Digital Media

After reading Steve Jobs' 2003 interview with Rolling Stone, it's easy to see why one label boss called him the smartest man in music.

(Credit: Rolling Stone)

Steve Jobs is a Bob Dylan fan because the folk singer is, in the words of Apple's CEO, a "clear thinker."

Jobs' own lucid and careful contemplation of the music industry is apparent in a 2003 interview he gave to Rolling Stone magazine's Jeff Goodell. My colleague Tom Krazit pointed me to the story after stumbling on to it recently. We were bowled over by the preciseness of Jobs' assessment of what the future held for digital rights management, music subscription services, the four largest recording companies, and Apple. The interview in retrospect is a fascinating read.

Jobs correctly predicted that attempts by the major labels to find a technological solution to piracy would fail. When it came to subscription music services, he said the public would reject them. He foresaw a day when iTunes would sell 1 billion tracks a year--a bold statement, considering that at the time, iTunes had only sold 20 million songs.

One can sense from Jobs' comments that he was ready to pounce on a music sector that five years ago possessed precious little tech savvy. He described leaders at the top labels as technologically innocent.

Also by 2003, Jobs had concluded that Apple was ready to move beyond computers. He suggested that his company's talent at melding innovative hardware and software designs could help it build winning consumer products.

Jobs warned that competitors would find it difficult to duplicate the success of Apple's iTunes music service, then just 8 months old. Yeah, that's another thing that's striking about the interview. In every word, there's a fierce confidence.

At one point, Goodell asks Jobs if he wrung his hands over the decision to bring iTunes to Windows. The tech legend responded, "I don't know what hand-wringing is."

One has to remember that the music industry was vastly different in 2003. Most of the public had never heard of a download and overwhelmingly preferred CDs. Piracy was rampant, and no legal digital-music service had caught on with consumers. The major recording companies were betting big on subscription services and copy protection software. Nobody knew for certain if a digital-music store would work. Wal-Mart Stores was the largest music retailer offline, and Amazon.com dominated in music sales online.

Here are some highlights from the interview:

Jobs on whether the iPod could become more important to Apple than the Mac.
Apple has a core set of talents, and those talents are: we do, I think, very good hardware design; we do very good industrial design; and we write very good system and application software. And we're really good at packaging that all together into a product.

We're the only people left in the computer industry (who) do that. And we're really the only people in the consumer electronics industry (who) go deep in software in consumer products. So those talents can be used to make personal computers, and they can also be used to make things like iPods.

On major music labels
When the Internet came along, and Napster came along, they didn't know what to make of it. A lot of these folks didn't use computers--weren't on e-mail; didn't really know what Napster was for a few years. They were pretty doggone slow to react. Matter of fact, they still haven't really reacted, in many ways.

On iTunes
We've created this music store, which I think is nontrivial to copy. I mean, to say that Microsoft can just decide to copy it, and copy it in six months--that's a big statement. It may not be so easy.

A defense of copyright
If copyright dies, if patents die, if the protection of intellectual property is eroded, then people will stop investing. That hurts everyone. People need to have the incentive that if they invest and succeed, they can make a fair profit. Otherwise, they'll stop investing. But on another level entirely, it's just wrong to steal. Or, let's put it another way: it is corrosive to one's character to steal. We want to provide a legal alternative.

You know how it turned out. Apple's iTunes surpassed Wal-Mart to become the largest music retailer in the land. Jobs proved prophetic about the difficulty in competing with iTunes. Apple's music service trounced those of Sony, Microsoft, and every other competing site. Amazon's digital music store has yet to show it can dent iTunes' 75 percent market share.

Most of the top subscription services are either shuttered, have changed their business models, or hover near irrelevance.

As for Jobs' predictions on iTunes' song sales, it took the service three years to sell 1 billion songs. Last June, Apple topped the 5 billion mark and earlier this month announced that it had reached 6 billion.

Is Apple selling a billion songs every six months?

