clive

Amazon’s recent drive into the video streaming market may well succeed, but it could also carry some risk for its brand.

In its negotiations for our attention as consumers, Amazon has developed a great sense of “authority”. This is an acknowledged source of bargaining power, as we are all more likely to trust entities which exude authority, and that authority is reinforced by the social conformity which leads more and more of us to trust it. All great brands have this pedigree of authority – from Apple to Harrods. It is wrapped up in a combination of reliability and expertise. This creates a conundrum for such brands though – how to extend such authority into other areas of business where that authority does not yet exist.

Brands are often keen to diversify – but can they carry their authority into new areas? If not then new ventures may fail and this may in turn affect the core brand itself – with harmful effects for the “deal” by which they obtained consumers’ attention in the first place. Virgin is a good example – it has been successful in turning its mixture of refreshing exuberance into an airline brand – less successful when it comes to Cola and cosmetics and trains – and maybe those uneven attempts at diversity have weakened our perceptions of what Virgin stands for, so that we are less likely to sit up and pay attention when Virgin negotiates for our attention as consumers.

For Amazon, video-streaming is an interesting extension of its core brand. It is peerless in the world of e-commerce books, and has extended that brand to book downloads and latterly music downloads. Is video streaming proximate enough to what […]

Deadline pressure can influence both buyers and sellers, so the real “winners” on transfer deadline day are those who go into the negotiations feeling in the strongest state of mind.

1. Give yourself the option to walk away from a deal

If you are feeling as though you can walk away from deals (either as a buyer or a seller) then that will stand you in good stead, and the approaching deadline will not affect you too much. If you are feeling anxious or desperate then the looming deadline will only make things worse, as your available options narrow. Moreover, your anxiety will communicate itself to the other side and encourage them to take a more assertive position against you.

2. Don’t put pressure on yourself by leaving a deal to the last possible minute

Arsene Wenger can’t have enjoyed deadline day at all, with the whole world knowing that he needed players in the wake of the departure of Fabregas and Nasri, and that awful result at Man Utd. Although he picked up some players, none of them are world beaters, and he would not even have got Arteta had the player himself not agitated for a transfer. Wenger would have been much better off selling Fabregas and Nasri earlier in the summer when he would have had far more options by way of replacement and far less time-pressure to find replacements. That would have put him and Arsenal in a much stronger negotiating state.

3. If someone wants to leave a deal, it’s probably best to let them

Was Moyes right to let Arteta go? Probably. There is no point keeping players who are miserable. Arsenal did not get a great season out of Fabregas […]

The recent Court Judgement in the EMI/MP3 Tunes case makes sobering reading for all those involved in the debate and the negotiations over the legitimacy of music locker services.

MP3 Tunes was broadly found to be operating under the “safe harbour” rules of the US Digital Millennium Copyright Act, so it was not liable for infringement in relation to its music locker service. However, one of the conditions of safe harbour protection is that you must respond to take down notices and terminate the accounts of repeat infringers, and MP3 Tunes was found to have failed this test.

Cue PR from both sides claiming victory. The issue is important because of the issue of much bigger cloud-based locker services recently launched by Apple, Google and Amazon.

Legal judgements create a potential source of bargaining power in negotiations, because they are a source of the power conveyed by “rules and regulations”. However, they are expensive to obtain and often, as in this case, somewhat inconclusive or distinguishable on their facts. What’s worse, they create a very “hostile” negotiating climate. Such is the antipathy on all sides that Amazon and Google both launched their locker services without the consent of the record labels.

It is understandable that participants in a negotiation of this kind seek the power of legal precedent to back up their position and gain a hold over each other. However, maybe the medium-term answer is to re-set the negotiating climate. Even a “cool” climate – very objective and process driven – might yield better negotiating results ultimately, than reliance on the power-based tactics of litigation…

The latest stats from You Tube concerning views of Vevo and the separate Warner channel are striking. 38% of You Tube’s July visitors watched a Vevo video, and 19.8% of them watched a video on the Warners channel.

But does “scale” alone create enough bargaining power to make a difference in the negotiations that record labels have to undertake in this area?

