clive

An article on the CMU site speculates that there could be up to 5 parties interested in buying EMI outright.

There’s no question that having many bidders potentially adds bargaining power to Citigroup. When people believe that something they want may be in scarce supply, it often increases its value to them psychologically. Note that the operative word here is “believe”. The belief may have no foundation in reality but if it feels real to the person that holds that belief, then it may tempt them to bid more.

The last time EMI was sold, to Terra Firma, Guy Hands clearly believed there was another buyer waiting in the wings (even though there wasn’t), and that influenced his decision to spend a huge £4.2 billion on securing it. The fact that Hands subsequently had to wrote off half that value shows just how having a group of potential bidders can make a difference in price.

It’s interesting that the potential price being quoted this time is US$3.5 billion – almost exactly the same as the write-down valuation that Terra Firma arrived at. As surprising as this is, the price might go even higher if the number of genuine suitors is correct. Of course, there’s always the possibility that Citigroup might be encouraging the market to believe that there are lots of suitors in the very hope that such upward valuation will occur. Keep your eye on this one…

The CISAC and its President Robin Gibb last week issued a statement statement berating two recent Court decisions in India regarding copyright laws, believing that these will result in injustices for artists and composers. Whilst this is admirable, I’m not sure what impact they expect these statements to make?

Are they hoping that their authority will carry some weight with the Indian Government? Certainly if you have genuine authority it can make a big difference to your bargaining power in any negotiation. However, the negotiating authority must be genuine otherwise it will have no impact on the other side. Most commercial music in India is of Indian origin.

I suspect that CISAC and the Bee Gees don’t have a huge amount of influence there. Maybe it would be better to find local Indian writers and superstars to complain about these decisions. They are more likely to have genuine “authority” with the Indian Government and consequently more bargaining power in any negotiation to have the decisions over-turned.

In the LA Times last week it was revealed that Metal record label Century Media have withdrawn their content from Spotify’s catalogue claiming that “… in its current form, it does not allow for the artists to derive the profit needed to sustain their respective careers”.

I don’t agree with Century’s comments. The more services like Spotify there are the better. CD sales are in irreversible decline because of the advent of digital.

There are two types of substitutional digital usage – illegal digital usage and legal digital usage. The fewer legal services there are and the more restricted their offering, the more users are driven into the arms of illegal sites.

It is absolutely true that content owners receive only tiny amounts from each stream compared to the amounts they used to receive from CD sales, but that is not the right comparison. The comparison is the amount received from Spotify versus the “nothing” received from illegal services.

If services like Spotify and countless other legitimate digital retailers can be encouraged into the market then Content owners will only benefit, potentially expanding the market well beyond its CD peak. If there were thousand s of digital retailers able to distribute music legitimately, then they would potentially be able to reach millions of users in a way that physical retailers selling CD’s and bound by shelf space and geography could never have hoped to emulate.

In some ways the riots in London last week represent a rather tense negotiation between the Nation and its disaffected youth. Does looking at it like a negotiation give us any fresh perspective on how to address these events?

Certainly if someone is pushing you around, it’s important to push them back. In any negotiation, you have to stand up to tough guys by making their behaviour the issue. So, imposing tough sentences on people who behave badly is as it should be.

However, if you accept this as a “negotiation” then pushing people back cannot be the only tactic required. It’s important also to try to influence the “state” of people on the other side so that they behave the right way not just out of a fear of retaliatory measures but also because they want to. If deterrence is the only response then the negotiation can’t really move forward.

So how do you reach members of disaffected gangs and alter their negotiating state? It has to be done with dialogue of some kind, which interrupts their pattern of behaviour and alters their state of mind.

Recent activity by Strathclyde Police may give us a clue. They have managed to reduce gang violence through adoption of a programme used by Police in the US. It offered kids a way out by saying that if they stopped the gang fights they could have access to help with training, housing, education and community groups – but if they carried on with the gang behaviour they would go to jail. 400 gang members signed up and violent offending among those undertaking the most intensive programme fell by 73%.

This kind of dialogue can make a difference. So can making rioters confront […]

With the world watching on as Syrian President Bashar Al-Assad continues to carry out horrific crimes against his own people, the West has finally responded with coordinated calls for him to stand down. The US have also imposed severe sanctions on Syria, including the freezing of their US assets and banning US citizens from operating or investing in Syria. A UN delegation has also been sent in the last couple of days to assess humanitarian needs in the country. However, these actions still fall some way short of the military intervention seen over the past 5 months in Libya by UN forces and there are also doubts over how long it will take for such sanctions to have an impact on the country and its President.

Is there any other way to ensure a regime change? The military option which the coalition jumped on so quickly for Libya, is not practical. Syria has a strong army and a powerful friend in Iran. It is one of those troublesome countries like Burma, North Korea, Zimbabwe and Iran itself, where it’s very easy for the West to convince itself that it has a justification for intervention, but military and political considerations get in the way.

So, what about negotiating a deal for regime change? Ironically this might have been possible in Libya, but the coalition didn’t really give itself a chance before opting for the military route. Gaddafi may be mad as well as bad, but he was happy enough to do a deal with Tony Blair to renounce terrorism when it suited him. It may be that a dignified exit which met his needs could have been negotiated. This would have […]

The Google bid for Motorola is indeed puzzling in some respects.

Why would Google want to compromise the independence of its Android system in this way? Now it’s in handset competition with the likes of Samsung and who have previously made big commitments to Android. Why would it want to be in the handset business at all given that it is low margin and very tough?

