Negotiating in Public

I question the wisdom of publicly stating that you want a piece of the iPod action.  As I expected was the case, UMG’s Doug Morris said yesterday, “The Zune (deal) was an amazingly interesting exercise, to end up with a piece of technology.”

Does such a pronouncement give you leverage over Apple when the iTunes Store re-negotiations are on tap for next year? There are short memories among these guys, I guess. After all, the last time music labels tried pushing Apple in public, media darling CEO Steve Jobs called them greedy and was generally lauded for it by the public. At least then, Jimmy Iovine of Interscope said that not enough people converted to the legal digital music market and Universal came off as the pragmatic part of the bunch.

Now we all know Microsoft needed UMG’s vast catalog in order to even begin competing against the iPod/iTunes juggernaut. It makes sense that they’d pay up Universal’s levy demand (this is hardly your normal royalty payment). Apple, however, has very little incentive to agree to a tax when they have sunk millions of R&D into their hugely successful iPod, developing a top notch experience in purchasing music via iTunes, and for successfully providing a new revenue stream to music industry coffers.

Considering Apple’s secretive nature in conducting business, this is probably a bad direction to go in. Remember, the RIAA and their massive lawsuit campaign destroyed any good will with the public. On the other hand, Apple has one of the strongest brands on earth. End result is the music industry looks like a bully (again).

The question becomes, does Universal’s catalog have enough importance to depress sales of the iPod? It’s doubtful considering that the bulk of music loaded onto iPods is not from the iTunes Store but from CD rips, P2P/IM, or offline sharing. This sounds like a case of cutting your nose to spite your face.

We would be better served tackling the concept of legitimizing our customers’ behavior with file sharing instead of focusing on how to keep them herded in our small fences.  While the demand for recorded music has never been higher, the industry leaders keep acting like their old rules still apply.

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~ by Som on November 29, 2006.

One Response to “Negotiating in Public”

  1. Thanks for sharing this information. Really is pack with new knowledge. Keep them coming.

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