Scale is certainly an acknowledged source of bargaining power in any deal. You can imagine it having some weight in negotiations between You Tube and Record labels over a share of ad revenue from video streams. But this is only one kind of negotiation that record labels have to undertake, as in the digital age a share of ad revenues is unlikely to make “the” difference for labels financially, whatever percentage they negotiate.

Labels also have to negotiate for the attention of consumers (and try to turn that attention into cash). Here sheer scale is not enough, as there are enough streams available elsewhere (and for free) to enable scale on Vevo to be negated by lack of scarcity elsewhere. So, other forms of bargaining power need to be brought into play.

Can record labels leverage their “expertise” for example, to create authoritative offerings which consumers value and might pay for? On the same basis can they use the unique “information” at their disposal about their artists and their products to create attention and value? Information is a source of power…Can they re-create scarcity through the creation of multiple bundles which are exclusive by reference to time or channel? Can they use their “network” power (the power to connect users with desirable networks, such as their network of artists) to create value?

Scale is a […]

It is critical to have all stakeholders involved in the negotiation. If that doesn’t happen it’s all too easy for the party that is excluded to disrupt the deal or try to bring it down.

In the case of Hamid Karzai’s Government in Afghanistan, they no doubt feels very threatened by the fact that talks between the US and Taliban representatives have taken place without its involvement. You can understand how they might fantasise negatively about the possible outcome of talks on the future of the country from which they had been excluded. What reason could there be for them to be left out unless their interests were deemed somewhat inconvenient and immaterial to the final outcome?

The US has to support the Karzai government as “legitimate” as this itself gives the US a legitimate reason to be in Afghanistan – at the behest of its official government. If the US professes to support the Karzai regime then it has to involve them in any peace process. If they can’t be present because the mood is too tense or sensitive then they must be kept involved on a fully transparent and equal basis. If the US doesn’t trust or respect them sufficiently to do that, then it must expect Karzai’s Government to adopt the state of mind of a “loser” which believes it cannot win, and accordingly seeks to de-rail the possibility of a deal happening.

Some interesting deal-making issues are raised by the formation by Sony, Toshiba and Hitachi of a combined Liquid Crystal display operation funded by the Japanese Government (to be called ‘Japan Display’). The Innovation Network Corp of Japan is putting in 2.6 billion and will own 70% of the shares in the vehicle.

You can see why the deal has been done. This is a very competitive sector with increasing competition from players in Taiwan and South Korea including Samsung and LG. All 3 companies must have “reassurance” negotiating needs as must the Japanese Government which must view these companies’ interests as being of strategic importance nationally.

Creating this combined huge operation will certainly give scale which is an acknowledged source of potential bargaining power. However, whether such scale delivers genuine market power remains to be seen. Huge organisations can be very cumbersome and it is often difficult to realise internal synergies, which make great sense when discussed at Board level, but don’t have the commitment of the workplace at large. Workforces often find the prospect of such synergies rather frightening as they often involve people losing or changing roles – and as a result, they may resist change which can then become difficult to implement.

Moreover, organisations which are heavily supported by the Government often tend to be uncompetitive – they know they can rely on the Government to bail them out so they have less motivation to be lean and hungry. The history of Nationalised Industries in the UK and the former Soviet bloc tells us everything we need to know about that. So, if the Government holds 70% of the shares that may be an obstacle to turning scale into actual market power.

If […]

The patent wars between Apple and Samsung are another example of the “push” negotiating behaviour which seems to be part of Apple’s coding as an organisation. Apple has used its patents arsenal to gain a local injunction preventing distribution in Germany of the Samsung Galaxy 7.7 Tab.

Certainly one can see why patents are useful for this kind of purpose – Google’s otherwise baffling acquisition of Motorola only makes sense in the context of Motorola’s stockpile of patents. Here, they are once again enabling Apple to engage in typical “push” behaviour – “stating expectations” about what it will not accept and using “pressure” tactics to get what it wants. This has been their house-style in all their content negotiations too, going back to the launch of iTunes. It’s also pretty much the way they deal with consumers – forcing them to exist only within Apple’s domain and being obstructive when it comes to them porting their content to other devices.

It’s difficult to critique Apple’s success as an organisation to date. However, if all you ever do in negotiations is “push” people around, you will come unstuck eventually. You store up too much resentment and create too many enemies who will either fight you constantly, draining resources and energy, or wait patiently for their chance to take revenge.

