WEBVTT - The Epic Epic Vs Apple Battle 0:00:04.400 --> 0:00:07.760 Welcome to text Time, a production from I Heart Radio. 0:00:12.160 --> 0:00:15.320 Hey there, and welcome to tech Stuff. I'm your host, 0:00:15.480 --> 0:00:19.200 Jonathan Strickland. I'm an executive producer with I Heart Radio 0:00:19.239 --> 0:00:22.680 and I love all things tech. And as I record this, 0:00:22.800 --> 0:00:26.439 it is August twenty twenty, and there is an epic 0:00:26.760 --> 0:00:32.600 showdown going on between two tech companies. An epic epic showdown, 0:00:33.400 --> 0:00:37.559 or or maybe an epic epic showdown. What I mean 0:00:37.600 --> 0:00:41.159 to say is that the company Epic or Epic Games, 0:00:41.240 --> 0:00:44.400 known for video games in general and the juggernaut game 0:00:44.560 --> 0:00:49.800 Fortnite in particular, is facing off against the sometimes trillion 0:00:49.880 --> 0:00:54.800 dollar monolithic company Apple, and things are getting spicy. But 0:00:55.520 --> 0:00:59.480 why are these two companies feuding and how are things 0:00:59.720 --> 0:01:02.760 escal leading? As I research and write this, the fight 0:01:02.920 --> 0:01:05.640 is just gearing up, but it promises to get much 0:01:05.760 --> 0:01:09.679 nastier over time. Today we're going to learn about the 0:01:09.720 --> 0:01:12.440 conflict between these companies as well as get a deeper 0:01:12.520 --> 0:01:16.880 understanding of the way that apps, services and Apple make money, 0:01:16.920 --> 0:01:20.399 because really, that's what this all boils down to the 0:01:20.440 --> 0:01:23.720 method that companies follow to make money and how they 0:01:23.720 --> 0:01:26.240 can make more money and keep more of the money 0:01:26.280 --> 0:01:30.520 they make. So you know, spoiler alert. That's really what 0:01:30.680 --> 0:01:33.000 this is all about when you get down to it. 0:01:33.240 --> 0:01:37.560 But first some background. Now, I've done an episode about 0:01:37.600 --> 0:01:41.280 Fortnite that published back in February of two thousand nineteen, 0:01:41.360 --> 0:01:44.559 so I'm not gonna go over the entire history of Fortnite, 0:01:44.800 --> 0:01:47.840 but let's do a quick rundown of Epic Games so 0:01:47.880 --> 0:01:52.440 we understand where they're coming from. Way back in, a 0:01:52.480 --> 0:01:56.360 guy named Tim Sweeney was programming video games and saving 0:01:56.400 --> 0:01:59.840 them onto floppy disks and then sending those disks out 0:02:00.120 --> 0:02:02.840 over the mail, and he was using the company name 0:02:03.160 --> 0:02:07.720 Potomac Computer Systems. He hired on a couple of important 0:02:07.800 --> 0:02:13.200 people as well, Mark Rhyan and Cliff Blazynski. In Sweeney 0:02:13.280 --> 0:02:17.160 would rename this company and it became Epic Mega Games, 0:02:17.440 --> 0:02:20.480 and the founders started creating lots of games that got 0:02:20.520 --> 0:02:24.320 a pretty good reception. A few years later, as computers 0:02:24.360 --> 0:02:28.239 got more powerful and graphics cards began to be a thing, 0:02:28.760 --> 0:02:32.640 Epic evolved into Epic Games and the company released a 0:02:32.680 --> 0:02:37.720 computer engine, a game engine called the Unreal Engine. So 0:02:37.800 --> 0:02:40.560 computer engines or video game engines are sort of a 0:02:40.600 --> 0:02:44.040 block of code that provide tools to game developers, like 0:02:44.600 --> 0:02:48.320 physics engines and graphics engines, and a game engine saves 0:02:48.360 --> 0:02:50.960 game developers a lot of time and a lot of effort. 0:02:51.000 --> 0:02:55.680 It provides some basic functionality that the game developers can 0:02:55.720 --> 0:02:58.640 then build upon. It's like the framework, and it keeps 0:02:58.680 --> 0:03:01.360 developers from having to re invent the wheel every time 0:03:01.360 --> 0:03:04.520 they want to build a game. The Unreal Engine would 0:03:04.560 --> 0:03:08.200 become a really popular game engine, and that will play 0:03:08.240 --> 0:03:11.880 an important part in our story. Around two thousand and six, 0:03:12.200 --> 0:03:16.160 Epic Games began to saunter casually over to the world 0:03:16.240 --> 0:03:21.080 of console video games, developing titles or adapting existing PC 0:03:21.320 --> 0:03:25.040 games for the Xbox three sixty. The company was branching 0:03:25.040 --> 0:03:28.840 out beyond PC and Mac titles. Some of their earliest 0:03:29.240 --> 0:03:32.160 games that you know Epic produced were available on the 0:03:32.200 --> 0:03:35.560 Mac computer. That will also play an important part of 0:03:35.600 --> 0:03:39.920 our story. The company announced Fortnite in two thousand eleven. 