What you watch in this video is the skin of a squid reacting to sound.
There are some questions as to what is happening and how this works. An iPod plays music by converting digital music to a small current that it sends to tiny magnets in the earbuds. The magnets are connected to cones that vibrate and produce sound.
Since this is the same electrical current that neurons use to communicate, we cut off the ear buds and instead placed the wire into the fin nerve. When the iPod sends bass frequencies (<100Hz) the axons in the nerves have enough charge to fire an action potential. This will in turn cause the muscles in the chromatophores to contract.