Secrets of successful negotiations from Steve Jobs




Secrets of successful negotiations from Steve Jobs

Apple in the people


The next month in New York to host the trial , in which Apple accused of price fixing with book publishers to create service iBookstore. Before the trial were released e-mails showing that Apple could play a role in this process and the instigator of the first violin. However, these messages can be viewed not only as evidence in favor of the arguments of the prosecution, but also as a training guide on how to effectively and efficiently conduct business negotiations with potential partners.

Quartz edition analyzed the correspondence of the then Apple CEO Steve Jobs and his son CEO News Corp. Rupert Murdoch and the example of the negotiations between the two companies tried to analyze it, to what the impact of the methods resorted Jobs to reach their goals. In this article we offer a translation of the article on the Russian language.

Steve Jobs has always been famous energetic and uncompromising negotiator, who had the strength to win in any battle. First there were the record companies, and then came the book publishers. As it turned out, the process of courtship turned not less complexity than negotiating with record labels.
The first step of News Corp.

The yard was a Friday morning January 22, 2010. Next week Apple is preparing to release a new product – a tablet computer, rumors of which went for a long time. To make the iPad even more attractive, it was necessary to allow it to consume the most diverse content. However, HarperCollins, which is one of the largest publishers in the United States, refrained from signing a distribution agreement, electronic versions of their books in the iTunes Store.

This question was discussed when the head of Apple’s development of iTunes Eddy Cue HarperCollins visited the company and News Corp., Which includes publishing. The content of the talks was described in an email that same day sent Kew HarperCollins CEO Brian Murray. It described the proposal, which has made the negotiations publishing, and that happened just five days before the presentation of iPad.

Секреты успешных переговоров от Стива Джобса


Once again, thank you for having gone this morning. We discussed your offer, and I want to make sure that you have a summary of the deal, which would like to conclude with you HarperCollins.

1. Pricing: We need flexibility in pricing for each individual product outside of the price level prescribed in the contract. We will make every effort to comply with a price range that we discussed.
2. The status of “most favored”: If between HarperCollins and Apple have differences over the price of any product, HarperCollins should be able to distribute this product through other agents that support a higher price.
3.Komissiya: We need to reduce the fee for new releases that economic laws are working for the benefit of us and our reviewers. We believe that the 30 percent commission will lead to the fact that many authors will be asked to move the release of the book because of his unwillingness to work with Apple and HarperCollins.
4. The window for the new release: We need flexibility in the formation of a time window before the release of books. We believe that it should be 6 instead of 12 months, in the event that one or more of the larger retailers prefer not to choose the agent’s model.

Leslie Kevin send a contract that outlines the data items if you agree with these terms and conditions.

Thank you.

Of course, in these conditions did not want to go to Apple, as the company has been able to successfully conclude similar arrangements with competitors HarperCollins, such as Penguin and Simon & Schuster. These agreements will enable Apple and publishers set the prices of new e-books at around 12.99 dollars. It’s three dollars above the average price in the Amazon . In this case, Apple was going to remain with 30% of each sale.

However HarperCollins wanted to have the freedom to set their own prices and. Publisher feared that the price of 12.99 dollars per book and the success of Kindle reader may question the success of the iPad. To insist on its position, the top manager of News Corp. James Murdoch Murray redirected letter to Steve Jobs, adding to it FOLLOWS postscript. It happened, by the way, on the same day.

Секреты успешных переговоров от Стива Джобса


Thank you for your today’s call and for a meeting held last week.

I spoke with Brian Murray and the head of Digital Media News Corp. John Miller and Brian today sent a letter Eddie. I think that I too have something to say on this matter. In short: we are pleased to be implemented with Apple some project, but we are legitimate concerns.

The economy is quite simple. Kindle pays us a wholesale price of $ 13 dollars and sells the book for $ 9.99. The author receives $ 4.20 from the sale of books and paper 3.30 – with sales of books for Kindle.

[Part of the letter is removed in the interest of the investigation]

In general, the hypothetical advantage of a workbook created without the cost of materials and delivery is provided by Apple, but not the publisher or author of a book. The main problem is the delays. If we can not agree on a fair price for a book, offer your team will not allow us to sell the book through other channels, even at a higher price. For us, this is a significant obstacle.

