Great Leaders Negotiate

Great Leaders Negotiate

To create iPod and iTunes, Steve Jobs had to convince record companies as well as recording artists to license their music on a single-song basis.

This concept was contrary to the precedent in the recording industry.  Their business model was to sell entire albums on cassette players.

He convinced these recording companies and the recording artists that the future of the recording industry was digital recording and not cassette recording and that digital recording was single-song recording.

Recording studios and recording artists were already dealing with digital pirating of their music.  Steve Jobs was offering to pay for copies of their music for digital resale.

Steve Jobs negotiations with Sony Records were especially difficult.  Sony made cassette players.  The iPod would compete with those players

He focused on what recording studios and recording artists could gain from single-song digital sales versus adhering to the dying cassette-albums sales of the past.

Steve Jobs was involved in similar negotiations with book publishers over ebooks for iPads.  At the time of the negotiations, Amazon was selling ebooks at a loss.  Job convinced publishers that Amazon’s business model of losing money on books was not sustainable. Emails between Steve Jobs and Sony show how aggressive and convincing Job could be in negotiations.

Later Steve Jobs and Michael Eisner clashed over the licensing of Pixar movies for Disney distribution.  Steve Jobs superior, tough negotiation skills, his position as CEO of Pixar, and the success of the Pixar movie “Finding Nemo” resulted in his becoming the largest single owner of Disney stock.  There were a number of factors involved in Eisner’s exit from Disney.  In particular, he fired Jeffrey Katzenberg, who would join David Geffen and Steven Spielberg to create DreamWorks Studios.  But Jobs power negotiations with Eisner and Jobs ability to deliver winning movies ultimately caused Eisner to lose his job at Disney.

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