The only answer can lie in the 17,000 patents Motorola possesses. These are big negotiating currency in the competition between major hardware companies. Apple recently had to pay millions of dollars to Nokia and ongoing licence royalties in order to settle outstanding patent disputes. HTC is anticipating a similar outcome having acquired S3 – a company which has just won a similar preliminary ITC judgement against Apple in relation to patent infringement. Ericsson and Sony recently paid an eye watering US$4.5 billion for some 6,000 Nortel patents on the same basis.

Perhaps Google sees Motorola’s patents in purely negotiating terms, as a spoiler for competition and an important insurance policy for itself. After all, having “rules and regulations” on your side is an important piece of bargaining power in any negotiation…

I was interested to see that La Liga went on strike last weekend over the creation of a salary fund to protect the wages of Spanish players against non-payment by Spanish League clubs. In spite of the success of Spanish Football, most clubs other than Barcelona and Real Madrid experience severe financial difficulties routinely. As many as 22 of the 42 professional clubs have passed through administration over the last few years and €52million is owed in unpaid wages to players.

The problem is not difficult to spot – Real Madrid and Barcelona take 3 times as much of the TV monies paid to La Liga than any other club. So, they use their bargaining power to max out on revenues from the game, leaving other clubs to fight for the scraps. This is a “users” approach to deal-making, where no attention is paid to the needs of any other parties.

This may seem great for the top 2 clubs, but actually, like most “user” negotiating behaviour, it is short sighted. How great would it be for Barcelona and Real Madrid if the other clubs were so impoverished that they couldn’t offer effective competition? It would not be good at all. The League would be very boring, and actually Real Madrid and Barcelona players would not get sufficiently tested to make them tough enough or sophisticated enough for the Champions League.

You only have to look at what has happened in Scotland to see the force of this. Celtic and Rangers dominate and other clubs rarely get a look in. Which club other than Celtic or Rangers last won the League recently? The result is that actually Celtic and Rangers, along with their poorer cousins, are […]

A new rights deal has been struck between the English Premier/Football League and Media Organisations meaning reporters are now free to use Twitter and live blogs throughout matches. This replaces the old outdated system whereby the media were only allowed to upload text and picture updates during certain fixed ‘windows’. This deal reminds me of the same dilemma record companies have faced over the years since digitisation shook up the music business. How is it best to keep control of your rights when the whole thrust of digital distribution makes it harder to keep control?

In relation to music people want to share it, copy it, make mash ups, and download stuff for free. The only thing that can’t be shared in exactly its original form is a live event like a concert. It’s the same with football. There is limited access to the live matches but everything else around the game is up for grabs and people expect to be able to share it – highlights, video clips and live feeds from matches included. It must be very tempting for the Premier League to react as the Music Industry did and try to control all of this usage based on the value its clubs create. But in fact, as the experience of the Music Industry has shown, this is a mistake. Paradoxically, by trying to exert control you alienate consumers and diminish the value of what you are trying to protect. If you relax control then the interest and engagement you stimulate can be turned into value.

So the Premier League has done the right thing by allowing live twitter feeds. Like many fans I follow these as well. They keep […]

The vacillation over the Euro is a classic case of “avoidance” negotiating behaviour. This kind of negotiating behaviour is not to be recommended, as it creates uncertainty and lack of confidence in whoever you are dealing with.

The Debt crisis within a number of the Eurozone is placing impossible strains on the Euro. The financial markets do not believe the various “austerity” programmes which have been created to accompany individual country bail-outs such as in Greece and Ireland. Nor do they believe that countries like Spain and Italy can avoid a default in the absence of bail-outs which the Eurozone cannot afford.

The only answer to the continued market anxiety is to engage with the problem, but the Eurozone seems to lack the political will to do so. Germany does not wish to underwrite Euro indebtedness with a blank cheque (e.g. by backing a Euro bond). Germany and France would like to utilise the current crisis to impose strict fiscal controls on the Eurozone in future so that member states don’t live beyond their means. But there seems little political will from the other states to accept this kind of political harmonisation. Even the will to engage with ratings agencies like Standard and Poor seems to be lacking – finding ways through dialogue to counter their gloomy predictions, which often spook market anxieties, would surely be a step forward.

Instead France and Germany have put the onus on the European Central Bank to sort out the problem, through interventions involving the buying of European government bonds. Nobody is convinced by this sticking-plaster solution.

When you “avoid” engaging in a necessary negotiation you frustrate the other side, they lose confidence in dealing with you, and they fantasise about all […]

The best news about the hostage negotiations between Israel and Hamas over captured Israeli soldier Gilad Shilat is that they are seemingly being negotiated with Egypt mediating between the parties.

Mediation is a very effective technique where there are highly emotional conflicts to work through. Often where there is a large degree of emotional history or the current dispute is highly charged it’s difficult for the parties to feel dispassionate enough to negotiate rationally. The emotionalism just gets in the way. Leaving aside the emotional results of 3,000 years of conflict, for Israel the return of its soldiers is always a big emotional issue, whilst for Hamas the return of what it regards as political prisoners is equally charged.

So, using Egypt as a go-between is a good idea. The best mediators are seen to be neutral, are trusted by both sides, keep matters confidential, and are prepared to challenge the entrenched positions of both sides. In the UK Mediation has an 80% success rate in resolving litigious disputes. Maybe it is the best way to resolve this kind of tense, political issue, too.