0:03:40.160 --> 0:03:43.440 It would take a few years before it actually would debut, 0:03:43.960 --> 0:03:49.040 and in a Chinese company called Tencent Holdings ended up 0:03:49.040 --> 0:03:53.200 buying a forty steak in Epic Games for a three 0:03:53.360 --> 0:03:59.120 hundred thirty million dollars, a princely sum. This, by the way, 0:03:59.320 --> 0:04:03.400 makes Epic another potential target in the ongoing political and 0:04:03.480 --> 0:04:07.280 trade battle between the United States and China for much 0:04:07.360 --> 0:04:11.480 the same reason that TikTok is under scrutiny. But that's 0:04:11.480 --> 0:04:15.000 a different topic that will probably not come back into 0:04:15.000 --> 0:04:17.520 this episode. I think I don't know. I'm just at 0:04:17.520 --> 0:04:20.920 the beginning of writing this. I'm reading my old notes, okay, 0:04:21.000 --> 0:04:23.440 so I can say definitively no, that's not going to 0:04:23.520 --> 0:04:27.280 come back in. In two thousand and fourteen, Epic announced 0:04:27.400 --> 0:04:30.440 that when Fortnite would launch, it was going to be 0:04:30.520 --> 0:04:33.280 a free to play game. Now, this is also a 0:04:33.279 --> 0:04:36.440 big part of our story, so a free to play 0:04:36.560 --> 0:04:41.080 game is a little bit deceptive. It is free to 0:04:41.279 --> 0:04:44.640 download and install and play one of these games, but 0:04:44.680 --> 0:04:49.720 it typically has in game transactions, and these are transactions 0:04:49.720 --> 0:04:53.960 where players can spend real world money and enhance their 0:04:54.000 --> 0:04:57.000 game play in some way. Games do this in different ways. 0:04:57.200 --> 0:05:00.800 Some games allow players to purchase upgrade that give them 0:05:00.839 --> 0:05:04.920 an advantage in the game. The derogatory name for this 0:05:05.040 --> 0:05:08.600 style of game is called pay to win, the implication 0:05:08.720 --> 0:05:12.400 being that a mediocre player can dominate people who have 0:05:12.440 --> 0:05:15.280 spent more time and developed more skill in the game 0:05:15.680 --> 0:05:19.159 just by dishing out more cash for upgrades. And a 0:05:19.200 --> 0:05:23.599 lot of gamers view this as being inherently unfair. Other 0:05:23.680 --> 0:05:27.560 games only allow for cosmetic transactions, so it's stuff that 0:05:27.680 --> 0:05:30.720 changes the appearance of different elements in the game, like 0:05:31.200 --> 0:05:35.520 a player's outfit or their weapons, skins or whatever, and 0:05:35.640 --> 0:05:40.000 some games incorporate are element of randomness in the transactions 0:05:40.000 --> 0:05:43.680 with loot boxes. With these games, you don't buy specific 0:05:43.839 --> 0:05:48.680 upgrades or cosmetic changes. Instead, you buy a crate or 0:05:48.720 --> 0:05:52.359 a loot box which you then open within the game, 0:05:52.520 --> 0:05:55.000 and only then do you find out what you've got 0:05:55.200 --> 0:05:59.120 from inside the crate or box. It's a classic mystery 0:05:59.200 --> 0:06:02.240 bag idea of you ever went into a store where 0:06:02.480 --> 0:06:04.200 the country stores used to do this all the time 0:06:04.200 --> 0:06:06.680 where I was growing up, where you would have bags 0:06:06.760 --> 0:06:09.320 that would just be a a mystery bag. There'd be 0:06:09.360 --> 0:06:11.120 a toy inside, but there'll be no way of knowing 0:06:11.200 --> 0:06:13.679 what toy was in there until you bought the bag 0:06:14.000 --> 0:06:16.120 and then you could open it, so you have no 0:06:16.200 --> 0:06:18.600 clue what's inside, and you have to take a gamble 0:06:18.839 --> 0:06:21.479 if you purchase it, maybe it will be something cool 0:06:21.600 --> 0:06:24.640 or maybe it'll be something lame. And on a side note, 0:06:24.760 --> 0:06:28.359 there's a definite art to designing these style of loot boxes. 