Steve Jobs

The bigger problem at Time Inc. was the same as the one at the Times: The magazine company did not want Apple to own its subscribers and prevent it from having a direct billing relationship. Time Inc. wanted to create apps that would direct readers to its own website in order to buy a subscription. Apple refused. When Time and other magazines submitted apps that did this, they were denied the right to be in the App Store.

Jobs tried to negotiate personally with the CEO of Time Warner, Jeff Bewkes, a savvy pragmatist with a no-bullshit charm to him. They had dealt with each other a few years earlier over video rights for the iPod Touch; even though Jobs had not been able to convince him to do a deal involving HBO’s exclusive rights to show movies soon after their release, he admired Bewkes’s straight and decisive style. For his part, Bewkes respected Jobs’s ability to be both a strategic thinker and a master of the tiniest details. “Steve can go readily from the overarching principals into the details,” he said.

When Jobs called Bewkes about making a deal for Time Inc. magazines on the iPad, he started off by warning that the print business “sucks,” that “nobody really wants your magazines,” and that Apple was offering a great opportunity to sell digital subscriptions, but “your guys don’t get it.” Bewkes didn’t agree with any of those premises. He said he was happy for Apple to sell digital subscriptions for Time Inc. Apple’s 30% take was not the problem. “I’m telling you right now, if you sell a sub for us, you can have 30%,” Bewkes told him.

“Well, that’s more progress than I’ve made with anybody,” Jobs replied.

“I have only one question,” Bewkes continued. “If you sell a subscription to my magazine, and I give you the 30%, who has the subscription—you or me?”

“I can’t give away all the subscriber info because of Apple’s privacy policy,” Jobs replied.

“Well, then, we have to figure something else out, because I don’t want my whole subscription base to become subscribers of yours, for you to then aggregate at the Apple store,” said Bewkes. “And the next thing you’ll do, once you have a monopoly, is come back and tell me that my magazine shouldn’t be $4 a copy but instead should be $1. If someone subscribes to our magazine, we need to know who it is, we need to be able to create online communities of those people, and we need the right to pitch them directly about renewing.”

Jobs had an easier time with Rupert Murdoch, whose News Corp. owned the Wall Street Journal, New York Post, newspapers around the world, Fox Studios, and the Fox News Channel. When Jobs met with Murdoch and his team, they also pressed the case that they should share ownership of the subscribers that came in through the App Store. But when Jobs refused, something interesting happened. Murdoch is not known as a pushover, but he knew that he did not have the leverage on this issue, so he accepted Jobs’s terms. “We would prefer to own the subscribers, and we pushed for that,” recalled Murdoch. “But Steve wouldn’t do a deal on those terms, so I said, ‘Okay, let’s get on with it.’ We didn’t see any reason to mess around. He wasn’t going to bend—and I wouldn’t have bent if I were in his position—so I just said yes.”

Murdoch even launched a digital-only daily newspaper, The Daily, tailored specifically for the iPad. It would be sold in the App Store, on the terms dictated by Jobs, at 99 cents a week. Murdoch himself took a team to Cupertino to show the proposed design. Not surprisingly, Jobs hated it. “Would you allow our designers to help?” he asked. Murdoch accepted. “The Apple designers had a crack at it,” Murdoch recalled, “and our folks went back and had another crack, and ten days later we went back and showed them both, and he actually liked our team’s version better. It stunned us.”

The Daily, which was neither tabloidy nor serious, but instead a rather midmarket product like USA Today, was not very successful. But it did help create an odd-couple bonding between Jobs and Murdoch. When Murdoch asked him to speak at his June 2010 News Corp. annual management retreat, Jobs made an exception to his rule of never doing such appearances. James Murdoch led him in an after-dinner interview that lasted almost two hours. “He was very blunt and critical of what newspapers were doing in technology,” Murdoch recalled. “He told us we were going to find it hard to get things right, because you’re in New York, and anyone who’s any good at tech works in Silicon Valley.” This did not go down very well with the president of the Wall Street Journal Digital Network, Gordon McLeod, who pushed back a bit. At the end, McLeod came up to Jobs and said, “Thanks, it was a wonderful evening, but you probably just cost me my job.” Murdoch chuckled a bit when he described the scene to me. “It ended up being true,” he said. McLeod was out within three months.

In return for speaking at the retreat, Jobs got Murdoch to hear him out on Fox News, which he believed was destructive, harmful to the nation, and a blot on Murdoch’s reputation. “You’re blowing it with Fox News,” Jobs told him over dinner. “The axis today is not liberal and conservative, the axis is constructive-destructive, and you’ve cast your lot with the destructive people. Fox has become an incredibly destructive force in our society. You can be better, and this is going to be your legacy if you’re not careful.” Jobs said he thought Murdoch did not really like how far Fox had gone. “Rupert’s a builder, not a tearer-downer,” he said. “I’ve had some meetings with James, and I think he agrees with me. I can just tell.”

Murdoch later said he was used to people like Jobs complaining about Fox. “He’s got sort of a left-wing view on this,” he said. Jobs asked him to have his folks make a reel of a week of Sean Hannity and Glenn Beck shows—he thought that they were more destructive than Bill O’Reilly—and Murdoch agreed to do so. Jobs later told me that he was going to ask Jon Stewart’s team to put together a similar reel for Murdoch to watch. “I’d be happy to see it,” Murdoch said, “but he hasn’t sent it to me.”

Murdoch and Jobs hit it off well enough that Murdoch went to his Palo Alto house for dinner twice more during the next year. Jobs joked that he had to hide the dinner knives on such occasions, because he was afraid that his liberal wife was going to eviscerate Murdoch when he walked in. For his part, Murdoch was reported to have uttered a great line about the organic vegan dishes typically served: “Eating dinner at Steve’s is a great experience, as long as you get out before the local restaurants close.” Alas, when I asked Murdoch if he had ever said that, he didn’t recall it.