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Looking at the findings of the white paper from Nielsen/Midem on the state of music streaming across European markets I believe the greatest obstacle to the take-up of streaming services is really their lack of general availability. The reality of the stats highlighted in the report is that penetration is low because very few streaming services have been licensed.

We all rely on a kind of social conformity which encourages us to try new things and so the lack of availability is a genuine constraint. This lack of availability is partly down to the difficulty in getting such services licensed, because content owners demand high advances, minimum guarantees and per stream minima. The result is that very high barriers are set for new entrants to the market place.

Contrast the way that handset manufacturers and mobile operators set about building the mobile market. They made it as easy as possible for consumers to get started – pay as you go model, free devices, regular upgrades, the whole momentum was towards growing the market. The net result was that more and more users wanted mobile phones, until their presence became ubiquitous. Mobile operators didn’t set out to charge the highest possible prices to as few users as possible, as that would have stifled the growth of the market.

So, when considering licensing streaming services content owners could consider the example of the development of the mobile market. When they do so, the penetration stats on streaming might start to look more impressive.

BT have announced plans to offer a music streaming service to their customers, although these plans seem a bit vague as it doesn’t know when or exactly what the service would look like.

Is this just positioning with the UK government so that it looks like BT is making a positive effort to drive consumers towards legitimate services? This would be understandable in a context where ISP’s are under pressure to do more to prevent illegal downloading by shutting off access to websites providing uncleared material.

Let’s give them the benefit of the doubt and assume that this is a genuine initiative. From a deal-making point of view they face some familiar hurdles. Firstly it is notoriously difficult to get clearance for this kind of service from content owners – both record labels and publishers. The complexities and delays involved in agreeing issues like pricing and guarantees drove Virgin Media to abandon its plans to set up its own streaming service and instead do a deal with Spotify to host their service. BT would face similar issues.

Secondly BT would face challenges negotiating for the attention of its own audience in relation to such a service. Technology companies like BT are not naturals at creating content-led services for consumers – the slow progress of BT Vision attests to this. It is as though they need someone else to provide a “managed service” to craft a content offering, leaving BT free to market the service to its customers.

So, whichever way you look at it, there is a long way between BT saying it wants to develop a music service, and such a service being successfully launched.

It’s great when you have two suitors and their fear of losing you means that you can end up having a relationship with both of them. That’s what happened in the recent Formula 1 UK television rights negotiation.

F1 has considerable bargaining power in these negotiations because it alone can provide access to televised F1 races. This kind of exclusive access to a network, or “network power” is extremely powerful in negotiations. It will have induced both Sky and BBC to bid aggressively for the rights, with each needing access to that network to enhance their own profile (in negotiating terms, each of them having a “belonging need”).

The masterstroke by F1 has been to be able to satisfy that belonging need of both BBC and Sky at the same time by parceling up the rights in each way. Sky gets the full package of rights to F1; BBC gets a reduced package – enough to make it feel it still has adequate access to the brand, but not enough to prevent Sky paying top dollar for its own package.

Further, the reduced rights granted by F1 to BBC enables them to meet another negotiating need at the same time – that is to save money (a “reassurance” negotiation need). Small wonder that the BBC statement welcoming the deal refers not only to the triumphal fact that in large measure F1 will still be available to licence fee payers, but also to the fact that as a result of the deal the BBC has achieved “significant savings”.

F1 of course benefits all round, and the deal certainly meets Bernie Ecclestone’s almost insatiable “achievement” needs. F1 gets much higher audience reach through dealing with two UK channels, […]

Recent reports here (uk.Reuters.com) suggest that Nokia are in free-fall and their their problem may well be that they are no longer sure what constitutes a “win” in their ongoing negotiation for consumer attention. Their aim has traditionally been to occupy the number 1 position worldwide. But that position has now been undermined in the smart phone market and looks to be under threat in relation to the overall handset market.

What should they do? The Nokia tie-up with Microsoft suggests a continuing pre-occupation with achieving greatness through scale. But though they are big, neither Apple nor Android have made progress on the Smartphone market by focusing on being number 1. They focused on creating superb technology and let their market position take care of itself.

Maybe Nokia should go back to basics and concentrate on creating the next generation of technology for smart phones? Or focus on its existing customer base and create a peerless reputation for customer service? Or focus on price ahead of quality and become price-leaders? Any of these options offer alternative ways of taking forward the “negotiation” with consumers.

Perhaps the one mistake would be for Nokia to presume that the only way to get a win from the negotiation is to “get back to number 1”. That would be to put the desired outcome ahead of the negotiating strategy for getting there…

As predicted by this blog, a fudged deal got done by Republicans and Democrats in order to avoid the potential disaster of a US debt default. It was inevitable that this kind of arrangement would leave everybody equally unhappy. Not enough has been pledged as a cut from the debt either to satisfy Republicans or financial markets scrutinising the probability of future US debt crisis.

The reaction of the markets since the announcement of the deal tells you everything you need to know about their ongoing concerns. For the democrats, the concern is that too much has been promised by way of cuts, which will affect a whole host of social, health and welfare programmes, hence the wave of criticisms directed at Obama by his own party.

One thing that was noticeable about the negotiations was that they were conducted in a very public manner – with each party declaiming its position repeatedly to the media. This kind of public negotiation makes it hard for parties to step away from their adopted positions for fear of losing face. Negotiations that take place behind closed doors give all sides much more flexibility.

The other problem is that both parties seemed to use exclusively “push” negotiating behaviour focused solely on their own agenda. So there was a lot of “stating of expectations” and “proposing with reasons” as each side sought to justify its own position. Each side used the deadline “pressure” tactic to try and force concessions out of the other. Each side relentlessly “tested and probed” the other side’s negotiating position.

“Push” behaviour has its place in the negotiating repertoire, but it is never enough on its own. Other behaviours need to be mixed in: Some […]

As ever, this Dragon’s Den episode provided an array of examples of how to negotiate a deal – and how not to negotiate one.

First-up was the Rascal Dog Litter Box. No points on negotiating skills for Minah from this team who seemed unable to keep quiet at any point in the discussions. Good negotiators know that listening is far more important than talking when negotiating – generally the more you say, the more you give away. Her husband did not fare much better, as he seemed to have no grasp at all on the numbers for his business. Was that £100k turnover he was forecasting for next year? Or £200k? Or £30k? All these numbers were mentioned. Fail to prepare for any negotiation and you prepare to fail – and knowing the numbers for your own business is a pretty basic preparation requirement.

The next interesting example was the Hart family’s fancy dress business. They did well in that their franchise model for expansion attracted interest and an offer from Duncan Bannatyne. He made an offer of £100k for 60% as opposed to their proposal of £100k for 10%. This was a fairly drastic reduction in their valuation. It would have been sensible for the Harts therefore to have taken a break and decided what to do next. Taking a break is always a good idea when you are under pressure in the bargaining phase of a negotiation. Instead the Harts ploughed on even though they clearly had not prepared for this turn of events. The husband uncertainly said that they wanted to keep at least 50% of their own business – a massive shift in their position. The wife undercut him and said they […]

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 […]