> I flew home that night, posted my meeting notes on my website, emailed all of my clients to announce the news, and went to sleep.
> When I woke, I had furious emails and voicemails from my contact at Apple.
How was this unexpected? Who goes to a business meeting with a potential partner that can make your business soar, and then goes and blabs all over the internet about the partner's business strategy. Who does that shit?
He literally published Apple's perfected pitch and detailed strategy online the very next day:
Apple & CD Baby's partnership was ultimately very beneficial for both companies, but Derek certainly went a bit overboard publishing those meeting notes.
>>Who goes to a business meeting with a potential partner that can make your business soar, and then goes and blabs all over the internet about the partner's business strategy
One who has thousands of people(and more who can be potential independent businesses(musicians/singers) on his portal) to communicate to in a short time and the other guy(business) who never mentioned[0] secrecy[1].
[0] Yes, you out to have done that.
[1] Source: post.
I agree that he needed to communicate with the artists. The problem is the level of detail of the notes he shared. Did you read through his notes? Those notes were a perfected business plan handed to Yahoo / eMusic / Rhapsody, and a bit of a slap in the face to the major labels.
I have mixed feeling about whether it was right for Steve to be vindictive, but I am certain I would be pissed.
Everything the guy did just screams amateur. The first issue is posting information about a deal before a contract has been signed. However, I'd argue that the bigger issue is the $40 price tag that was slapped onto the iTunes upload service. The record label is already making money off of its customers through sales on iTunes; why on Earth would you cheapen the service by making it seem like anyone with $40 cash-in-hand can become part of the iTunes catalog? The fact that the author made $200,000 (!) in iTunes service sales alone says a lot.
My understanding is CD Baby was never a 'label'. They chose a service model and operated more like a fulfillment service. E.g. we will store and ship CDs to customers for a fee, we will upload your stuff to iTunes for a fee, etc. Charging $40 to upload to itunes seems very reasonable. If Apple wanted to allow anyone anywhere to upload to iTunes with no quality control, they wouldn't use partners like CDBaby.
Furthermore, it makes no sense to think Apple was pissed about the $40 since that happened after Apple got pissed.
It looks like a very fair deal for small artists to me.
> Everything the guy did just screams amateur.
I disagree. At the very least, he is very smart. If you read those notes, it is clear that he has an incredible ability to distill and communicate what was important.
"Everything the guy did just screams amateur. The first issue is posting information about a deal before a contract has been signed. "
Agree. Default state in business normally "not ok to talk about this" unless specifically mentioned or there is some reason to believe that it is ok by other factors. Sometimes of course it's explicitly pointed out. Maybe someone simply forgot in the chain of command. Doesn't a meeting with Steve scream "better not talk about this"?
In the end it doesn't matter whether Apple is right or wrong anyway. It's the golden rule. He who has the gold rules. In this case assuming you want to be in business with Apple you need to go to extreme lengths to play the game the way they want it played.
wtf? As OP stated, there was nothing in the meeting about confidentiality. If you are telling people your business plan, and talking about that plan would benefit them, but you want it to remain secret, fucking tell them.
After a series of emails with Steve Jobs --all while I was coding at four in the morning!-- my then partner and I flew to Cupertino for a meeting with VP's directly under him and about thirty engineers and managers from various areas of the organization. We brought with us nearly a million dollars of equipment to put on a good demonstration and illustrate our technology. Apple asked us to develop a product they needed. We threw a ton of money and effort at the task and got it done in three months (a redesign of an existing product). They started to promote the product, gave us a direct link on their website to ours. It was amazing.
Six months later a cheaper (20% of our price) bad quality product (among other things, there were reports of it catching fire) came into the scene. Apple dropped us like a hot potato. We lost a ton of time and money on the deal.
Am I angry? Nope. I have enough experience dealing with large companies to know you should go into these deals nearly expecting the worst corner cases. This, I think, is certainly true for small companies. Besides, I had a conversation with Steve Jobs at four in the morning. Perhaps that alone was worth the cost of admission...and I am not even close to being an Apple fan boy.
As for the OP, I don't think he was very wise in posting meeting info as he did.