In addition, we are concerned about high prices: Many e-books are $ 9.99. The time window with a reduced commission (for example, 10%) for the first six months would allow us to provide Apple users more affordable prices. We would like to do it.

More details are set out in a letter to Brian Eddy. There we described the terms of the transaction, which we have agreed. You can call or write to me at any time at the weekend to discuss the issues. I’m in the UK (the difference with California +8 hours). My phone: [removed]. Check e-mail regularly.

Steve, believe me, that the whole industry (television, studios, books and newspapers) rather wants to work with Apple, what does not. However, we and our partners who write, edit, and help us create content, have their own views on fair pricing and worried about the stability in the future. I hope that we can resolve the issue. If not now, on the eve of launch, then maybe in the future.

With best regards,
James Murdoch

On the scene Jobs

But Jobs did not want to compromise. On the same day he sent Murdoch reply which stated that pricing Amazon is promising and encourages people to think that e-books is something cheap. Jobs also said Murdoch’s vast customer base of Apple – «more than 120 million consumers with credit cards.” The essence of his message boils down to this: You need us more than we need you.

Секреты успешных переговоров от Стива Джобса


I propose to consider a few things (I will be grateful if this stays between us)

1. The current business model of companies like Amazon, when e-books are distributed at low cost without substantial profits will not be able to maintain its stability. As electronic books become increasingly big business, distributors will want to get at least a small profit, and you want it too, because they are investing in the future of the business, its infrastructure, marketing, etc.
2. All the major publishers are telling us that the price of $ 9.99 from Amazon negates the value of their product in the minds of consumers, and they do not want to save the practice for new releases.
3. Apple offers to give cost savings due to the lack of raw material costs, distribution and so on, to the consumer, not the Apple. Therefore, the price of the product will be 12.99 dollars, and not, say, 16.99 or higher. Apple does not want to get more of his modest commission it receives from the distribution of music, movies, etc.
4. $ 9 for a new release is a business model of publishers, not tied to profits. We do not ask that they earned less money. As for the artists, paying them the same amount of compensation they receive today, and save the publisher of the same amount of profit will be the same way to send them a letter stating that you pay them a larger share of e-books. Nothing wrong with that I do not see.
5. According to analysts’ estimates, Amazon has sold more than a million Kindle for more than 18 months (Amazon itself is nothing about it says). For the first few weeks of sales we sell more of our new devices than the Kindle was sold during that time. If you follow just for Amazon, Sony and others, you will find yourself on the side of the revolution of mass distribution of e-books.
6. Consumers will demand a comprehensive solution, that is, online Bookstore, which offers books, conducting transactions with their credit cards for maximum convenience and loads the book on their device. At the moment there are only two companies that can boast of a substantial volume of transactions: Apple and Amazon. iTunes Store and App Store has more than 120 million customers with credit cards that have downloaded more than 12 billion products. It is this type of online assets will be needed in order to transform the distribution of e-books into something that will make a real difference for publishers.

So yes, $ 9 for a new release that’s less than $ 12.50, which today pays Amazon. But the situation is short-lived and is not a solid foundation on which to build a business selling e-books.

[Part of the letter is removed in the interest of the investigation]

Apple – the only company that is now able to have a serious impact on the industry, and have 4 of the 6 major publishers have agreed to work with us. When we open the doors for the second-tier publishers, we will be offering already a lot of books. We would be happy if a number of publishers and you have entered.

Thank you for your attention.

Murdoch begins to give way

Reply Murdoch arrived in the afternoon the next day, January 23. Jobs has clearly indicated that Apple will not retreat one iota, and Murdoch began to signal that it can HarperCollins compromise. He suggested two possible solutions, and then said that the talks between News Corp. and Apple took on several levels. Before the premiere iPad remained four days.

Секреты успешных переговоров от Стива Джобса


I think the key for us is the freedom to offer products at other venues at prices that do not suit you.

If we propose to you, that a certain proportion of releases (> 50%) was available within your price structure (


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