0:06:28.680 --> 0:06:31.159 You want there to be just enough payout to keep 0:06:31.200 --> 0:06:34.960 players engaged and buying the crates. So you need to 0:06:35.040 --> 0:06:38.599 keep those payouts just rare enough so that it feels 0:06:38.640 --> 0:06:42.240 like an accomplishment to get, you know, a rare skin 0:06:42.480 --> 0:06:45.400 or something like that, but not so rare that people 0:06:45.440 --> 0:06:48.480 feel they're getting nothing but garbage every time they buy 0:06:48.520 --> 0:06:51.280 a lootbox. So this is not easy to do, and 0:06:51.320 --> 0:06:55.880 it's also something that can encourage unhealthy behaviors akin to addiction. 0:06:56.320 --> 0:06:58.200 And it's said the core of why games that have 0:06:58.400 --> 0:07:02.039 these sorts of transactions off come under scrutiny by various 0:07:02.120 --> 0:07:05.760 advocacy groups and governments around the world. Now that's another 0:07:05.839 --> 0:07:08.680 kettle of fish, but the micro transactions get to the 0:07:08.760 --> 0:07:11.960 very heart of the matter we're looking at in this episode. 0:07:12.280 --> 0:07:15.840 In two thousand nineteen, Epic Games made another big move. 0:07:16.080 --> 0:07:20.680 They launched the Epic Games Store. Now, over its relatively 0:07:20.760 --> 0:07:24.640 short history, the PC games industry has seen some pretty 0:07:24.680 --> 0:07:28.760 massive changes in how companies sell and distribute games. So 0:07:28.840 --> 0:07:32.200 in the old old days, you had game programmers like 0:07:32.400 --> 0:07:35.040 Sweeney who would build a game and then make copies 0:07:35.080 --> 0:07:38.520 of it on discs you floppy discs, and then sell 0:07:38.560 --> 0:07:41.800 them either by mail order or sometimes going through like 0:07:41.840 --> 0:07:45.760 a local computer hobby store, and that evolved into game 0:07:45.800 --> 0:07:49.840 developers and publishers selling games through brick and mortar retail 0:07:49.920 --> 0:07:53.840 shops like game stop or best Buy or Walmart or whatever. 0:07:54.560 --> 0:07:58.720 But over the last decade the model has shifted dramatically 0:07:58.880 --> 0:08:03.800 over towards digital distribution. The vast majority of games are 0:08:03.840 --> 0:08:07.800 now sold through digital downloads, more than eighty percent since 0:08:07.840 --> 0:08:11.920 two thousand eighteen. This changes the model a lot, and 0:08:11.960 --> 0:08:14.480 it's one of the reasons why companies like GameStop are 0:08:14.520 --> 0:08:17.320 really in trouble these days. But you still need a 0:08:17.320 --> 0:08:21.040 place to sell your games. You need a shopping portal 0:08:21.240 --> 0:08:24.040 or something. Now you could try and do this through 0:08:24.080 --> 0:08:27.120 your own company's web page, but the problem with that 0:08:27.320 --> 0:08:29.960 is that you're asking gamers to go to a lot 0:08:30.000 --> 0:08:32.880 of different websites when they're in the mood to buy 0:08:32.920 --> 0:08:36.200 a game. Most gamers like to play a variety of 0:08:36.280 --> 0:08:39.120 titles from a variety of companies. There are very few 0:08:39.120 --> 0:08:41.520 gamers who are like, I'm only going to buy games 0:08:41.559 --> 0:08:45.160 from this one company, and smaller independent developers have a 0:08:45.160 --> 0:08:47.960 hard time standing out with so many big companies that 0:08:47.960 --> 0:08:52.200 are in the industry. So having a centralized digital store 0:08:52.559 --> 0:08:55.839 where you can look at titles from big or small companies. 