Opening the iTunes Wi-Fi Music Store displays four buttons: Features, Top Tens, Search and Downloads. You can pick Top 10 songs from all of iTunes or only from specific genres. If you see a song you like, you can preview it, and if you like it, you can tap it to buy it using a Buy Now button. You'll download the song, and the next time you dock your iPod touch to your computer, it will sync back to iTunes.
Jobs demonstrated the new software's capability by buying John Lennon's Imagine. The song was visible in a playlist on the iPod touch called "Downloads."
"Isn't this incredible?" asked Jobs.
The iTunes Wi-Fi Music Store is available internationally in every country where Apple operates an iTunes Store, said Jobs.
"And we're going to bring it to the iPhone," he added. Jobs said the new software will be delivered to iPhone users via an iPhone software update later this month.
Apple and Starbucks partnership
"There's even one more incredible part of this," said Jobs, who said that Apple has been working on this for two years. "I cannot tell you how much pleasure it gives me to announce we've got a great partnership with Starbucks today."
Jobs called Starbucks "an incredible phenomenon in our culture" and added that a lot of Apple employees are great customers. Apple wanted to combine iPods and their love of music with Starbucks' coffee and love of music.
"In the new iTunes Wi-Fi Store, when you get near a participating Starbucks, automatically a fifth button is going to pop up in the store with a Starbucks button," he said.
"You will know what songs they're playing in Starbucks, and you can buy it with one tap of your finger. And if you just missed it, you can look at the last 10 songs they've played. They're going to program some cool music for us in terms of their collections," Jobs said.
Jobs brought on stage Howard Schultz, founder and chairman of Starbucks. Schultz offered some operating statistics for Starbucks and said that his company has "gotten pretty serious about the music business as well," pointing to the eight Grammy awards Starbucks has won.
Schultz called Starbucks "the third place between home and work, an extension of peoples' lives," and suggested that his company's partnership with Apple would prove to be "transformational." The Starbucks feature in the iTunes Wi-Fi Music Store won't be limited to iPhones and iPod touches, either - he said it would be free to access from Mac and PC laptops, as well.
The new ability will require a substantial infrastructure upgrade on Starbucks' part, according to Schultz, who said "We can't do this overnight." With about 5,800 Wi-Fi enabled stores, the company plans to get started on October 2 with Seattle and New York locations, with San Francisco to follow in November. By February Los Angeles will follow suit, then Chicago in March. The company will expand the ability to buy music from the iTunes Wi-Fi Music Store throughout 2008 in most metropolitan markets, and by 2009 will have "all of the Wi-Fi stores completed," he said.
iPhone price break
"But we want to get even more aggressive than this," said Jobs. He explained that the iPhone's customer satisfaction numbers are off the charts - higher for iPhone owners than for any Apple product in the history of the company.
"And so we want to make iPhone even more affordable for even more people this holiday season and so we're going to do something about that today. We're on track to ship our millionth iPhone by the end of this month, and so to get ready for the holiday season, here's what we're going to do: The vast majority of customers want the 8GB iPhone. So today, we're going to focus on just the 8GB model."
"The 8GB isn't going to sell for $599, it's going to sell starting today for $399. We want to put iPhones in a lot of stockings this holiday season," said Jobs.
Jobs then asked the crowd to give a round of applause to the Apple employees present who worked on the new products. They stood, and the crowd cheered its approval.
"One of those traditions we have at these music events is to remind ourselves that what drives us is that we all love music too," said Jobs. "And nothing reminds us more than to have a musician to come perform for us. We have a talented young musician, flew in from across the pond, KT Tunstall."
KT Tunstall took the stage and performed her hit song, "Black Horse and the Cherry Tree."