Stop the Noiz

Steve Jobs Dissed Derek Sivers: So What?

Frank Fox - 2010.11.17 - Tip Jar

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. LEM

* Back in April 2010, Gizmodo paid a "finders fee" of $5,000 to someone who found an iPhone 4 prototype left in a bar by Apple engineer Gray Powell. Gizmodo published its findings about the next gen iPhone, Apple filed a report, and the police raided the home of Gizmodo editor Jason Chen, seizing every computer in the house.

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