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With the announcement of iTunes in January 2001, Apple CEO Steve Jobs ushers in the legal digital music era. It also marks the beginning of Apple's renaissance as a Silicon Valley pioneer.
By Richard MacManus | October 14, 2025 | Tags: Dot-com, 2001, Season 4
When Steve Jobs opened Macworld on January 9, 2001, he boasted that in addition to the live audience in San Francisco, “we're streaming all the way up to a megabit per second all around the world.” Although he only mentioned streaming a couple more times during the event, it was a hint of what was to come.
At around the 40-minute mark, Jobs began talking about what Apple’s vision was in 2001, especially now that the economy was mired in a post-dot-com depression. He referenced some media reports that the PC had become boring and that its impact was waning. He talked about two “golden ages” for the PC: from 1980-1994, based around productivity applications, and 1995-2000, “the age of the Internet.” But now that the Internet had “matured,” Jobs explained that Apple was preparing for a third golden age.
“We think the PC is on the threshold of entering its third great age, and that age is the age of digital lifestyle — and that's being driven by an explosion of new digital devices,” he said. He listed cellphones, portable music players (CD players and “their cousins, the new solid-state MP3 players”), digital camcorders, DVD players, digital cameras, and handheld organisers such as the Palm Pilot.
“We are living in a new digital lifestyle,” he continued, “with an explosion of digital devices — it's huge — and we believe the PC, or more importantly the Mac, can become the digital hub of our new emerging digital lifestyle, with the ability to add tremendous value to these other digital devices.”
Jobs emphasised the phrase “digital hub,” which he said was key to the PC’s renewed importance. “Most of these digital devices have pretty brain-dead UIs,” he quipped, which meant the PC would have to become the primary user interface for digital entertainment. Also, crucially, the PC was how most people got on the Internet. “Very few of our digital devices get on the internet at all,” Jobs said, “and those that do are slow.”
This vision of the PC as a digital hub for multiple digital devices was a compelling one — and, in time, it would be viewed as a turning point in Apple’s history. But, unlike another celebrated Jobs keynote six years later, when the iPhone was launched, there was no new hardware to unveil in January 2001. The iPod was still in development — in fact, it was still in its initial research phase. So Jobs had no option but to emphasise Mac software in his keynote, which he did with his customary marketing flair.
Jobs talked about the “music revolution” that was presently happening — digital music. He explained that you could “rip” music from a CD into MP3 format, "mix" it into custom playlists, and “burn” it onto writeable CDs or portable MP3 players. It was obvious he was leading up to a new piece of Mac software, but one of Jobs’ marketing tricks was to list off a few competitors first. In this case, it was the Real Networks player (Real Jukebox), the Windows Media Player from Microsoft, and HP’s music software.
According to Jobs, this software from the competition was “too complex” and there were restrictions (“some of them don't let you encode into MP3, which is the most popular format”). The solution to these woes? iTunes. Cue whoops and a round of applause from the live audience.
iTunes was based on the SoundJam software that Apple had acquired just months before; and in the Macworld audience that day were the founders of SoundJam’s main competitor, Audion. They quickly realized that they wouldn’t be able to compete with iTunes. As Audion co-founder Cabel Sasser later recalled:
“On one hand, it [iTunes] was far, far simpler than Audion — no MP3 editing, no faces, no playcount, no rating, no hierarchical playlists. But on the other hand, it's really not that bad — that interface is awfully smart — and, oh crap, it's free.”
As Jobs demonstrated the features of iTunes to the Macworld audience — including using an unnamed MP3 player to show how you could add music onto such a device — the hearts of Audion’s founders sank even further. “iTunes blazed the trail for clean, efficient software design for a broad audience,” Sasser admitted.
iTunes was a triumph for Apple, and for Jobs personally. While it was Mac-only software to begin with, for Apple users iTunes quickly became an integral part of their computing life.
The “digital hub” strategy that Jobs referenced that day would come to define Apple’s business for the twenty-first century. But oddly, they weren’t the first of their competitors to try and pursue it. Jobs himself admitted on-stage that “we're late to this party,” although he added, “and we're about to do a leapfrog.”
Microsoft CEO Bill Gates had announced a “consumer electronics-plus” strategy a year before, during a keynote at the Consumer Electronics Show (CES) in Las Vegas. But Microsoft’s execution simply wasn’t as polished as Apple. In a review of Windows Media Player 7 (WMP7) in October 2000, IT columnist Paul Thurrott had noted that “the user interface is one of WMP7's biggest limitations.” That, according to Thurrott, was a common affliction in media players of the time. “On the other hand, one must consider the competition, and WMP7 is no more difficult to use than Real Jukebox, especially when you're first learning how it works,” he wrote. This, of course, was why Steve Jobs focused so much on the user interface of iTunes a few months later.
But the biggest problem with WMP7 was that it didn’t encode in MP3 format — in other words, you couldn’t rip a CD into MP3 files. Instead, Microsoft used its own proprietary compression format, Windows Media Audio (WMA). Given that Napster had effectively made MP3 into the default digital format for music, whether the music industry liked it or not, it was a big mistake for Microsoft to try and route around MP3. As Thurrott put it, “There may come a day when the world uses WMA as a standard audio format, but that day is not yet upon us.”
That day would never come. When Steve Jobs unveiled iTunes, it was MP3 by default and its user interface set a new standard for media players. The path to legalising digital music truly began in January 2001.
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