0:08:56.240 --> 0:08:59.079 That ended up being a really great idea, and that 0:08:59.120 --> 0:09:02.320 was an idea of that a company called Valve, famous 0:09:02.360 --> 0:09:05.840 for video game series like Half Life in Portal had 0:09:06.040 --> 0:09:10.360 the Valve Digital Store gave PC gamers a centralized location 0:09:10.440 --> 0:09:13.160 where they could shop for games, and Valve would end 0:09:13.240 --> 0:09:16.959 up making truckloads of cash off of this because the 0:09:17.000 --> 0:09:20.959 company would take a cut out of every transaction made 0:09:21.200 --> 0:09:24.160 through the Valve Steam Store. If you bought a title 0:09:24.200 --> 0:09:27.720 on Steam, whether it came from Valve or not, Valve 0:09:27.720 --> 0:09:30.960 would get some of that cash, and for a while, 0:09:31.360 --> 0:09:35.199 it was effectively the only game in town, so to speak, 0:09:35.320 --> 0:09:39.480 unless you were to go directly to each publisher. In 0:09:39.520 --> 0:09:43.280 two thousand nineteen, that changed. Epic announced the Epic Game 0:09:43.360 --> 0:09:45.640 Store and also announced that it was going to take 0:09:45.679 --> 0:09:49.160 a smaller cut than what Valve was taking in their 0:09:49.200 --> 0:09:52.600 Steam Store. That would mean that video game companies would 0:09:52.600 --> 0:09:55.760 get to keep more of the money from those sales, 0:09:56.160 --> 0:09:57.839 and it would also mean that if a company were 0:09:57.880 --> 0:10:00.000 to hold a sale, like if they were to discount 0:10:00.000 --> 0:10:02.800 on a title, they wouldn't take as big a hit 0:10:02.960 --> 0:10:06.680 on revenue as a result, and it introduced competition in 0:10:06.720 --> 0:10:11.840 the digital marketplace. Some of epics moves upset gamers, particularly 0:10:11.880 --> 0:10:15.559 when they heard about specific titles that would be exclusively 0:10:15.679 --> 0:10:19.200 sold through the Epics store. Gamers are not crazy about 0:10:19.200 --> 0:10:22.240 the idea of having to manage to store accounts, I guess, 0:10:22.520 --> 0:10:25.080 but you could make a strong argument that competition would 0:10:25.120 --> 0:10:27.680 ultimately be a good thing, even if it meant you 0:10:27.720 --> 0:10:30.440 had to go to two stops when you were shopping 0:10:30.640 --> 0:10:33.880 for games instead of just one, And that really sets 0:10:33.960 --> 0:10:37.360 the stage for the show down with Apple. Epic Games 0:10:37.360 --> 0:10:41.120 has done something really smart with Fortnite. Actually, they've done 0:10:41.160 --> 0:10:44.280 a lot of smart things, including lifting the battle Royal 0:10:44.440 --> 0:10:47.360 concept that was working so well for video games like 0:10:47.440 --> 0:10:50.920 Player Unknowns Battlegrounds and then applying it to Fortnite. That 0:10:51.040 --> 0:10:54.240 transformed that game and made it into the juggernaut it is. 0:10:54.600 --> 0:10:57.199 But Epic has followed what I think of as the 0:10:57.280 --> 0:11:01.640 Netflix strategy. One of the things that Netflix really got 0:11:01.760 --> 0:11:04.840 right early on when it started making movies available to 0:11:04.960 --> 0:11:08.480 stream online is that the company worked hard to make 0:11:08.520 --> 0:11:11.640 sure that this service would be available across a ton 0:11:11.920 --> 0:11:15.559 of different platforms. Netflix wanted to make sure that users 0:11:15.600 --> 0:11:18.440 would be able to access the service no matter how 0:11:18.600 --> 0:11:22.160 they watch video. So that meant that Netflix had its 0:11:22.200 --> 0:11:25.760 web based interface, and then it also had an interface 0:11:25.800 --> 0:11:29.000 for smart TVs and one for smartphones and one for 0:11:29.120 --> 0:11:33.320 video game consoles. Essentially, the idea was, if this thing 0:11:33.400 --> 0:11:37.040 can play video, Netflix wants an interface to go on it. 0:11:37.559 --> 0:11:40.160 And the strategy paid off big time. It meant Netflix 0:11:40.200 --> 0:11:45.680 could cast a truly wide, you know, net to capture 0:11:45.720 --> 0:11:49.880 as much audience as possible. Epic has done something similar 0:11:49.880 --> 0:11:53.840 with Fortnite. Game developers often have to weigh some pretty 0:11:53.880 --> 0:11:57.760 tough decisions when it comes to making games. One strategy 0:11:58.120 --> 0:12:01.120 is to build games for a specific thick platform and 0:12:01.160 --> 0:12:04.520 just to focus on that exclusively, and that gives you 0:12:04.520 --> 0:12:08.319 the ability to really refine the game for that specific 0:12:08.360 --> 0:12:11.440 platform and and and make sure that