Steve Jobs Emails Show How to Win a Hard-Nosed Negotiation

Negotiation–a core skill for diplomats–can be observed.  And now we have the  release of Steve Job’s emails, thanks to the U.S. government and a New York lawsuit on price-fixing.  The wiki-style reveal the step-by-step process

Those terms were never going to fly with Apple, which had successfully signed deals with HarperCollins’s rivals, like Penguin (a division of Pearson) and Simon & Schuster (part of CBS). Those deals would allow Apple and the publishers to set prices for new ebooks at $12.99—three dollars higher than the typical rate at that time on Amazon—and take a 30% cut of each sale.

But HarperCollins wanted the freedom to set its own prices and worried that $12.99 per ebook would hurt its sales on the new iPad as well as the Kindle. It also didn’t want to give up 30%. To back up its position, James Murdoch, a high-ranking News Corp. executive, forwarded Murray’s email to Apple’s then-CEO Steve Jobs and included the following note. It was still Friday.

via Steve Jobs Emails Show How to Win a Hard-Nosed Negotiation.

It could be argued that iBooks hasn’t been a success when compared to Amazon, the most successful ebook distributor.  Still, the industry in nascent and quite a lot could still change as preferences, alliances, and other factors come in to play.


One thought on “Steve Jobs Emails Show How to Win a Hard-Nosed Negotiation”

  1. Wow. Steve Jobs pressured his primary source of content into terms based on a projection of potential power. At this point, many observers weren’t sure if the iPad was going to be successful at all. It certainly had no market precedent. Who knows, without the additional media content provided to them by other publishers, perhaps it might have lost out to the kindle?

    What’s interesting about these emails is that Mr. Murdoch doesn’t seem to understand the strength of his own position. Steve threatens Mr. Murdoch with the internet boogeyman (piracy), and Murdoch folds like a house of cards. Steve gave Murdoch stark options that did not reflect all possibilities, overstating his own hand. Murdoch could’ve easily developed its own online distribution process that would’ve been accessible via web browser for the iPad, heavily advertised it (like, and would have still been able to access the iPad market. Apple’s argument that users need an “end to end” solution reflect the attitude of Apple consumers; but not the market as a whole. Most of the rising tech savy generation don’t care about downloading a file if it saves them money, the internet is a ruthless market place. Personally, I’ve always thought that eBooks were ridiculously priced, and mainly have used the store to sample books, then go read a copy from the library. Yes, the convenience is nice, but at such high prices its hard to justify buying a book when you can just get it from a library.

    Despite the unfavorable conditions though, it’s hard to deny that Murdoch understood how the winds were shifting. Perhaps he would have been able to renegotiate at a later date, but given the zealotry of Apple’s fans at that time, the iPad would have sold thousands of units even if all it did was provide users with an alarm clock. Unless the iPad had really flopped, it would have been unlikely that Murdoch would have been able to move Jobs into a more favorable position.

    Another detail I almost overlooked; like a superpower trying to encircle a dangerous rival, Apple enlisted other smaller publishers into its deal before starting its negotiations with News Corp, adding yet more pressure. If smaller publishers like Penguin were left a lone to sell on Apple’s new platform, News corp. ran the risk of being overwhelmed by its competitors.

    Masterful Mr. Jobs. If only Mr. Murdoch had been your match. Then maybe I would be reading more books on my iphone instead of checking all of them out from the library.

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