Usually when people do get angry about these things
it's because they don't have what you say next, in other words they haven't been around the block:
"I have enough experience"
More directly people get mad when you feel naive that you expected something and were fooled. In other words "I'm loyal to that girl and now she cheated on me". So you are mad at yourself for trusting and feeling fooled.
Sivers of course will most likely never make that type of mistake again. He has learned from the situation. If he does do the same thing though it will be with full knowledge of the possible outcome.
And that's probably true. I can't remember the first time I felt I got shafted (personally or in business) but I am sure I was fuming angry. There's truth to the concept of growing a thick skin. You really need it for business.
As a developer, I find myself saying that more often than I would like. Glad this isn't just a developer thing that Apple does - it seems like a consistent part of their DNA.
Not to be an apologist, but it seems like Apple's actions make a lot of sense.
First of all, who posts meeting notes from meetings with top executives when given a heads up about upcoming products? NOBODY. Of course it's confidential by default.
Second, Apple was right to presume a company charging to get music in the App Store would likely provide lower quality music. Charging for access completely reverses the motivation of record companies. Until they were ready to open the floodgates, excluding companies that charged was a reasonable if rough quality filter.
Confidential by default? Says who? Just because you say so doesn't mean everyone assumes that.
It's not as though the people there didn't know that Derek represented a bunch of independents who would all be able to make their own decisions. And if they somehow did not know, then they're fools for not spending 5 minutes to understand how CD Baby worked and what it meant for Derek.
They could have said in less than three seconds "This is all confidential." And then Derek would have had a conversation with them about what he could and couldn't say. I don't think he was at all in the wrong to not assume confidentiality at the get go. People sharing information have a responsibility to set expectations on it's use. Not the people receiving it.
Says who? Anyone that's ever been involved with technology businesses for 30+ years knows you risk your relationship when you breach confidence. It's common sense.
Of course, common sense is rarely common, which is why we have NDAs.
Have to disagree. If hundreds of people are "invited" it's almost like a mini conference. In fact, the entire issue was that Apple never created a relationship with him in the first place. I totally understand why under those circumstances someone wouldn't assume what was said is confidential.
Right, but you just assumed the model for life is "confidential unless told otherwise" and I'm saying that assertion doesn't necessarily hold. Your relationship with a secret lover? Yeah, probably. Does that same assumption hold if you're drunk, telling one of your friends (who is also drunk) something at a bar? Probably not.
So what we've discovered is that context matters. The folks at Apple treated the negotiation with Derek the same as all the folks at the labels (where secrecy is probably the default and nothing needed to be said). Derek assumed that the people he was talking to understood the nature of his business (much, much different than a big music label) and would tell him if he needed to keep his trap shut. No such words were said and thus, he assumed everything was cool.
Was it potentially stupid of him to assume everything was cool? Yeah maybe. But at the same time, why is it his responsibility to think to ask if it's OK to share this information? How can he know there is any confidence to be breached?
I'm essentially arguing that this isn't such a clear-cut case as you make it out to be. Since context matters.
Anyone who believes that a potential new partner with no reason to be loyal to you, and not held back by a confidentiality agreement, won't use your offer in negotiations with competitors is a fool. There were 150+ attendees, this was never going to be confidential.
That said, CDBaby were foolish to think divulging these details wouldn't effect their potential business arrangement.
In another thread, we have links to the Debian project leader politely and directly talking to someone who is causing an issue for them, suggesting pathways for a relatively win-win resolution. He got labelled as treating the guy poorly.
Here we have Apple responding like a spoiled brat "What, how dare you do that! Take it down! Now we're going to do stuff without telling you, changing the bargain from our side, and make snide sideways remarks directed at you. We'll cut off communication and you have to guess at why we're doing this" and they get a pat on the head.
There's a great expression that is especially useful when dealing with big companies: "Never ascribe to malice that which is adequately described by incompetency." [1]
While it's tempting to think that Jobs was pulling all the strings, the reality is that Apple is a large company where legal departments take forever, internal debate occur, and communication is slow.
It sucks that Jobs made that $40 statement without someone vetting (or caring) that they were negotiating with CDBaby and that's their price. It sucks that Apple did not communicate better about the reason for the delay. But doing enterprise deals is nothing like working with an individual, and in that context I wouldn't simply assume that Apple/Jobs was being spiteful.