everything is working 0:12:11.480 --> 0:12:14.360 well and you end up with the most polished, well 0:12:14.400 --> 0:12:18.560 designed game you can create. So if you want the 0:12:18.600 --> 0:12:21.360 game to be available on more than one platform, such 0:12:21.360 --> 0:12:22.920 as let's say that you want the game to be 0:12:22.920 --> 0:12:27.199 playable on PC as well as on a PlayStation console, well, 0:12:27.240 --> 0:12:29.800 then you have to devote time to adapting the game 0:12:29.880 --> 0:12:33.920 to work on the other platform. Because games are not 0:12:33.960 --> 0:12:37.000 just something you can copy and paste over on to 0:12:37.559 --> 0:12:40.520 one thing from together. You can't just pull the code 0:12:40.559 --> 0:12:43.360 from a PC game and PLoP it into the PlayStation store. 0:12:43.360 --> 0:12:46.640 It doesn't work that way. So you really have two choices, 0:12:47.000 --> 0:12:50.560 one of which doesn't make much sense. That choice is 0:12:50.600 --> 0:12:54.359 to essentially recreate the game entirely for the new platform. 0:12:54.400 --> 0:12:57.839 This would mean building the same game two times, at 0:12:57.920 --> 0:13:00.560 least only the second time you're doing it for a 0:13:00.600 --> 0:13:05.280 different system. That's not really efficient. That's not a great 0:13:05.320 --> 0:13:07.319 way to go about it. It's certainly not a cost 0:13:07.360 --> 0:13:10.040 effective way to go about it. So the other way 0:13:10.600 --> 0:13:13.760 is to port the game over, which means you're really 0:13:13.760 --> 0:13:17.560 trying to keep as much of the basic code you 0:13:17.640 --> 0:13:21.440 built for the original game whatever platform moves on, like 0:13:21.600 --> 0:13:24.880 for PC, and only focus on making changes where it's 0:13:24.960 --> 0:13:29.000 necessary in order to run on a different platform like 0:13:29.040 --> 0:13:33.559 the PlayStation or whatever other platform you're developing for. Either way, 0:13:33.800 --> 0:13:37.240 it's a process that takes more time and resources to complete. 0:13:37.679 --> 0:13:40.400 Some companies will farm this sort of work out to 0:13:40.600 --> 0:13:44.240 other game developers, and this gives the original company the 0:13:44.320 --> 0:13:48.040 freedom to do other stuff like developed downloadable content or 0:13:48.480 --> 0:13:51.760 otherwise known as DLC for that original title, or to 0:13:51.800 --> 0:13:55.720 work on a brand new game with Fortnite, Epic developed 0:13:55.800 --> 0:14:00.480 versions for pretty much every conceivable platform. There are versions 0:14:00.520 --> 0:14:04.280 of Fortnite that you can play on PC, on MAC, 0:14:04.600 --> 0:14:08.080 on the Xbox One, the PlayStation four, the Nintendo Switch, 0:14:08.559 --> 0:14:13.080 on Android phones and iOS devices like iPhone and iPads. 0:14:13.080 --> 0:14:17.800 So epics approach is, again, if this thing can play games, 0:14:18.040 --> 0:14:20.800 we want to be there. Now. I say that knowing 0:14:20.840 --> 0:14:23.800 there are other gaming platforms out there, like you know, 0:14:23.920 --> 0:14:26.240 handhelds and stuff like that, So don't yell at me, 0:14:26.320 --> 0:14:29.840 you know what I mean. What's more, as an added 0:14:29.960 --> 0:14:33.120 value to the game, Epic has included the ability to 0:14:33.160 --> 0:14:36.960 have a lot of cross platform play. Now, this means 0:14:37.040 --> 0:14:40.640 that people playing the game on totally different systems can 0:14:40.720 --> 0:14:44.480 potentially play together in the same game or match. This, 0:14:44.600 --> 0:14:46.600 by the way, helps illustrate the fact that all these 0:14:46.600 --> 0:14:50.560 systems are ultimately computers when you really get down to it, 0:14:51.360 --> 0:14:54.440 and that would mean that you could play on PC, 0:14:54.640 --> 0:14:56.880 your friend could be on a PlayStation, and the two 0:14:56.880 --> 0:14:59.000 of you could actually play in the same game. Now, 0:14:59.000 --> 0:15:03.320 typically that doesn't really happened that much. At first, this 0:15:03.440 --> 0:15:06.920 cross platform ability wasn't quite universal. You would run into 0:15:06.920 --> 