The major labels have given up on DRM but not as fast as Jobs may have thought. The music industry is moving away from suing individuals for copyright violations and has enlisted the help of Internet Service Providers to help thwart illegal file sharing. The music industry is focused more now on competing with piracy in the marketplace. Rio Caraeff, Universal Music Group's digital chief, told me recently that his label's approach now is to try to win over file sharers by providing easy and inexpensive ways to acquire music.

And Jobs' assessment that Apple had the kind of talent to produce consumer devices that could replace the Mac as the company's most important product...well, let's talk iPhone. In an October story, CNET News' Krazit wrote that an internal assessment at Apple--using supplemental metrics--determined that the iPhone represents 39 percent of company revenue, while the Mac accounts for 30 percent.

Jobs' foresight likely has a lot to do with why Doug Morris, chairman and CEO of top label Universal Music Group, called him the smartest man in music.

You can find AC/DC's new album on the band's Web site or Wal-Mart but not at iTunes.

(Credit: Acdc.com)

AC/DC, the iconic Australian rock band, has been talking to reporters as part of the promotion of its upcoming album. The group has also used the opportunity to take swipes at Apple.

The band refuses to offer music at iTunes because it isn't interested in selling individual songs. The only places to acquire the album, Black Ice, is at Wal-Mart Stores or on the band's Web site. In an interview with Reuters, lead singer Brian Johnson said the band is trying to protect the album format.

"Maybe I'm just being old-fashioned, but this iTunes, God bless 'em, it's going to kill music if they're not careful," Johnson, 61, told Reuters. "It's a...monster, this thing. It just worries me. And I'm sure they're just doing it all in the interest of making as much...cash as possible. Let's put it this way, it's certainly not for the...love, let's get that out of the way, right away."

Angus Young, who co-founded the band with brother Malcolm, told The New York Times last week: "It's like an artist who does a painting. If he thinks it's a great piece of work, he protects it. It's the same thing: this is our work."

I want to give AC/DC, one of the best-selling rock & roll bands of all time, the benefit of the doubt. I want to believe they really do consider their work art and that the forthcoming album, which debuts October 20, will reflect a legitimate attempt to deliver a hit with every track.

This kind of good-faith effort from the music industry wasn't always guaranteed, remember? I'll get back to that.

First, I couldn't care less if the band doesn't like iTunes. Plenty of people don't. Other artists, such as Kid Rock, choose not to distribute via the country's largest music retailer. It's their music--they can do what they want with it. What offends me about AC/DC's comments is that in the band members' attack on iTunes, they completely ignore history.

Johnson implied that iTunes is all about money and thus this commercialization is hurting music. Let me state the obvious: plenty of people profited off of music long before iTunes was formed, including AC/DC. What, is Wal-Mart donating Black Ice profits to charity?

If iTunes is such a threat to the music industry, you couldn't tell by listening to Doug Morris, CEO of Universal Music Group, the largest of the four top recording companies. Billboard asked him recently who he thought was the smartest person in music. He named Apple CEO Steve Jobs.

"When you look at the whole picture, we make a lot of money through iTunes," Morris said. "We consider (Jobs) a friend...I talk to him about once a month. I like him very much. I have dinner with him occasionally, and he's the kind of guy we'll be talking about 100 years from now. He's a brilliant guy."

As for albums, there's nothing sacred about this format--at least not to consumers. Angus should look around. Hardly anyone in the music business advocates for albums anymore. That's because digital technology has rendered the album obsolete. Consumers are free to buy tracks they like and aren't forced to shell out money for those they don't. Years ago, after the rise of CDs, if a fan liked a song, he or she had little choice but to buy the entire album.

The truth is the album was anti-consumer.

I stopped buying music in the early 1990s after reading a Rolling Stone interview where Kurt Cobain suggested that this wasn't an accident. Nirvana's legendary frontman implied that music labels would take a band's best tracks and scatter them over multiple albums to squeeze more money out of consumers. In the two years I've covered digital music, I've had the opportunity to ask a number of music executives about this.

