Arts pursue his: a lesson from Steve Jobs

The trial in the United States, under which investigated the existence of a "conspiracy" between the largest publishers of e-books for the purpose of artificially high prices for products, have to be fed. In light of the evidence in the letters, some even trying to show Apple initiator and a key element in terms of high prices. All this fuss judicial incredibly boring, but the letter itself is quite entertaining.

No need to once again talk about the talent Jobs convinced. He got to play by the rules of film industry, the music industry and the industry of e-books. The last moment just disclosed in the published correspondence.

Situation: Apple and News Corp could not agree on pricing.

Total: 5 days unconditionally Jobs pulls CEO News Corp on its side.

How?

Friday morning, January 22, 2010, Apple is preparing to launch the first iPad. Now we know about the subsequent success of the Apple tablet, but then everything was foggy. As part of the iPad presentation it was necessary to show users how much more interesting they will be able to receive from the new flat other, including electronic books, but by HarperCollins, a subsidiary of News Corp, and incidentally one of the largest publishers in the US, does not want to sign a cooperation agreement with a digital store Apple.

Prior to that, Eddy Cue visited Brian Murray, CEO HarperCollins, and the heads of News Corp. What came of it? Here are excerpts from a letter from Brian Eddie (remember, before the iPad release by the time remains 5 days):

HarperCollins Apple requires the following conditions:

Publisher determines the price for each book. When HarperCollins and Apple do not agree on the price of the book, the first reserves the right to distribute products through agents who will offer a higher price. sales commission should be well below 30%. Reduction of the so-called «release window» from 12 to 6 months.

Such conditions would never be accepted by Apple. At that time they had already signed contracts with other publishers (units Pearson and CBS), in the framework of which books will be sold at $ 12.99 - $ 3 dollars more expensive than in the Amazon, and Apple takes 30% sale.

James Murdoch, one of the top managers of News Corp, is quite clearly expressed their dissatisfaction with the proposed conditions of Apple and Jobs sent an appropriate letter:

If your terms all prospective profit goes to the publisher and not the author of the book, namely Apple. Your conditions also prohibit us to publish more books anywhere, even at a higher price. We are concerned about too high a price for a book, which differs from the standard $ 9.99. It is necessary to reduce the commission to 10% for the first 6 months, sales of the book.

Steve Jobs takes

Steve did not want to compromise. He said Murdoch on the same day. His key idea was:

The current business model used by companies like Amazon and implying a fall in prices on the books without obtaining it is reasonable profits, is not viable. E-books are big business, and distributors need to get at least a small income (you, the publisher also wants it).

All major publishers tell us that the price of the Amazon to $ 9.99 for new releases, even destroys awareness of the value of the appearance of a new book in the minds of users. Publishers themselves do not want to use this practice for future releases.

Apple makes it possible to favorably distribute books, which do not need to print, in the wrapping cover for them do not need paper, they do not need to supply somewhere. That is why the new releases will be sold at $ 12.99, not $ 16.99 and a higher price. Apple does not want more than a small income with products that we already get for distributing music, movies and similar content.

Analysts said that Amazon sold just over a million Kindle for more than 18 months. We sell more of our devices in the first few weeks. If you will be friends only with Amazon, Sony, and the like, you'll be out of the wave of revolution in e-books.

Buyers will demand a store that takes over the entire process, from payment of the book before its delivery to the electronic device. So far, this store is only for us and Amazon. Together at the iTunes Store and App Store have an audience of 120 million users, each of which is connected to the account bank card. For all time, they have made 12 billion downloads. Such scale and volumes should be relevant to a publisher who wants to turn the business of e-books into something more.

We already have contracts with 4 of the 6 major publishers. When we let into service a second wave of publishers, there will be a lot of books, and we want to see your books were already there at the time.

Murdoch breaks

Jobs has made it clear that is not going to concede. Murdoch said the next day. Now he began to understand that HarperCollins will have to accept such conditions. He suggested two possible compromise, and recalled that between Apple and News Corp are negotiating on several lines (television, newspapers, video), but in each of these directions Apple behaves in the style of "either our way or in any way. " At the end of the letter he says:

It is clear that Apple has become the platform attractive to so many of our customers around the world. The essence of our company in creativity, and we (News Corp) should work more closely with Apple, as well as Apple could work more closely with us.

Jobs finishes

As I see it, at HarperCollins have the following options:

1. Go to Apple and see if will be able to create a mainstream market of electronic books with prices of $ 12.99 and $ 14.99.

2. Stay with the Amazon and the price of $ 9.99. Perhaps you will make some money on the short term, but then you will be asked the same 30%, because Amazon has also shareholders.

3. Keep your books away from the Amazon. If the user can not buy them, they will steal it. This will give rise to piracy, and if piracy will begin to develop here, it does not stop. I have seen such a situation with their own eyes.

Maybe I'm missing something, but I see no other alternatives, and you?

The final

Tuesday, one day before the iPad announcement, by HarperCollins accept Apple's terms. Their books are included in the iBook Store.

January 27 kicked off the service and the tablet itself. At the moment around the world sold more than 100 million iPad.

(via)