0:15:10.440 weird situations where player a could play with player B, 0:15:11.000 --> 0:15:13.880 but they couldn't play with players C, and player B 0:15:14.040 --> 0:15:17.600 could play with either A or C, but they could 0:15:17.680 --> 0:15:21.160 not play with both at the same time. However, over time, 0:15:21.200 --> 0:15:24.520 Epic would roll out more cross platform support. In two 0:15:24.560 --> 0:15:28.040 thousand nineteen, they tweaked this a bit so that players 0:15:28.080 --> 0:15:31.280 who were on Nintendo Switch would by default get grouped 0:15:31.280 --> 0:15:34.440 into games with mobile players, you know, people on Android 0:15:34.480 --> 0:15:38.200 phones or iOS devices, whereas Xbox and PS four players 0:15:38.520 --> 0:15:42.960 were by default grouped together. The company still allowed people 0:15:43.040 --> 0:15:46.600 to create parties to form across these technological divides if 0:15:46.640 --> 0:15:50.120 they really wanted to. It's just the differences and system 0:15:50.160 --> 0:15:53.960 power and controls really make a big impact on gameplay. 0:15:54.120 --> 0:15:56.600 It could be very difficult for someone on mobile to 0:15:56.920 --> 0:16:00.000 compete head to head against someone on PC, for example. 0:16:00.800 --> 0:16:03.960 But anyway, that's epics set up. When we come back, 0:16:04.240 --> 0:16:06.560 we'll do a brief rundown on Apple and then we'll 0:16:06.560 --> 0:16:10.360 talk about why these companies are waging war. But first 0:16:10.800 --> 0:16:23.360 let's take a quick break. So Apple. I've done a 0:16:23.480 --> 0:16:27.760 series of episodes about Apple, and it was one of 0:16:27.800 --> 0:16:30.920 the early personal computer companies to emerge out of the 0:16:31.000 --> 0:16:35.280 hobbyist scene of the nineteen seventies. The original Apple computer, 0:16:35.480 --> 0:16:39.720 the Apple one, was really a hobbyist computer. It wasn't 0:16:39.800 --> 0:16:42.280 until the introduction of the Apple two line that you 0:16:42.320 --> 0:16:44.520 started seeing machines that could appeal to people who were 0:16:44.920 --> 0:16:46.600 you know, they were geeks, but they weren't, you know, 0:16:46.680 --> 0:16:51.960 like hardcore computer hobbyists geeks. Then you had the introduction 0:16:52.000 --> 0:16:55.560 of the Macintosh computer in four. That's going to have 0:16:55.640 --> 0:16:59.400 an interesting callback later in this episode. Then co founder 0:16:59.440 --> 0:17:02.920 Steve Joe either quit or was fired from the company. 0:17:02.960 --> 0:17:07.800 He was definitely pushed aside, and so even if he quit, 0:17:08.359 --> 0:17:12.200 that was because he had essentially been neutralized by company 0:17:12.240 --> 0:17:16.200 management at that time. Now, after the ousting of Steve Jobs, 0:17:16.480 --> 0:17:20.880 Apple executives would make a series of really bad decisions 0:17:21.119 --> 0:17:24.720 that ultimately put the computer in jeopardy. Now I'm not 0:17:24.760 --> 0:17:27.520 going to go into detail because they aren't really relevant 0:17:27.520 --> 0:17:30.359 for this episode, except to say I'm sure that the 0:17:30.400 --> 0:17:34.320 brushes with bankruptcy shaped the company as a result and 0:17:34.359 --> 0:17:38.200 created a sort of steely resolve to reverse course. So 0:17:38.200 --> 0:17:42.120 Steve Jobs, who had left the company in nineteen five, 0:17:42.480 --> 0:17:45.600 would end up being called back to Apple a little 0:17:45.640 --> 0:17:50.119 more than a decade later in to act as something 0:17:50.160 --> 0:17:53.399 of a like a counselor or advisor, and before long 0:17:53.680 --> 0:17:57.639 he was able to regain control or if you prefer, rest, 0:17:57.760 --> 0:18:02.040 control of the company, first as an interim CEO and 0:18:02.080 --> 0:18:07.320 then ultimately as the permanent CEO. Apple was in bad shape, 0:18:07.359 --> 0:18:09.960 and Jobs was determined to fix it and then make 0:18:10.000 --> 0:18:12.520 sure the company would never be in such a precarious 0:18:12.520 --> 0:18:16.359 position again. I think it's fair to say he had 0:18:16.400 --> 0:18:19.280 a bit of a ruthless edge to him. He was 