https://macdailynews.com/2007/02/06/apple_ceo_steve_jobs_pos...
Short version:
The music industry wanted Apple to license FairPlay. SJ said no. But Apple will start selling interoperable DRM free music if the industry allows it.
One of the major labels and independents took them up on the offer and Apple did it. The other three labels wanted among other things - a royalty from each iPod sold and for Apple to basically post a bond against piracy.
Apple refused and it took until early 2009 for the rest of the labels to come on board.