| Here is a vital lesson about how to make arguments and win in a negotiation, but nobody here has picked up on it. You are instead focusing on the numbers...which is a small part of the win... It's all about psychology and understanding the situation and the customer..let me explain: Notice how Murdoch uses "I" and "we" (referring to NewCorp/HC) all the time, while Jobs almost entirely uses "you" or "we" (as in HC and Apple). Take a look at Murdoch's language:
" I thin[k] I have a handle on this now" - he's not sure
"we we would like to be able to get something done with Apple" - done what exactly? very vague statement, no specific. blah.
"The economics are simple enough" - are they really simple? "we are worried about setting prices to high" - again, he doesn't sound confident or sure of himself "Feel free to call or write anytime over the weekend to discuss if you like" - he is making himself available to Jobs over the weekend, giving Jobs the power to interrupt him "anytime", he takes a subservient/beta position in the negotiation, and gives the lead to Jobs. Same sentiment here: "we would much rather be working with apple than not" And this is quite painful: "If we could offer to you that a certain percentage of releases (>50%) would be available within your pricing structure (< or = 14.99), does that GIVE YOU ENOUGH COMFORT?" - Murdoch is actually trying to "comfort" Jobs, really?
it crossed my mind, that he is almost trying to "please" Jobs here. Psychologically (probably reading too much into his story), his need to please a (fatherly) authority figure (Rupert), impersonated by Jobs. Too bad for Murdoch. More worries:
"I think we are worried more about the absolute holdback of product elsewhere, and our ceding of pricing to Apple, than we are about the actual haggle over what the price will be."
- This sentence sounds extremely vague, nothing is clearly qualified or quantified. Jobs just comes across as infinitely more knowledgeable on publishing and economics than Murdoch... "I haven’t shared this with HC directly—so this is only hypothetical." - HYPOTHETICAL? He sounds like a time-waster, almost asks to be hardly negotiated with? Also, do we know who makes decisions here? Murdoch or HC? "Please let me know."- again...PLEASE "Is it worth considering in the round, over the next few months or weeks, whether or not some of these loose ends can be tidied up?" - Weeks or Months? Which one is it, James? More vague language... Then contrast this with Jobs, "you" focused language and clear and simple arguments: "The current business model of companies like Amazon distributing ebooks below cost or without making a reasonable profit isn’t sustainable for long. " - Jobs qualifies and frames Amazon's tactic in a sentence. Boom! "All the major publishers tell us that Amazon’s $9.99 price for new releases is eroding the value perception of their products in customer’s minds, and they do not want this practice to continue for new releases." - ALL THE MAJOR publishers are on our side...i.e. NewsCorp/HC side too... And some more clear, concise and action-oriented language:
"All the major publishers tell us"
"Apple is proposing"
"Analysts estimate"
"Customers will demand" Person A does action B etc etc Jobs sounds like a man who has done his research, both among other publishers, his competition (Amazon), and knows what customers want. Murdoch has done NONE and only "worries" about NewsCorp, coming across as weak and vague.
Pathetic. Jobs' language is "YOU" focused ("focus on your customer and their pains / benefits mantra" used in copywriting, advertising,etc). "you will want this too" "If you stick with just Amazon, Sony, etc., you will likely be sitting on the sidelines of the mainstream ebook revolution." "You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99." "Once we open things up for the second tier of publishers, we will have plenty of books to offer. We’d love to have HC among them." - here Jobs almost frames HC as a second tier publisher...urging HC to move to first tier or else they are going to miss out... Jobs gives reasons behind his statements, e.g. "Our proposal does set the upper limit for ebook retail pricing based on the hardcover price of each book." Why? "The reason we are doing this is that, with our experience selling a lot of content online, we simply don’t think the ebook market can be successful with pricing higher than $12.99 or $14.99. " Jobs offers reasons, solutions, analysis. Murdoch brings nothing, but "worries" and woolly arguments to the table. And finally, to win Murdcoch over to his side, Jobs does a fair amount of fear-mongering: "the current situation is not sustainable and not a strong foundation upon which to build an ebook business." "You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99" "Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them." Kudos to Jobs! What a great display of:
- Framing
- Focus on the customer (YOU language)
- Appeal to other's needs
- Understand and address their fears
- Provide reasons and analysis in support of your arguments And many more little gems, that I most likely have missed out! Jobs had truly been one of the bests (if not THE BEST) marketer/negotiators/CEO of our era. |
Like others have said, this was not a difficult negotiation for Apple. Maybe Murdoch could have used the other verticals (video and newspapers) in a better way or tried to leverage an upcoming big release. I don't think they had reason to give in either way though.