Since the whole iPhone scandal on Gizmodo,* I've avoided reading its
often negative articles. Finally, there was a title I couldn't resist
reading: The
Day Steve Jobs Dissed Me in a Keynote by Derek Sivers.
Apple Opens Doors
This bizarre article goes from bragging about how Apple's interest
in independent musicians opened the doors for all online digital music
retailers, who suddenly wanted to sell their music, to complaining that
Steve Jobs dissed him personally during a keynote.
In summary, Sivers, founder of CD
Baby, was invited to Apple in the May 2003. Apple wanted to sign
all musicians to iTunes, including the small record labels and
distributors. Sivers then went home and blogged about it.
An Apple rep contacted him to pull down the info. Sivers did as
asked, even though there was no NDA (Non-Disclosure Agreement) signed
regarding the meeting.
To get the music into iTunes, his company had to rip the tracks from
100,000 albums. This was a pain, because they already the tracks in
lossless WAV format, but Apple wouldn't accept that.
At this point in the article, Sivers complains that all the albums
would have to be pulled and ripped, and this was going to cost time and
equipment. (If you already had it in a lossless format, why not just
digitally convert those files? Why did they have to be re-ripped?)
Apple sent him an iTunes Store contract. He signed it and sent it
back.
While waiting for Apple to sign and return the contract, he asked
his musician for $40 each to help pay for the conversion. 5,000 agreed
for a total of $200,000.
The Market Opens Wide
Before he received the signed contract back from Apple, Sivers was
contacted by Rhapsody, Yahoo Music, Napster, eMusic, and others.
Suddenly everyone wanting the music.
Apple's interest opened up every online outlet for independent
musicians that had been ignoring them. Sivers' company,had contracts
signed with all these other sites - but they still didn't have a signed
contract back from Apple.
Later in October 2003, Steve Jobs did a keynote for the iTunes Music
Store. Jobs focused on the issue of quality songs to offset the fact
that they had a smaller collection than some other sites, such as
Rhapsody.
"This number could have easily been much higher, if we
wanted to let in every song. But we realize record companies do a great
service. They edit! Did you know that if you and I record a song, for
$40 we can pay a few of the services to get it on their site through
some intermediaries? We can be on Rhapsody and all these other guys for
$40? Well, we don't want to let that stuff on our site! So we've had to
edit it. And these are 400,000 quality songs."
Derek Sivers took this comment to specifically mean him. He'd
charged his artists $40 to convert their music.
After charging the fee, he was still waiting for a signed contract
from Apple so he could begin the conversion process. He took the
keynote as a sign from Apple and refunded the $40. At that point, he
says, he got a signed contract from Apple the following day.
Grudge Match
This could have been a great story about the day that Apple opened
the doors for musicians everywhere. The interest that started with
Apple spread to all online retail services. It could have pointed out
how much more money the independent musician is now able to earn thanks
to this critical turning point.
Instead, Sivers has a personal grudge that he has to make the point
of his article (which was first
published on his blog).
His story doesn't make any sense. He complains a lot about Apple not
contacting him, yet someone invited him to Cupertino. And
someone emailed him to complain about his blog post the next
day. And someone sent him a contract to sign.
Did he really wait patiently for 5 to 6 months without trying to
call or email or send a letter to these people at Apple?
I recently negotiated for over six months to buy some equipment. I
called when I needed something, but their sales guy called me dozens of
times in between. I didn't always have news for the sales guy, but at
least I let him know that things were still in the works.
Is it really possible that Apple didn't contact Sivers for months
when his business had 5,000 artists and 100,000 songs to prepare for
iTunes? Did he never get even a few reassurances?
That is poor communication - and a little hard to believe.
What about other small distributors? Had they signed contracts? Had
Apple singled out his company for rebuke?
The guy is in the business; he should have known what was happening
in the rest of his industry at the time. I get the impression that
Apple's overall contact was still small, so plenty of others still
hadn't signed up with Apple. In other words, Sivers wasn't being
singled out. Apple was just being slow to get the ball rolling; I doubt
there was really a personal vendetta against this guy.
Why couldn't this have be a story of all's well that ends well?
Missing Information
Below the article is a blurb about Derek Sivers and CD Baby. CD Baby
had over $100 million in sales. How did joining iTunes help sales? How
does it compare to the other services? How much did his company go up
in value? (We know he sold it later in 2008.)
Doesn't Sivers have anything good to say about this whole time
period - or only that Steve Jobs insulted him in a vague reference?
What cracks me up is that there are companies who contradict the
keynote message. Tunecore
charges a fee to get a musician's music on iTunes, so maybe Steve Jobs
was talking about Sivers back in 2003, but today helping artists onto
iTunes for a fee is legit.
Derek, I think you screwed up. Since you don't talk business in your
article, I assume that iTunes was the bigger fish to catch. You could
have had exclusive digital content on iTunes, but instead you signed up
with everyone else first. You said it yourself - people weren't sure
iTunes was going to be a success.
Blogging Can Be Bad Business
You blew it by opening your mouth about the iTunes deal before it
was finished. That is just bad business.
Apple shouldn't have to tell you that their business negotiations
are confidential. Sure, Apple should have had everyone sign an NDA, but
that doesn't mean you should have been posting to the world what Apple
was planning. I can't imagine posting any of my company's business
plans online, let alone someone else's. Clearly your postings were
self-serving in that you got Rhapsody and others interested. You just
didn't know that Apple was the real prize to win.
Stripped of business impact, there is not much point to the whole
story. What is left is a story full of holes, lacking supporting
collaboration, and petty.
In other words, it's just the kind of story I've come to expect from
Gizmodo. 
