Quite a Coincidence
A few years ago I made two consecutive sales calls on businesses which were inextricably linked; in fact one wanted negotiating skills training for buyers who dealt with the sellers of the other! At the end of the day I had learnt an interesting lesson.
The first call was to Virgin Our Price, now no longer existing but at that time, before internet shopping and downloading had become popular, a major force in music retailing. ‘We want you to teach our buyers how to get better deals from the record labels’ the Training Manager told me. ‘Our problem is that we buy from monopolies, who realize their position of power and screw us as a result. Of course there are lots of music labels, but there is only one which records Michael Jackson, or Rod Stewart, or Guns N Roses. In each case they have a monopoly, and we are at their mercy because we have to have the big name artistes on the shelves.’
My second meeting was with Sony Music Entertainment. ‘We find it very difficult to deal with high street music retailers’ they told me. ‘There are very few big chains, and some of them are interconnected (WH Smith owned Virgin Our Price at the time). Each therefore commands a significant share of total distribution, and they know it. If one of them blanked us we would find a major route to market cut off. We can’t afford to do that. So we pay their price.’
So, both companies in thrall of the other because of the power they perceived was being wielded. In reality, the relationship was symbiotic. Both needed the other. Neither could do without the other. Negotiating style needed to be re-tuned to this reality; they were partners in a process to get music to the consumer, and they needed to negotiate accordingly.
So it was unsurprising to read this morning in the business press that the CEOs of a number of rec