Apple’s vice president of applications and Internet services, Eddy Cue (EC), talked to Ajax Scott – editor of Music Week (MW) – about the burning issues surrounding iTunes and its global progress.

MW: iTunes has been in operation in the UK, Germany and France for three months now. What have you learnt?

EC: There’s all the local repertoire that is a lot more important in the domestic markets, and it runs differently in each. I can’t say we’re experts yet. We’re still going through the growth period, but that is why we position our people locally
to really understand the local music scenes.

MW: You haven’t broken down download totals for each market – how have they fared?

EC: You need broadband connectivity. In each market penetration is different.
It’s fair to say we’re very pleased with the results we have got in Germany and England.

MW: How many people do you have working locally and what are their roles?

EC: We’re not going to share the number of people we have. We’re expanding all the time and we will continue to do that. Their primary role is two-fold: firstly to work with the labels and secondly to programme the music store. We don’t take any money for what gets put on the key genre pages or placement in the store. We have complete editorial control – those
folks do that. It’s really about the content.

MW: The indie labels have been in the news again with complaints about their difficulty in getting deals completed with iTunes. How is the relationship, from your side?

EC: When we launched we said we would have independents on the service. The second goal was to get them one by one and that’s exactly what we’re doing. Are we fast enough for everybody? No. But we will keep adding
them as quickly as we can.

MW: Has the whole process been a frustration?

EC: No, because it’s very few of them. The majority of indies are very happy with the success they’ve had and we’re not going to
let a few diminish that. At the end of the day, we have the same goal, which is selling music.
I just want to get their content up and sell music and then we will both be happy.

MW: You recently struck a deal with Hewlett Packard for it to produce versions of the iPod and to bundle iTunes on all its PCs. How important was the deal, and does it mark a change in strategy?

EC: This is the first of a number of deals. We’re listening to other people, but the HP deal is a pretty unique opportunity because they’re the biggest Windows brand on the planet. We’re looking for unique opportunities with partners.

MW: You also announced a deal with Motorola that takes you into the mobile sector for
the first time. How important is this, and if iTunes goes mobile could this have a negative impact on your bread-and-butter iPod sales?

EC: We believe it’s huge. The mobile space and mobile-phone market is pretty large. This is the first time we can expose people to iTunes through mobile phones and we want to do
it through mass market phones rather than high-end handsets.

It’s difficult to make a music player like the iPod and we think we can stay very competitive. For the next year or two, the networks won’t be that great for downloading. But over time, people will definitely want to be able to download over the air, but I don’t envision that completely taking over what you do on your Mac or PC. They’re very complementary as far as buying music is concerned. Once you have started buying over the phone, it’s important
to have something like iTunes in the background to manage your music collection. We view the mobile space as expanding our market, not as being competitive to the iPod.

MW: Microsoft has finally unveiled its download service – what do you think of it?

EC: I won’t comment beyond saying there
have been plenty of reviews that have been written. We take Microsoft very seriously as
a competitor. We really launched iTunes out of our love for music and I hope that shows from our products. I’m not sure that’s the same reason everyone else is involved in the online music space.

MW: As more players like Microsoft enter the market, do you fear price-cutting as a tactic
to drive business, as in the physical world?

EC: We give the majority of the cost of a
track to the label. There’s not a lot of flexibility, without doing it as a loss. I think our price
is fair. We’re certainly flexible to move if the labels put their prices down as well. There’s a lot of competition. That shows me people are starting to believe there’s a real market place.

MW: The Consumers’ Association in the UK has recently complained about price disparity between iTunes in the UK and continental Europe. What’s your response?

EC: I don’t live in the UK, but I hear a lot of things are more expensive there. We’re literally passing on a lot the costs we’re getting from the labels. This isn’t about Apple.

MW: Do you think it could lead to single
pricing across Europe?

EC: I like anything with the word pan in front
of it because it makes life easier.

MW: There’s been a lot of focus recently on the subscription model, especially with the arrival of Microsoft’s Janus technology. Do you still stand by the download-only approach?

EC: I don’t think a whole load has changed from 17 months ago when we launched. We’re not saying subscription services can’t be successful. We just think that the real growth opportunity is in people buying and owning music because of the simplicity of it.

Subscription is always something that’s difficult to explain in the music space. Janus will allow some form of doing it. But there’s a lot of complexity
in that it’s not a clear, easier-to-use option.

MW: Senior record industry sources suggest that Apple CEO Steve Jobs has privately admitted regret at missing out on an opportunity to buy EMI when its share price was lower because his focus was elsewhere.
Is Apple interested in buying a music company?

EC: I haven’t heard that EMI rumour. One thing I will say is that there’s a huge difference between owning music from a label perspective and what we’re trying to do. We’re focused on what we’re trying to do and we have a clear message about that. Buying a label is not an area I’m spending a lot of time thinking about.

Interview courtesy of