Eddy Cue on Apple's 50 years: launching the online store, 99-cent songs, and the iPhone moment

Summary

Eddy Cue, Apple's senior vice president of Services, reflects on the company's 50-year history through the lens of the businesses he helped build — from the original online store to iTunes to the current F1 broadcast deal.

The iTunes origin story

Apple's services business didn't start with a grand strategy. Early efforts around email and cloud storage were, in Cue's words, "a hobby." The real inflection came with iPod and iTunes, which forced Apple to do something genuinely new: negotiate with an industry that didn't want to move.

The major labels were building their own competing services at the time, with inconsistent pricing across songs. Apple came in with a flat 99¢ model and the labels told them, as Cue puts it, "to go pound sand." Two things made the 99¢ price non-negotiable for Apple. First, a fixed price meant customers never had to think about cost before buying. Second, credit card processing fees on a single 99¢ transaction would consume roughly a quarter, wiping out the economics. Apple's solution was to batch purchases over a rolling window — 8 to 24 hours — so most transactions settled at several dollars, not one, and the fixed fee became irrelevant.

Universal Music told Apple that selling a million songs in any single month within the first six months would constitute success. Apple sold a million songs in the first six days.

Launching iTunes on Windows was equally significant. Steve Jobs introduced it internally as "hell froze over." It opened Apple to an entirely new customer base that had never owned an Apple product — Cue's interviewer notes his own first Apple experience was iTunes on Windows, eventually leading to 25 Apple apps.

The shift to subscription

The move from per-song downloads to subscription streaming was enabled by a single infrastructure shift: ubiquitous, always-on broadband. When connectivity was metered or unreliable, downloaded ownership made sense. Once unlimited network access became the norm, streaming became invisible infrastructure rather than a deliberate user choice. Caching to device still happens, Cue notes, but users no longer need to think about it.

Lessons from Steve Jobs

Asked what he carries forward from Jobs, Cue pushes back on the standard framing of Jobs versus Tim Cook. The more useful question, he says, is what the two share: relentless work ethic, complete focus on Apple and family, and an obsession with the product itself rather than financial results. "Believe it or not, not the financial results" — those were always secondary to what was being delivered to customers.

Cue's two most memorable keynote moments are the iMac and Apple Store launch — the moment Apple knew it wasn't going bankrupt — and the original iPhone reveal in 2007. He brought his wife and eight-year-old children to the iPhone event, the only time he did so, because months of using a pre-release unit had convinced him it was the most significant product he had ever seen. He says he still underestimated it.

F1 and the media strategy

Apple's Formula 1 deal is partly personal — Cue has followed the sport since learning about it from library magazines, since F1 wasn't televised in the US. He had a pre-existing relationship with Formula One CEO Stefano Domenicali from Domenicali's time at Ferrari and Lamborghini, and had flagged his interest in a partnership early.

The Brad Pitt film came together separately, driven by director Joseph Kosinski. The production took longer than planned due to COVID and strikes, but Apple used the film as a demand-generation tool: before screenings, very few US audience members had watched an F1 race; after the film, nearly every hand went up when asked if they'd want to. Apple then used that momentum to take on broadcast rights.

Three races in, US ratings are running well above historical norms. 30% of viewers are watching with multi-view, choosing between different camera feeds and following specific teams — a format Apple designed and that Cue sees as genuinely changing how the sport is consumed. The sports-to-film flywheel, previously tested with MLS soccer, is now the explicit template.