The Beatles Finally Agree To Deal With Apple

The Beatles and Apple have been negotiating and settling disputessince the late 1970’s, first with trademark dispute of the name Apple Corps, owned by the Beatles, then over what was known as Apple’s Music Synthesizer, and now over licensing and digitally distributing the recorded catalogue of the group’s music. Ironically, after a total of thirty two years of bickering back and forth, both parties are ready to play nice and do business so many generations of new Beatles fans, as well as the old, will have a more accessible channel through which to purchase their favorite selections.

The primary parties in this negotiation are Apple, Inc. and the entire Beatles group. The secondary party in the group that has stake in the negotiations is the record company EMI whom owns a considerable portion, alongside of Michael Jackson’s estate, of the Beatles master recording rights. Though all three sides had a very large monetary incentive that would encourage them to make the deal, one of the strongest inhibitors to the agreement was based around the ability to satisfy each separate member of the Beatles interest(s) in the agreement before anything could move forward in the total process, which took roughly seven years. Obviously, a super group, such as the Beatles, doesn’t really have to worry so much about the financial end of what their return will be in this type of negotiated deal, their main focus will be on what is know as Marketing Reach, and how this type of business merger will benefit the longevity of their entire catalog of music. The main questions that will likely be asked on the management end of the band’s side are: “Will this venture be profitable and reach new fans?” “Will this agreement help facilitate new business and future sales of the Beatles music?” and lastly, “Is releasing this music through iTunes a valid effort to modernize with the distribution process as the methods of selling recorded music evolves and changes?” From the iTunes side, they already own 90% of the digital distribution market and don’t particularly need the Beatles to help their quarterly reports. Their interest in this would be to protect their already existing market share and look toward future growth if they have the monopoly on digitally distributing the Beatles music. EMI, on the other hand, was almost in bankruptcy and needed this deal to happen more than anyone; their stake in the agreement could potentially save the entire record label.

During this long negotiation process many different angles were used to understand each reason this deal had to happen for everyone involved. One of the most present elements was the Beatles management’s ability to “separate the people from the problem” and “focus on the mutual benefit”. Even though it was apparent that each side had the ability to utilize the best alternative to the entire negotiation and continue on with their daily process, it was made very clear each party involved was for making a solid, long-term agreement.

The Beatles separated the people from the problem by hiring Jeff Jones to run their company’s interests and Mr. Jones was new enough to their business to have not developed any animosity toward Apple and want to look at the best options for protecting and preserving the group’s interest in their own music; he felt digital distribution was something that had to happen in order for this to long-term solution to be successful. Focusing on the mutual benefit aspects of the deal gave each party the ability to come to the table with something to gain and an even better incentive to make fair offers to speed the process along. In this mind-set and avoiding the pitfalls of Distributive Thinking, they were able to expand the entire pie to include a fair profit portion for all three entities involved. The benefits of this, other than financial, include: publicity and promotional power, two of the most important words for any business’s brand.

Though there were many different positive and negative factors represented by each side, one major aspect of the negotiation went very well. Apple was able to offer the Beatles their absolute highest payout for their purchases while not offending the other super groups already being distributed through iTunes, including: Garth Brooks, AC/DC, and Kid Rock. This was very important to Apple because they didn’t want to put themselves in the position to offer the Beatles more, just to make the agreement and have other groups assume they could hold out and get the same amount.  One could assume that this was an aspect of the deal that adversely didn’t go well for the Beatles because of the length of time they felt they needed to hold out, but the hold out in itself is more than likely the largest aspect of the agreement that had a negative affect on the process. Having to appease the estates and family members of a multi-billion dollar group was something that didn’t have to take as long as it did and therefore could have put the entire contract in jeopardy.