0:18:19.359 --> 0:18:23.879 also a remarkable salesman and always had been. While the 0:18:23.920 --> 0:18:28.879 course corrections helped improve Apple standing, what really turned things 0:18:28.920 --> 0:18:31.600 around for the company was the introduction of a little 0:18:31.640 --> 0:18:35.560 device that could play music files. This was called the iPod, 0:18:36.040 --> 0:18:40.320 and Jobs unveiled it on October twenty three. One. Two 0:18:40.440 --> 0:18:43.840 years later, Apple would launch the iTunes store, and that 0:18:44.320 --> 0:18:48.720 would really be a transformative moment for the company. Now, 0:18:48.760 --> 0:18:51.879 the iPod helped Apple get a new foothold in the 0:18:51.880 --> 0:18:55.560 consumer market. The company would strengthen that over time with 0:18:55.600 --> 0:18:58.639 the introduction of the iPhone and, to a lesser extent, 0:18:58.760 --> 0:19:01.879 the iPad and the I Watch. But the iPod and 0:19:02.000 --> 0:19:07.120 iPhone were slam dunks or touchdowns or Grand Slam home 0:19:07.200 --> 0:19:10.440 runs or whatever. Impressive sports analogy you would like to use, 0:19:10.760 --> 0:19:15.359 That's what they were. They weren't just popular, they became iconic. Heck, 0:19:15.400 --> 0:19:19.119 the iPod didn't invent the MP three player, but it 0:19:19.480 --> 0:19:23.720 certainly defined the MP three player. We usually call shows 0:19:23.760 --> 0:19:27.600 like mine like tech stuff podcasts for a reason, and 0:19:27.640 --> 0:19:30.960 that reason is the Apple iPod. But I want to 0:19:30.960 --> 0:19:34.960 tell you, guys an important fact. The iPod helped turn 0:19:35.000 --> 0:19:39.360 Apple around. The iPhone secured Apple's place as the company 0:19:39.400 --> 0:19:44.360 that makes status symbols that are esthetically appealing technology. Though 0:19:44.359 --> 0:19:46.640 I should also admit that the company was on that 0:19:46.680 --> 0:19:49.560 path already with the redesign of Mac computers and the 0:19:49.560 --> 0:19:53.040 evolution of the iPod. But one thing that would truly 0:19:53.119 --> 0:19:56.080 set Apple apart was the introduction of the iTunes store 0:19:56.160 --> 0:19:59.160 back in two thousand three. So the company had first 0:19:59.600 --> 0:20:03.120 made and iTunes program in two thousand one, but at 0:20:03.160 --> 0:20:06.840 that time, iTunes was really just about letting users rip 0:20:07.000 --> 0:20:09.439 music from their c d s and then load the 0:20:09.480 --> 0:20:13.040 files onto their iPods. In two thousand three, the company 0:20:13.080 --> 0:20:16.480 began to act as a sort of music retailer, offering 0:20:16.560 --> 0:20:20.320 up downloads of individual songs, and this was the start 0:20:20.400 --> 0:20:23.760 of a massive change in how the music industry had 0:20:23.800 --> 0:20:27.639 been working and it would presage you like that word. 0:20:28.119 --> 0:20:31.280 The change in the video game industry by you know, 0:20:31.320 --> 0:20:34.760 like a decade so since the introduction of the long 0:20:34.800 --> 0:20:38.840 playing album or LP record, companies have been marketing full 0:20:38.960 --> 0:20:42.280 albums as sort of the preferred product. Now, you could 0:20:42.280 --> 0:20:45.439 go and buy a single, typically with a B side 0:20:45.600 --> 0:20:49.280 song attached to it, but that was less common and 0:20:49.600 --> 0:20:51.440 for those of you who have never dealt with music 0:20:51.520 --> 0:20:54.560 on a physical medium, an album is a collection of 0:20:54.600 --> 0:20:57.920 songs by a band or artist, and a single is 0:20:57.960 --> 0:21:01.199 a particular song off an album. Usually it's one that 0:21:01.280 --> 0:21:04.200 the artist and the music label feels has a particularly 0:21:04.240 --> 0:21:07.080 catchy vibe to it. The goal of picking a single 0:21:07.160 --> 0:21:09.840 is to pick out the standout hit or hits from 0:21:09.880 --> 0:21:13.479 an album. In other words, but now Apple was allowing 0:21:13.520 --> 0:21:18.440 people to purchase not just albums, but individual songs. Sometimes 0:21:18.840 --> 0:21:22.080 your favorite song off an album might not be a single, 0:21:22.280 --> 