The article here (paidcontent.org) refers to the blog by Matthaus Krzykowski, criticising Apple’s domineering approach and suggesting that the tech community and even consumers will come to resent this. There are others Apple may need to worry about too. It owns 80% of the tablet market – cue Regulator interest. And in a post-Steve Jobs world, shorn of his charismatic influence, Apple may find it needs friends […]

The negotiating stand-off at Bani Walid is not that surprising really.

Whoever it is from Gaddafi’s side that is holed up there must be feeling pretty anxious right now – with deep-seated reassurance or even survival needs. This is because after all the fighting and the casualties and now the discovery of appalling atrocities there will be a thirst for “justice” from the NCT rebels and their Western allies which is impossible to ignore. This will mean trials and probably executions. Gaddafi’s side know that if they negotiate a surrender now there is not much of a “win” in the deal for them – hence the standoff whilst they consider other options – including fighting to the last or, more likely, escaping if they can.

There seems to be a further complicating factor in the negotiation as well, in that the discussions are being brokered through the Warfalla tribe, who dominate this area. There are 140 different tribes in Libya and their influence on events has been under-stated in reporting to date. In this case the tribe seems somewhat split between those in Bani Walid who are pro-Gaddafi and those in other regions like Miserate who are pro NTC. It’s never easy to get things agreed with a divided team on the other side so that may be complicating events too…

It’s a shame really. What was the “win” here? It must have been regime change. Getting rid of Gaddafi bloodlessly would have been a major negotiating coup and might have been possible before the fighting began. He might not have been punished but, evil though he is, could we have tolerated that in the overall bigger picture? Was it necessary to punish the IRA for […]

Maybe the blocking of the proposed AT & T/T Mobile merger by the US Justice Department is not so surprising after all.

Commentators were surprised because negotiations with the Justice Department were ongoing, and the AT and T lobbying team in Washington was led by the successful and experienced Jim Ciocone who has worked in the Reagan and Bush Administrations. Those were of course Republican regimes and I just wonder if enough adjustment has been made to accommodate the differing negotiation needs of a Democrat-led Administration?

Republican regimes are notoriously business-led and the Justice Department in previous eras will have wanted to align itself with big business – it will have almost had a “belonging” need in this respect. The Democrats will have a different agenda – including a “respect” need for their policy agenda which would be more focused on the outcome for consumers and less on the interests of big business. Given the perilous state of the jobs market there may also have been a “reassurance” need that the merger would not reduce levels of employment through rationalisation.

On the AT & T side the agenda would seem to be driven by an “achievement” need for Chief Executive Randall Stephenson and his Board – perhaps that got in the way of a full perception of what the DOJ actually required. A clue to the fact that there may have been a mismatch in terms of addressing underlying needs is that the disapproval of the deal seems to have happened so suddenly and been such a surprise to commentators.

If one side’s needs are not being met at the “exploration” stage of a negotiation then this often surfaces when “bids” are made, as there […]

The article “how to achieve peace ‘tomorrow’ in Israel-Palestine” focusing on Stuart Diamond’s theories on solving the Israeli-Palestinian dispute raises many good points.

There is no real point in the Palestinian tactic of seeking a UN resolution. This move will be vetoed by the US, almost certainly, and the attention it creates will highlight Palestinian as much as Israeli intransigence. There is widespread support for the perceived “justice” of the Palestinian cause so there is no need to ventilate the issues again at the UN in order to further that objective. Furthermore, a resolution, if passed, would have absolutely no effect on Israel at all; it will just be perceived as a pressure tactic and will harden Israeli opinion.

The answer is for the two parties to adopt a mental position that peace is more desirable than a perpetual state of hostilities. Once that breakthrough is achieved it becomes possible to put in place a process that may get somewhere.

Stuart’s suggestion of economic co-operation as a part of that process is a good one. Economic co-operation within the EU has kept member countries at peace since 1945 – an unprecedented period of calm. Economic co-operation between Israel and Palestine can have a similar effect, because it delivers people on both sides what they most need – jobs, income, security. Once they see that these are the benefits of a peace process, that there is something to gain from a peace process and something to lose if it stops, then the process gains commitment. THEN, but not until then, is it possible to start talking about the content of a deal…