Not one has ever denied it.

This was obviously a poor way to treat customers, and it's not a stretch to suggest this is why many people felt justified in downloading songs off Napster in the late 1990s, and why so many continue to pirate music to this day.

By requiring Black Ice be sold as an album, AC/DC is trying to cram it down the throats of fans. Why not offer the music on iTunes and be confident that the individual songs will sell themselves?

Henry Blodget is again at the center of controversy but his news blog is among the fastest growing.

(Credit: Silicon Alley Insider)

Words like "scumbag," "fraud," and "crook" once trailed after Henry Blodget's name anytime it came up in Silicon Valley. The budding Web-publishing mogul, who was once a superstar tech analyst before being accused of securities fraud, has spent the past five years trying to recover his credibility. Last week, his efforts may have suffered a setback.

This interview began in August, when I sent Blodget the questions. He e-mailed his answers on Wednesday, two days before Silicon Alley Insider, the technology news blog Blodget co-founded, wrote itself into a controversy. A member of the public posted a false report to CNN's user-generated news site, iReport, that claimed Apple CEO Steve Jobs had suffered a heart attack. SAI followed up with a story that clearly informed readers the rumor was unverified. Nonetheless, SAI appears to have helped fuel the investor panic that led to a 9 percent drop in Apple's stock.

Blodget and I corresponded again on Friday and he said if ever in a similar situation he would play it the same way. He wrote: "We described exactly what the report was, said we didn't know whether it was true or not, and said we were investigating."

Blodget isn't the kind to shy away from the spotlight, regardless of how hot it may be. He became famous a decade ago after he accurately predicted Amazon.com's stock price would double to $400. At Merrill Lynch, Blodget was a cheerleader for tech stocks in the late 1990s. After the dot-com bubble burst, Eliot Spitzer, the former New York State Attorney General, himself since disgraced, accused Blodget of fraud and he was banished from the securities industry for life. Since then, Blodget has launched a journalism career and helped turn SAI into one of the fastest growing tech-news blogs. The insights from this former Wall Street insider have been praised by publications, such as BusinessWeek.

Why journalism? After what you've been through, why didn't you turn your back on Wall Street, on technology, on predicting anything other than the weather?
Well, you've ruled out a lot of professions there--and, thankfully, I only got kicked out of one. What journalists do has a lot in common with what analysts do. After spending a decade learning some lessons the hard way, I didn't want to just throw all that experience in the trash.

I liked your story on The New York Times, when you sort of offered to buy the paper's digital unit. What's the best piece of journalism you've produced?
Yes, we'd love to buy NYT Digital. We're sorry we haven't heard back from Janet (Robinson, CEO of The Times) and Arthur (Sulzberger Jr., publisher) yet. The best thing I've written--or at least the longest--is probably a book called The Wall Street Self-Defense Manual: A Consumer's Guide to Intelligent Investing. An alternate title could have been, "I made all the dumb-ass mistakes, so now you don't have to."

You've hired two old-media types in Michael Learmonth (Variety) and Peter Kafka (Forbes). Doesn't that differ from what Michael Arrington and Om Malik are doing by hiring mostly young writers? How do you intend to grow Silicon Alley Insider?
Yes, Michael and Peter are pros. TechCrunch has a couple of pros, too, and Om's been a pro forever. This business is getting professionalized in a hurry, and strong reporting, writing, and editing skills are going to be increasingly important. (Sadly, Peter and Mike have both moved on, but we've hired new pros).

I think the growth opportunities for Silicon Alley Insider, TechCrunch, et. al., are similar to those of CNN in cable's early days, or broadcast news in the early years of TV and radio. This is a new form of news production, and you can't just jam a square old-media peg in a round hole. As an industry, we're still at the beginning of figuring out what is possible, and our hope is that will drive a lot of opportunity down the road.