0:21:25.120 which means you normally wouldn't be able to buy just 0:21:25.760 --> 0:21:28.400 that song. You would have to buy the whole album, 0:21:28.560 --> 0:21:31.560 And if it's the only one you like off that album, 0:21:31.680 --> 0:21:34.320 you might deliberate about whether or not it's worth it 0:21:34.400 --> 0:21:36.639 to purchase the whole thing or not. Why would you 0:21:36.680 --> 0:21:40.359 spend your money if you really just want one song? Not. 0:21:40.480 --> 0:21:44.159 At the time Apple was introducing the iTunes Store, music 0:21:44.240 --> 0:21:47.720 piracy was running wild. People were using all sorts of 0:21:47.760 --> 0:21:51.959 different services to share music and download specific songs. For 0:21:52.000 --> 0:21:55.480 the music industry. Apple was helping solve a problem by 0:21:55.520 --> 0:21:59.600 guaranteeing quality and safety, two things that were not a 0:21:59.680 --> 0:22:04.000 guar team if you were, you know, using piracy, Apple 0:22:04.080 --> 0:22:07.680 could convince people to buy music rather than just share 0:22:07.720 --> 0:22:11.080 it illegally. If a song costs less than a dollar 0:22:11.359 --> 0:22:13.040 and you knew it was going to be really good 0:22:13.040 --> 0:22:16.280 audio quality, plus it wasn't going to infect your computer 0:22:16.359 --> 0:22:19.439 with a virus, you might just go and purchase it. 0:22:19.680 --> 0:22:22.399 In fact, a lot of research shows that piracy doesn't 0:22:22.400 --> 0:22:24.680 always come about because people just don't want to pay 0:22:24.720 --> 0:22:28.679 for stuff. It usually grows because people don't have options 0:22:28.680 --> 0:22:31.159 when it comes to buying the stuff they like. So 0:22:31.280 --> 0:22:35.040 if you provide options, you remove some of the motivation 0:22:35.119 --> 0:22:39.240 for piracy. Now, this gave the iTunes store a nice 0:22:39.400 --> 0:22:43.400 healthy amount of support early on, and in return, because 0:22:43.640 --> 0:22:46.800 iTunes was acting as a sort of retail store for 0:22:46.840 --> 0:22:51.120 this music, Apple would take a cut of the transaction. 0:22:51.680 --> 0:22:54.560 The music label would get most of the money, but 0:22:54.640 --> 0:22:59.320 Apple would pocket fair percentage as well, And for music labels, 0:22:59.359 --> 0:23:03.320 this wasn't that big of a roadblock. Producing music on 0:23:03.440 --> 0:23:08.000 physical media is expensive. You're dealing with actual materials like 0:23:08.119 --> 0:23:11.040 c D s or cassettes or vinyl or whatever it is. 0:23:11.640 --> 0:23:15.280 You want to produce enough of that to meet consumer demand. 0:23:15.600 --> 0:23:17.840 But you also don't want to go overboard and make 0:23:17.880 --> 0:23:20.119 more copies than you can sell, because that's just a 0:23:20.119 --> 0:23:22.920 waste of money in space. You also have to store 0:23:23.320 --> 0:23:25.639 that stuff, and you have to ship it. In other words, 0:23:26.200 --> 0:23:30.600 there's a cost associated with actually producing and selling music 0:23:30.760 --> 0:23:36.040 on physical media. Going digital helped reduce or even remove 0:23:36.200 --> 0:23:39.800 a lot of those costs, lowering the overhead, and so 0:23:40.080 --> 0:23:42.760 even with Apple taking a cut, this looked like a 0:23:42.800 --> 0:23:46.720 pretty good deal. That deal would set a precedent, one 0:23:46.760 --> 0:23:49.680 that Apple would extend when it debuted the App Store 0:23:49.720 --> 0:23:52.040 for the iPhone in the summer of two thousand eight. 0:23:52.440 --> 0:23:55.200 The iPhone had come out the year before, and its 0:23:55.280 --> 0:23:59.440 launch had been an enormous hit. The media went bonkers 0:23:59.520 --> 0:24:04.520 over the production of the attractive, sleek, exciting smartphone called 0:24:04.720 --> 0:24:08.080 the iPhone. Now Apple was introducing the world to a 0:24:08.160 --> 0:24:12.600 marketplace where you could download apps to enhance your phone experience. 0:24:13.119 --> 0:24:17.480 You might download games or productivity apps, or lifestyle apps 0:24:17.600 --> 0:24:20.560 or whatever. I mean. You you know what apps are. 0:24:21.280 --> 0:24:24.919