Apple 2.0

Covering the business that Steve Jobs built

Steve Jobs still drives a hard bargain

February 2, 2009: 9:44 AM ET

Steve Jobs in June 2008, no captionOn Christmas Eve, at the height of a holiday season that Steve Jobs claimed was the first in a decade he got to spend with his family, Apple's (AAPL) ailing CEO was on the phone screaming at the chairman of Sony Music (SNE).

That's the picture Tim Arango paints in Monday's New York Times in an article that describes the "tense and antagonistic" relations behind the seemingly harmonious music pricing agreement unveiled at Macworld less than two weeks later.

On Jan. 6, Apple announced that the major record labels had agreed to drop their demands for copy protection in return for the right to charge more than 99 cents for new and popular songs on Apple's iTunes store.

But according to Arango, the negotiations were anything but cordial.

"Disagreements over the timing of the changes ... resulted in a particularly tense conversation on Christmas Eve between Steven P. Jobs, the chairman and chief executive of Apple, and Rolf Schmidt-Holtz, the chairman of Sony Music. ...

"According to a person briefed on the telephone call, Mr. Schmidt-Holtz and Mr. Jobs had a heated exchange by phone on Christmas Eve. Eventually, Sony gave in and agreed to a longer waiting period ...

"A spokesman for Apple declined to comment, as did a representative for Sony Music. But chatter about Mr. Jobs's combative tone on the call ricocheted around the music industry, and it was regarded as another display of his tough bargaining tactics, made possible by Apple's position as the dominant seller of music ...

'I think Steve has been smart, and he knows he has the upper hand,' said Dave Goldberg, the former general manager of Yahoo Music." (link)

Although Jobs has since taken a leave of absence to deal with medical problems, the music industry does not expect Apple's bargaining manners to become any more pleasant.

"The entire Apple staff,"  writes Arango, "including Eddie Cue, the vice president in charge of iTunes who handles the relationships with the record labels, do their best to follow Mr. Jobs's style in their own negotiating." (link)

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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