Give me an example of how journalism can be rewarding.
It's great fun. I was complaining the other day about the ridiculous hours, and my wife said any job in which she can hear me laughing downstairs at 5 a.m. is fine with her.

What led you to put the $400 price on Amazon.com? Did you really see it coming or were you out to make a splashy prediction?
Are you serious? That was a decade ago. But, yes, I thought it was going to $400 ($67 in the current share-split). You humiliate yourself enough in that business without making predictions you don't actually believe. Clients do prefer clear, bold calls to mush-mouthed equivocation, but I wouldn't have made the call if hadn't thought the stock would get there.

Some people strongly believe that your punishment didn't go far enough. What does it mean when someone bans you from your chosen profession for life?
If that's the case, I'm sorry to hear it. The allegations were devastating to me. Over the course of the late 1990s, I had the privilege of earning the respect and trust of millions of people, and a few minutes after Spitzer's press conference everyone decided I was a scumbag. Fortunately, in the years since, a lot of folks have been willing to give me a chance to earn back that trust, and I will forever be grateful for that.

What do you say to investors who took your advice and lost?
The same thing I said at the time: I'm very sorry I missed the market top. I did get the big picture right--that the late-'90s boom was a bubble--and I'm glad I recommended that even aggressive investors only put a fraction of their portfolios in the Internet sector. But I got caught in the typical bubble trap, which was not wanting to miss further upside, and I'll always regret that. (For what it's worth, I also followed my own advice--and lost a boatload of money.)

What's most misunderstood about your career as an analyst?
I think the most important thing to understand about stock analysts--still true today--is that they're not investment advisers. Analysts actually play a limited role in the overall investment process, which starts with asset allocation. Analysts come into play at the end of this process (and then only if the recommended portfolio includes an allocation to the analyst's sector). Internet stocks were great additions to aggressive portfolios for most of the 1990s, but they were never appropriate for conservative investors.

Eliot Spitzer. What do you think of how he handled your case? What is your opinion of what happened to him?
I actually have a lot of respect for Eliot Spitzer. I disagreed with many of his conclusions and tactics, but I admire much of what he was trying to do. I was as shocked as everyone else by his fall.

Much of the coverage about you in the past several years has been positive. What do you say to pundits who argue that you're trying to redeem yourself?
If the coverage really has been positive, I'm grateful. It was horrible there for a while. With regard to trying to redeem myself: Hell yes. As I said, I'm grateful to everyone who gives me the chance.

TechCrunch's Arrington criticized you for predicting Google would hit $2,000. Is it hard to make big predictions when critics are always going to make comparisons to your analyst days and accuse you of being dishonest?
Any time you stick your neck out, someone's going to hit you in the head with a two-by-four. But if there's one thing I've learned over the last couple of decades it's that if someone's not shrieking, you haven't said anything interesting.

Google $2,000 was a 10-year scenario. Last fall, when I wrote that post, Google was trading around $700 and $2,000 in 10 years would have produced a 6 percent annual return. Part of my point was that anyone who didn't believe the stock was going to $2,000 should dump it immediately. For what it's worth, I stand by that target. I just hope the stock drops to, say, $300 in the meantime, so the return justifies the risk.

Make another bold prediction. What company or sector has you most excited?
The Dow's going below 10,000, probably way below. But if you want to invest intelligently, ignore that prediction (not because it's wrong--because it's a prediction). Just keep making regular contributions to a globally diversified portfolio of low-cost index funds, and, in the long run, you'll come out OK.

Finally, what's the smartest thing you've done in the past year?
Not buying newspaper stocks.

"Unedited. Unfiltered. News."

That's the slogan CNN chose for its user-generated news site, iReport.com, a place designed to tap into the citizen journalism craze. At iReport, any member of the public is allowed to post stories, ostensibly as part of the cable network's news operation, simply by providing an e-mail address. CNN and citizen journalism are being criticized after someone used the site on Friday to spread the false report that Apple CEO Steve Jobs had suffered a serious heart attack.

