What Steve Jobs said that has iPod owners up in arms

Steve Jobs has come back to life in the form of a videotaped deposition to be presented at a trial.

The question and answer session took place in April 2011 -- just six months before the Apple (AAPL, Tech30) co-founder's death. It was made public for the first time Monday.

During the deposition, the attorney representing a large class of iPod owners asked Jobs questions about Apple's attempt in 2004 to limit the iPod's compatibility with music sold by rival music stores.
Most of the attorney's questions focused on a company called RealNetworks (RNWK). In 2004, RealNetworks developed an iTunes rival called Harmony that let people download music that could be played on any MP3 player -- including the iPod.

"Do they still exist?" Jobs asked about RealNetworks.
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That snarky question set the tone for the deposition. Jobs was characteristically defensive, evasive and opaque. Asked about events that took place seven years earlier, he said "I don't remember," "I don't know" or "I don't recall" 74 times during the two-hour session -- including when he was asked if he knew what the lawsuit was about.
At one point, Jobs was presented with a portion of a press release that he edited: "We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod...." When the attorney asked him "Is it a pejorative description?" Jobs responded: "What do you mean by 'pejorative?'"
The attorney later asked Jobs if he agreed with one of the music labels that supported Harmony. An executive at the label EMI Music said, "The move [by RealNetworks to sell iPod-compatible music] could boost iPod sales by allowing users to buy songs from more sites."
Jobs said, "I don't know. We've never run that experiment."

 

Why Steve Jobs still matters

In the iPod's early days, Apple went to great lengths to ensure the iPods could only play music burned from CDs or purchased on iTunes. Music sold on iTunes had a special Digital Rights Management encryption that wasn't compatible with other MP3 players. In a class-action lawsuit, plaintiffs argue that Apple abused its monopoly power in the music industry to force out competition. The nine-day trial began Monday.
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Throughout the deposition, Jobs portrayed Apple as a company that was at the mercy of the record labels. He said Apple was "very scared" of being in noncompliance with the labels' terms, which stipulated that iTunes music needed DRM protections.
Jobs noted that hackers continually found ways around DRM. Under threat of music labels revoking their contracts, Apple had to frequently update iTunes to patch the DRM holes.
Jobs said Apple considered Harmony's iPod compatibility a hole that could put it in breach of contract with the record companies.
None of the major labels ever canceled their contracts with iTunes. In fact, Apple has been widely regarded as having the upper hand in its negotiations with the record labels, and Jobs has been accused of strong-arm tactics when setting iTunes' music prices.
Towards the end of the deposition, the attorney asked Jobs whether Apple's response to Harmony was "strong and vehement."
"They don't sound too angry to me when I read them," Jobs answered. "A strong response from Apple would be a lawsuit."