The iTunes Store, which launched in 2003, fundamentally reshaped Apple's business and the music industry, laying the groundwork for its now-thriving services division. Eddy Cue, Apple's Senior Vice President of Services, stated the platform gave the company a "whole different perspective" on what services could achieve. He made the remarks during an appearance on the daily tech talk show TBPN on Wednesday, reflecting on his 38-year tenure.
Cue, who now oversees subscription platforms like Apple Music and Apple TV+, explained that iTunes offered an early glimpse of Apple's modern hardware, software, and services ecosystem. Its success demonstrated how Apple could connect directly with users and generate significant revenue, a model that has expanded exponentially under CEO Tim Cook.
Convincing a Reluctant Industry
The launch faced significant resistance. In the era of Napster and rampant music piracy, major record labels were sceptical of Apple's plan to sell songs for a uniform $0.99. "They wanted to build their own platforms," Cue told hosts Jordi Hays and John Coogan. He described the labels' alternative vision as fragmented, with "different pricing for each song" and "different rules."
Apple's strategy relied on consistent pricing and an innovative, open transaction system. This system allowed users to accumulate multiple song purchases over a 24-hour period into a single transaction, avoiding repeated credit card fees. "Instead of closing the transaction on every single one, why don't we just combine them over a period of time?" Cue explained.
Foundations for a $109bn Business
The gamble paid off spectacularly. Cue said the approach worked because most customer transactions totalled more than $0.99. It also rescued a "cratering" music business. When co-founder Steve Jobs asked what a successful six-month launch would look like, record labels told Cue they hoped to sell 1 million songs. "We sold a million songs in the first six days," Cue revealed.
This success provided the foundational blueprint for Apple's services segment. While still smaller than its products business, services have been its fastest-growing division, generating $109 billion in revenue in 2025—a 14% year-over-year increase. "It surpassed even our expectations," Cue said of iTunes, "but it was an example of if you give people the right way, people are willing to pay, but it has to be done well."