Apple CEO Steve Jobs

(Credit: James Martin/CNET News)

The bogus story sparked a minor panic on Wall Street before Apple had a chance to deny the rumor. Trading in Apple's stock skyrocketed, and the share price briefly fell about 10 percent before rebounding later in the day.

How is it possible that a single fraudulent Internet report can wipe away millions or even billions of dollars of market value from one of the world's most powerful technology companies? That's the big question if you're one of Apple's investors. If you're an investigator for the Securities and Exchange Commission you're interested in who did it and why. According to CNN, SEC investigators are looking for the person who posted the fictional story to iReport.

Some of the other questions being asked are why mainstream news services didn't discredit the report before any damage was done? And who was minding the store for CNN? Surely, one of the country's most trusted news sources wouldn't allow just anyone to post a story under its banner without vetting it.

Also at the center of the controversy is Silicon Alley Insider, a New York-based technology and financial news blog that has earned enormous respect and popularity in a brief amount of time. SAI and CNN could see their reputations tarnished if they're found to be at fault, but I venture to say that in the wake of the controversy, everyone involved in online journalism is doing some self reflection.

This is a time of intense competition in tech journalism. A decade ago, newspapers used to write today's news for tomorrow's paper. Not anymore. Reporters are increasingly under pressure to publish news to the Web minutes after events occur. People who have been in the business for a while know what's often lost with this need-for-speed mentality is thoughtful writing and careful reporting. Following the phony Jobs story, many pundits placed the blame at the feet of CNN and citizen journalism. But the facts of the case raise questions about whether professional journalists behaved responsibly in their handling of the story.

"Severe chest pains"
The incident began when someone posted a report on CNN's iReport shortly before 4 a.m. PDT. "Steve Jobs was rushed to the ER just a few hours ago after suffering a major heart attack,"the post at iReport read. "I have an insider who tells me that paramedics were called after Steve claimed to be suffering from severe chest pains and shortness of breath. My source has opted to remain anonymous, but he is quite reliable."

What hasn't been widely circulated yet is that iReport was not the first place the fake story was sent. Arnold Kim, who operates the blog, MacRumors.com, wrote Friday that someone submitted the same rumor to his site using an anonymous IP address. Kim did some research on the rumor and decided it was a fake. Later, he tracked the report and found it being circulated by members of online message board 4chan. Kim also discovered the item was circulating on Digg, a popular news aggregation site. Digg users, however, voted the story down, meaning they also were skeptical.

The next place Kim saw the rumor was at SAI.

At about 6:25 a.m. PDT, SAI published this headline: "Apple's Steve Jobs Rushed To ER After Heart Attack, Says CNN Citizen Journalist." Within the blog, SAI informed readers that the report hadn't been substantiated but reporters were checking it out. To that point, no other mainstream media outlet had published anything about Jobs' health, according to Henry Blodget, SAI's founder and a former well-known tech analyst.

Blodget told CNET News that his staff tried to contact Apple and CNN representatives to confirm the story prior to publishing but were unable to reach them. SAI decided to post the item--with all the disclosures about it being unconfirmed--anyway.

At 6:41 a.m. PDT, Apple's stock price began to plummet.

At 6:52 a.m. PDT, SAI updated its story to report that an Apple representative had denied the iReport story, Blodget said. A few minutes after that, Apple's stock began to recover.

Blodget defends his site's story
Kim from MacRumors argues that it was SAI's post that gave the rumor credibility and spooked Wall Street. "The (iReport) story has been picked up by numerous sites as a failure of citizen journalism," Kim wrote. "It's nothing of the sort. The real reason it gained traction is the reporting of it on mainstream blog sites."

I asked Blodget whether SAI should have waited to confirm the information before posting. After all, the blog was dealing with a potential life-and-death report about one of technology's most influential leaders. Blodget said he has no regrets about going with the story when he did.

