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Comment by jcampbell1 | Hacker News Reader

> You think they can't do their own licensing deal?

When you are the richest guy in town it is hard to negotiate a good deal. It is probably much smarter to just buy Beats. If they bought Spotify, they would be stuck supporting Android and Windows customers.

The $3B price probably reflects the current profitability of the headphone line. For what it is worth, audio brands seem to have staying power. I am not sure if the quality criticisms are a positive or negative value signal personally.

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Other services (like spotify) have tended to have clauses in their licenses saying something like "If you get acquired, the deal is cancelled and you have to renegotiate it" so that the record companies can prevent exactly this from happening. I would be surprised if Beats doesn't as well.

That means that it doesn't matter if Apple (or anyone else) buys someone who already has a deal - the previous terms go away and the record companies get to start the negotiations all over again.

Don't forget Beats is run by a record label boss. He is extremely well positioned to make those deals.

True, but if they have a system ready to roll and are in a good negotiation position (iTunes is effectively a monopoly) it puts a lot of pressure on the labels to sign

I don't understand your argument. Beats also supports Android and Windows, like Spotify.

My assumption is that Spotify has so many passionate customers that killing the Windows/Android apps would earn Apple enough bad karma, they could never do it. Apple could kill Beats Music, integrate it into itunes, and the small number of customers can't kick up enough stink for Apple to care.

>When you are the richest guy in town it is hard to negotiate a good deal.

Do you mean that the negotiation will go something like "come on, we know you can afford more!"? Granted, I haven't ever participated in negotiations at this level but I really doubt that being rich is a disadvantage.

Especially if you have other options and aren't in a rush. "You've got a nice portfolio of licenses, we're interested in working with you." "Fine, but we know you're worth over $120 billion so pay us $1 billion." "Thanks, we'll talk to your competitors now, or maybe just get our own licenses."

All negotiations start with what you think the other party can afford. I've never worked on a billion dollar deal, but I've worked on plenty of million dollar deals and I can assure you, perception of the other parties' ability and desire to pay does in fact play a factor.

"When you are the richest guy in town it is hard to negotiate a good deal."

When you control distribution and can offer larger revenue streams, you have a lot of negotiating power. See: Walmart.

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