Eddy Cue on how iTunes became Apple's services blueprint

• Eddy Cue reflected on how iTunes revolutionized Apple's service strategy.
• The iTunes Store's success was a precursor to Apple's services business reaching new heights.
• Apple's pricing strategy for iTunes helped it overcome challenges from music piracy in the early 2000s.

The iTunes Store reshaped Apple and the music industry, laying the groundwork for its booming services business.

Eddy Cue, the senior vice president of services at Apple, joined daily tech talk show TBPN on Wednesday to look back on his 38 years at the company. Cue oversees Apple's services, including its subscription-based platforms Apple Music and Apple TV, among others.

Before there was Apple Music, there was the iTunes Store, which started out selling songs and albums. Cue said it was a real game changer for Apple when it launched in 2003.

"It truly revolutionized music, and it really gave us a whole different perspective of what services can do," Cue told hosts Jordi Hays and John Coogan.

It was a glimpse of what would make up Apple's modern ecosystem — the combination of hardware and software, with services added. However, it took some convincing to make it happen.

In the era of Napster and music piracy, major record labels weren't sure it was a good idea to let Apple sell songs for $0.99. They wanted to build their own platforms, Cue said. Apple warned that wouldn't work out.

"They had different pricing for each song. They had different rules," Cue said. "It was all over the map."

Meanwhile, Apple's strategy relied on consistent pricing and an open transaction system that would allow users to buy multiple songs over time, rather than buying them piecemeal. For example, a customer could buy multiple songs in a 24-hour period and be charged for them in a single transaction, to avoid additional credit card fees.

"Instead of closing the transaction on every single one, why don't we just combine them over a period of time? Let's keep the transaction open," Cue said.

It worked out, Cue said, as most transactions were worth more than $0.99.

It ultimately helped the then "cratering" music business, Cue said. He said when cofounder Steve Jobs asked what a successful launch looks like in the music business, record labels told Cue they aimed to sell 1 million songs in the first six months.

"We sold a million songs in the first six days," Cue said.

The success of iTunes laid the foundation for the services department to thrive. It demonstrated how Apple could connect more directly with users and make money from it. That business has grown exponentially under CEO Tim Cook. The segment, while still smaller than Apple's products business, has been growing faster with $109 billion in revenue in 2025, up 14% year over year.

"It surpassed even our expectations, 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," Cue said of iTunes.