"The Steve Jobs report was the lead story on a site operated by CNN," Blodget said by e-mail. "It was highly relevant to anyone who cares about Steve or Apple...It was already getting notice when we heard about it. We never know how long it will take to confirm or reject information like that, and we knew our readers would want to evaluate it themselves. So we described exactly what the report was, said we didn't know whether it was true or not, and said we were investigating. Twenty minutes later we broke the news that the report was false."

CNN responded to this by saying that while iReport is relatively new, the company has been involved in user-generated content since August 2006 and this is the first time that any mainstream news site has mistaken some of its user-generated content for CNN-vetted material. Jennifer Martin, a CNN spokeswoman, said that though CNN owns and operates iReport, it is very clear that the information on the site is, like the slogan says, unedited and unfiltered. In iReport's "About" section is written this statement: "CNN makes no guarantees about the content or the coverage on iReport.com."

That may be true but a visit to iReport reveals there is little to distinguish user-generated reports from those filed by professionals. CNN often does fact-check some of the user-generated stories. If they're accurate, the network will use them on TV broadcasts or CNN-branded Web sites. Martin said these vetted reports are clearly identified with the label "Now on CNN."

What are the lessons?
As for Silicon Alley Insider's part in this mess, Blodget suggests that CNN's ownership of iReport gave credibility to the false Jobs story. But some Apple investors might say the same thing about SAI's report. The former analyst was once a Wall Street insider and his staff has been loaded with seasoned reporters from publications such as Forbes and Variety. Even if SAI prominently noted that the iReport story was unconfirmed, the fact that SAI had written about it and was checking it out may have given the report some credibility.

This isn't the first time that a respected blog has found itself answering questions about why it reported on a bogus tip. In May 2007, Engadget received what appeared to be an internal Apple memo that indicated the launch of the iPhone was going to be delayed. The memo was a fake and after the gadget blog reported the false rumor, Apple's market cap lost $4 billion. Engadget, like SAI, did not confirm the story first with Apple before publishing.

There's no doubt that both CNN and SAI will move forward and continue to produce important and accurate news stories. Maybe CNN will take a closer look at how it displays its user-generated reports. As for journalists, citizen and professional, maybe the takeaway for us is to slow down just long enough to make one more phone call, talk to one more source.

The public is less interested in us getting the story first as it is in us getting the story right.

Apple CEO Steve Jobs

(Credit: CNET News)

The Securities and Exchange Commission is looking for the person who falsely reported that Apple CEO Steve Jobs had suffered a heart attack on Friday.

Jennifer Martin, a CNN spokeswoman told CNET News that SEC investigators contacted the cable-news broadcaster seeking information on the person who posted the phony story to iReport.com. The CNN-owned site is dedicated to hosting news submitted by members of the public.

The Jobs heart attack story was categorically denied by Apple but not before the company's stock was already in a steep dive. Shares of Apple fell more than 9 percent before rebounding. Apple's share price closed trading Friday at $97.07, down 3 percent.

Some observers have speculated that someone may have posted the story to manipulate the stock market. A source close to the investigation said that CNN has attempted to contact the anonymous poster but hasn't received a reply. Martin declined to say what kind of information the SEC has requested.

In order to submit a story on iReport, a person need only submit an e-mail address. Martin said that it clearly says on the site that most stories are not edited, filtered, or vetted. Those stories that have been checked out are labeled "On CNN." This means that the cable network has verified the report and is using it on a CNN-branded TV show or Web site, she said. The Jobs heart attack story never got that label.

I'm working on a story in which I'll try to answer some of the questions about how this happened. It should be posted soon.

David Pakman, eMusic CEO

(Credit: eMusic)

David Pakman, CEO of eMusic, is leaving the online music service at the end of the year, he said in an interview with CNET News on Monday.

Pakman said he is departing after five years at eMusic to become a partner at a venture capital firm. He declined to specify which firm.

