Steve Jobs Bullied Record Execs Into iTunes Deal on Christmas Eve

While Steve Jobs wasn’t personally at Macworld to reveal that iTunes was going DRM-free and OTA downloadable, he’s the one who made it happen—he bullied Sony Music’s chairman over the phone on Christmas Eve.

The New York Times’ account of the behind-the-scenes negotiations that led to iTunes going totally DRM-free, getting downloads over 3G and variable pricing is fascinating for several reasons. One, it reveals that while Jobs said he was taking the holidays off to spend time with his family instead of preparing for Macworld, he was plenty busy making record executives cry. The Christmas Eve call, the Times says, “ricocheted around the music industry.”

Two, it reveals that Apple and iTunes have reached a tipping point since becoming the number one music retailer in the world: iTunes is now a more powerful institution than the record labels themselves. Just 18 months ago, Universal was flexing its muscles to show that iTunes still depended on the record instury, not the other way around. But in this round of negotiations, “several high-level music executives” told the Times (anonymously, of course) that “they operated in fear of Apple’s removing a label’s products from the iTunes store over a disagreement, even though that has never happened. The labels do not have much leverage in negotiating with Apple.”

Sony was the lone dissenter, which resulted in the “particularly tense” Christmas Eve chat. And well, we all know how it turned out. [NYT]