gift certificate gets sent to the recipient’s email, which they can easily redeem.

Redeeming Gift Certificates:

Jobs also elaborates on how to redeem a gift certificate. Upon receiving a gift certificate email, users can click “Redeem Now” to open iTunes and add the credit to their account. He demonstrates this by adding $20 to an account and then using it to purchase an album, showing the balance decrement accordingly.

Allowance Feature:

Jobs briefly mentions the “Allowance” feature, which operates similarly to gift certificates. It allows users to set up a recurring monthly gift of a particular amount without going into further details.

Featured Artists:

Lastly, Jobs hints at discussing “featured artists” on iTunes, though the excerpt cuts off before he elaborates on this point. This suggests that iTunes offers a platform for artists to be prominently displayed, likely aiding in discoverability for users.

Exclusive Artist Content:

Steve Jobs showcases exclusive content available only on iTunes, signaling its competitive edge. He mentions a yet-to-be-released album by the Eagles, stating that it is available on iTunes even before its CD release. Jobs also introduces an extended EP by Sarah McLachlan, recorded just the previous week, emphasizing its exclusivity to iTunes.

The Grateful Dead Exclusive:

Further strengthening the platform’s exclusive content, Jobs announces that the Grateful Dead’s music is available only on iTunes. With eight albums currently available and more to be added, this adds another layer of uniqueness to iTunes’ offerings.

Platform Availability:

Jobs points out that the second generation of iTunes is available both on Mac and Windows platforms, making it accessible to a broad user base. Importantly, this second-generation version is a free download, available immediately.

Additional Perks:

As a part of the presentation, Jobs informs the audience that they will receive two complimentary items: a collector’s item poster and a $20 gift certificate for iTunes. The gift certificate serves as an encouragement for people to experience iTunes’ new features.

Concluding Remarks:

Jobs sums up by referring to the showcased features and content as representing the “second generation” of iTunes. He emphasizes that this updated version is free and encourages everyone to try it out, reinforcing the notion that iTunes aims to provide a rich, accessible musical experience to its users.

Market Leadership:

The speaker, identified as Steve Jobs, emphasizes Apple’s leadership in the online music market. They note that the iPod dominates the MP3 player market, and their music store claims a 70% market share. This positioning sets the stage for ambitious goals.

Setting Targets:

Apple initially aimed to sell one million songs within six months but achieved this within a week. Consequently, their revised target is to sell 100 million songs by April 28, 2004. This marks a significant hike in their goals, illustrating high aspirations.

Strategy for Growth:

Apple plans to leverage its robust Mac customer base, which is already purchasing music at an annual rate of 30 million songs. Further, they are expanding to Windows, a considerably larger market, to help achieve the 100 million song goal.

Partnership with AOL:

In an exclusive partnership with AOL, Apple aims to make it easier for AOL’s 25 million subscribers to access and purchase music. Two main features will facilitate this:

An iTunes button next to every song and album on AOL’s music site, which will direct users to iTunes for purchase.

A simplified registration process for AOL subscribers, allowing them to become iTunes customers without entering credit card information again.

Music and Internet Synergy:

The CEO of AOL, John Miller, underscores the transformative potential of the internet in the music industry. He praises Apple’s role in unlocking a new, legitimate avenue for music distribution and sees the partnership as a step toward fulfilling the internet’s long-promised impact on music.

Future Contingencies:

Jobs concludes by hinting at additional plans to reach the 100 million song target, leaving the audience intrigued about future initiatives.

This summary encapsulates Apple’s market standing, ambitious targets, strategic collaborations, and the broader significance of their role in the evolving online music industry.

Introduction of Promotion:

Steve Jobs announces an ambitious new promotion: Apple will give away 100 million songs. This promotion is a collaboration between Apple and Pepsi. They intend to achieve this within a 60-day period, starting on February 1st, 2004.