An important part of Pakman's legacy at eMusic is that the company continues to exist. How many CEOs of digital music stores have been around for five years or longer? I can think of only one: Apple's Steve Jobs.

Pakman has watched stores from MTV, Microsoft, Sony, Yahoo, and AOL come and go. "We outlasted almost every other digital entity in the space," Pakman said. "We've proven the business model, growing the company by five times. I've had an amazing team."

That business model he referred to was based on selling music subscriptions to a niche market. Unlike Napster, or Yahoo's now shuttered music store, eMusic sold music in the MP3 format, which allowed songs to play on any digital music player.

Because the big music labels didn't want their songs distributed without copy-protection software on them, they shunned eMusic for years. The service carved out a niche by selling music from unsigned artists or those with smaller labels. Pakman's strategy has been vindicated now that the big recording companies have acknowledged erring in their MP3 strategy by embracing the format.

His relationship with eMusic remains a good one and he will have a role in helping to find a successor, he said.

At last week's Apple event, CEO Steve Jobs informed the crowd that Apple holds roughly 73 percent of the MP3 market share. According to his numbers, Microsoft has a hold on a little more than 2 percent of the market. Given the ubiquity of the iPod versus the Zune, it's not hard to believe those figures, even if it's give or take a few percentage points.

On Tuesday, Microsoft released a new round of upgrades for its Zune, in hopes of making the gadget more competitive with the Apple offerings, and perhaps eating into that market dominance. On the Daily Debrief, CNET News senior writer Ina Fried shows off one of the new Zune versions, which looks--and is priced--suspiciously like Apple's iPod Nano.

The biggest difference between the two is the Zune's ability to connect to a handful of services via Wi-Fi. Ina explains some of the reasons why you'd want this capability on your MP3 player, but the question is, is this enough of an edge for Microsoft to increase its presence in the market?

Apple CEO Steve Jobs admitted it was a "mistake" to roll out the company's MobileMe service at the same time it launched the iPhone 3G and other big products, tech news site Ars Technica reported late Monday.

Ars Technica cited an internal memo sent by Jobs to employees that acknowledged MobileMe had flaws and was released too soon. In the memo, Jobs said the launch of the service could have been handled better, the article said. He also acknowledged the service was "not up to Apple's standards." And he said the individual MobileMe services could have been launched slowly instead of all at once.

"It was a mistake to launch MobileMe at the same time as iPhone 3G, iPhone 2.0 software and the App Store," Jobs said in the e-mail, according to Ars Technica. "We all had more than enough to do, and MobileMe could have been delayed without consequence."

MobileMe is the next evolution of Apple's .Mac service. It's essentially a cloud storage solution that allows subscribers to synchronize e-mail, calendars, contacts, photos, Safari bookmarks, Dashboard widgets, and more, among Macs, the iPhone, and the iPod Touch. It allows for 20GB of storage on Apple's servers, and it even cooperates with Outlook on Windows computers. Because it is Web based, subscribers can access the online applications from any Web browser.

But from its launch on July 10, MobileMe had problems. Most notably subscribers had trouble accessing the site, and some even lost e-mail.

In a blog started by Apple to keep subscribers up to date on the status of MobileMe, the company acknowledged that some people lost 10 percent of their e-mail between July 16 and July 18 during the height of the outage.

That said, Apple asserts that only 1 percent of MobileMe users were affected by the e-mail issues, which were apparently caused by a "serious problem with one of our mail servers," according to the Apple blog.

MobileMe subscribers also had problems accessing calendars and contact information, which was caused by a misjudgment in demand, according to the Apple blog.

In this most recent memo to employees, Jobs urged them to learn from the mistakes and move on.

"The MobileMe launch clearly demonstrates that we have more to learn about Internet services," Jobs was quoted as saying in the memo. "And learn we will. The vision of MobileMe is both exciting and ambitious, and we will press on to make it a service we are all proud of by the end of this year."