Wednesday, June 19, 2013

How Steve Jobs bargained with Harper Collins

A side benefit of the antitrust trial is that the negotiations between publishers and Apple are now being made public.  It illustrates what we call the "non strategic" view of bargaining, that the alternatives to agreement determine the terms of agreement. 

Steve Jobs lays out these very clearly, and Harper Collins agrees to his offer:

  1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.
  2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.

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