Role of Pepsi:

Pepsi plays a significant part in this campaign. They will produce 300 million bottles of Pepsi, Diet Pepsi, and Sierra Mist with special yellow bottle caps. Each bottle has a one-in-three chance of being a winner. Winning bottles contain a free $0.99 song on iTunes, available for download on a Mac or PC.

Redemption Mechanism:

Winners don’t need to return to the store to redeem their prizes. Instead, they can go to iTunes and enter the code found under the bottle cap. Every bottle provides directions for the redemption process, making it simple and straightforward for consumers.

Launch and Duration:

The promotion will kick off with a large advertising campaign during the Super Bowl on February 1st, 2004. It will run through all of February and March.

Pepsi’s Perspective:

Dawn Hudson, the president of Pepsi-Cola North America, also expresses her enthusiasm through a video message. She acknowledges Apple’s impact on the music industry, mentioning the convenience offered by the iPod and iTunes, which are now accessible to Windows users as well.

Significance of Collaboration:

Both companies view this as a major promotion, potentially the biggest ever in music. The partnership aims to leverage Apple’s technological innovation in music distribution and Pepsi’s mass production capabilities to engage consumers on an unprecedented scale.

Promotion Mechanics:

Steve Jobs details how the promotional partnership with Pepsi will work. Starting in February, customers can purchase Pepsi, Diet Pepsi, or Sierra Mist. Each bottle cap contains a code that can be entered into iTunes, with a one-in-three chance to win a free song. They aim to give away 100 million songs between February and March.

Super Bowl Announcement:

The magnitude of this promotion is significant enough that they plan to announce it during the Super Bowl on February 1st. This event serves as the launchpad for the campaign, encouraging consumers to participate and buy the featured soft drinks.

Multi-Stakeholder Benefits:

Steve Jobs outlines how this promotion will benefit a wide range of stakeholders. Music lovers will gain access to free songs, while soda enthusiasts will have an additional incentive to purchase Pepsi products. Record labels and artists benefit as they will still get paid for the music downloads, thereby encouraging legal music consumption.

Strategic Aims and Partnerships:

Jobs elaborates that the promotion is part of a broader strategy for iTunes, which includes expanding to Windows and forming an exclusive partnership with AOL. Their goal is to sell 100 million legal song downloads by April 28th of the following year. Jobs credits Jimmy Iovine from UMG for initiating the Pepsi-Apple partnership.

Raising the Bar:

In closing, Steve Jobs emphasizes that the promotion aims to set a new standard in the industry. It serves as an example of what market leaders do to innovate and engage their customer base, benefiting all parties involved.

Exclusive Content and Partnerships:

Steve Jobs discusses the importance of artists in the iTunes ecosystem, emphasizing that “things start and end with the music.” He notes that exclusive content from a wide range of artists, such as REM, Black Eyed Peas, The Eagles, and The Grateful Dead, is available only on the iTunes Music Store.

Technological Bridge with Artists:

Jobs uses iChat to connect with various artists like Bono, Dr. Dre, and Mick Jagger who couldn’t attend the presentation. This emphasizes the role of technology in bridging gaps and making music more accessible.

Bono’s Endorsement:

Bono praises the iTunes platform for creating a crossroads for different kinds of artistic endeavors. He calls it “new territory” and appreciates Jobs’ leadership in that direction. The U2 lead singer humorously mentions he doesn’t “kiss every corporate ass,” signaling strong approval for iTunes.

Industry Veterans Weigh In:

Mick Jagger speaks on the evolution of the music industry from records to digital formats. He acknowledges the friction during the Napster era and hopes for a more harmonious future with platforms like iTunes. Dr. Dre also supports the idea that iTunes can help new bands gain recognition.

Gratitude and Teamwork:

Jobs thanks his team at Apple for their hard work in creating iTunes, acknowledging the sacrifices made by their families. He extends this gratitude to the artists and assures the audience that Apple’s primary focus remains the music.

Closing Remarks:

Steve Jobs ends the presentation by saying how much they love doing what they do. He encourages everyone to try out iTunes and even offers incentives like a $20 gift certificate. This highlights Apple’s commitment to user experience and artist collaboration.