After much hard work, negotiating, and deal making, there was a mutually beneficial agreement reached that could foster a long-termmutually beneficial relationship, a relationship that is considered by many to be one of the most solid in the record industry. Though the Beatles will receive a reported $1.29 per song, when most digital albums are only $12.99, the Digital Beatles box set is a great barging to their fan-base at a mere $149.00. This is an absolutely amazing price for the most die-hard Beatles fan that legally wants to obtain a high quality digital copy of the group’s music. Now, with the ability for millions of existing fans, as well as new younger generations of fans, the Beatles have the ability to once again grow and root themselves into what can be considered as an even bigger part of rock and roll infamy, even in the new digital revolution.

Negotiating & Deal Making Insight (Interview with CEO of Plastic Musik)

I recently had the opportunity to interview Jeremy Price, the founder and CEO of Plastic Musik, LLC.  Mr. Price is not only a well-respected businessperson but a highly skilled artist as well. Jeremy has been a touring musician since 1997, cast member of the global success STOMP & STOM OUT LOUD since 1999, and project creator/ rehearsal director of the internationally recognized percussion group Plastic Musik.

During our interview, I wanted to get Jeremy’s opinion on three different aspects of negotiating and deal making, including: leverage and power, mutual benefit, and best alternative to negotiation. Ironically, Plastic Musik was in the middle of a re-negotiation to their booking and management agreement so the information was basically given to me in real time.

In reference to leverage and power, I asked how gaining a certain level of clout affected the ability to negotiate on Plastic Musik’s behalf. Jeremy’s reply explained that having clout was a great position in which to be but not what is giving him the ability to get terms more favorable to his vision. Utilizing his position and standing in the world of percussion gave the agent the ability to spend less time on booking and also justified a lower percentage for less work involved on the agency’s behalf.

My questions toward mutual benefit were along the lines of “other than financially, how can both Plastic Musik and the Booking Company mutually benefit each other by a renegotiation of their agreement?” His answer was “I had planned on spending a larger amount during the first two years of the project because of the work involved for the agent, but now because people are calling to fit us in their schedules I have to justify paying back some of the overhead that accumulated during the initial routing of the tours. The agent has benefited because other projects looking to get on the road and start a career will see the company’s ability to sustain shows based on our touring history, and I will benefit because I have built a solid relationship with quality individuals and retain a larger portion of what I earn for the group.”

Jeremy and I spent quite a bit of time discussing BATNA as a last resort or worse case scenario to the potential of the negotiations, or future negotiations not going well. He explained how always cultivating new relationships with the buyers of his group’s talent and getting opinions on which agencies they’ve had the best experiences working with gave him the ability to speak with other companies that were interested in what the group had to offer without being disrespectful to his existing agency. Weeding out the many companies that wanted to be part of the group’s success was a goal for Plastic Musik when the idea of “what happens if our current agent doesn’t agree to fair terms’’ becomes a reality. Because of this, Jeremy was able to streamline his alternate interest into three sections. 1) Book and manage the project himself, 2) Negotiate terms with a company that he feels the group would be a great fit, or 3) Stop touring with Plastic Musik until he gets the terms he wants. Each was a legitimate alternative, but after factoring in the other performers of Plastic Musik, not touring wasn’t an option.

His solution to the complex, multi-month, negotiation process was to A) be more flexible in his terms to the existing agent, respecting the work already completed and recognizing the mutual importance of benefiting together and B) only talking to two other very strong companies that could help the project grow in ways the current agent wasn’t able keeping himself in a position to sustain with greater profit, or move forward and grow to a new level earning more profit in the long-term.

In summary, Jeremy was in the position as a business person to decide on reclaiming a portion of his company that he had to give up for two years, or work harder to find a common ground with other agencies that could help him grow into new markets. Each aspect of this process took into account emotions, livelihoods, and realistic visions for the future. Though in a great position to sign with any company in the market, Jeremy was more concerned with building a long-term, fair, relationship with deserving people. His final thought on the interview was “people buy people, not products… I’d rather pay an agent more and get more than have a company give me what I want and produce less.”