Look Jobs could be the way he is because he has things that people want (I don't mean Apple products so much as what someone like Jobs is able to do for someone economically).
If he didn't have those things nobody would pay attention to him or care about him other than the base level that anyone cares about anyone day to day. He knows that. Same as some pretty girls know why guys are interested in them. (Or rich guys hopefully know why girls are interested in them). It's a symbiotic relationship.
Read Jobs's biography (or talk to any of us who worked with him) and decide for yourself 1) whose personal decisions were behind the actions of Apple down to a "micromanaged" level of detail, and 2) whether that guy was better described as malicious or incompetent.
Long story short, dont trust others with your business. I have seen this dozens of times where a smaller company gets really excited because they are working with the big brute, and they get screwed because the big boy gets to make all the terms, and if/when they break the contract or act like complete assholes, you have really no recourse.
Big entities can afford to be arrogant and are well known to pay with promises instead of money. Silicon Valley is full of skulls and bones of little guys who got too excited too soon.
Business as usual until papers are fully signed and money in the bank.
The past year of my life has been spent dealing with a founder who assumes every compliment is a business deal ready to happen.
We've wasted so much time and money chasing after "paradigm shifts" and "game changers" that were literally nothing more than polite, small-talky blow offs.
There's a certain kind of narcissism at work in the minds of many founders. Perhaps it is what makes them successful on some level. Perhaps it is what motivates them to go forward. I dunno. Whatever it is, it is endlessly frustrating.
This- this and this. If every entrepreneur knew this from day 0, I'd garner we'd have a lot less mental breakdowns :)
It reminds me of a story of me when I got super excited about a contract with Zipcar, it was going great after meeting and email then silence. And 2 weeks later, got the call to end it all.
The lesson is to be humble/modest and don't get excited/lose focus when dealing with bigger cats- once the contract is signed AND money is transfered then maybe you can celebrate a bit.
This is why I think Apple will do better with Cook, Ive, Federighi, and Schiller as the frontmen. They can collaborate and judge what's best uninterrupted by the arrogant ramblings of Holy Jobs.
I suspect that Apple define success with their own metrics. There are a few measures by which Apple is already the best - which areas do you think a Cook Apple might target? From the short Post-Jobs era, I'd say that Apple was more secretive, and quicker to acknowledge fault.
He was also famous for screwing over his friends, idiots, charities, business partners, and his family.
I notice that most of your comments show a level of hostility that's often disproportionate to the topic or comment you are responding to. You seem like a very angry person. It's not very pleasant.
I'm somewhat amused that many here mention the amateurishness of Sivers' behaviour, yet there's no mention of Jobs' passive-aggressive bullshit.
"But we realize record companies do a great service. They edit! Did you know that if you and I record a song, for $40 we can pay a few of the services to get it on their site, through some intermediaries? We can be on Rhapsody and all these other guys for $40?"
Dude, what a pompous douchebag. You got a problem with what I did, tell me. Just don't screw around, sending mixed signals in a very roundabout way in the hope that I get it, because you're too scared of any confrontation in your Garden of Reality Distortion. I know Apple likes being this impenetrable Kremlin, but this is just plainly taking pages from Stalin's Guide to Management. "Did you know some CEO from a very successful tech company is a pompous douchebag?..."
The $40 was a service fee to cover the cost of having someone at CDBaby go into the warehouse, pick up a copy of the CD, put it into the CD drive, type in all the album, artist and track info and hitting "scan" and then putting it back when things are done. Doesn't sound like that big of a deal, you could do it for "free" yourself at home. But if CDBaby had to do 5000 of them there's a real cost associated. For a lot of people it's worth $40 to not have to think about anything and for it to "just work".
As I read the article, I couldn't figure out why Derek and cdbaby didn't just script a solution to submit the data appropriately from his already amassed archive (which he could then sell as another service on the side).
>Then they showed the Apple software we'd all have to use to send them each album. It required us to put the audio CD into a Mac CD-Rom drive, type in all of the album info, song titles and bio, then click [encode] for it to rip, and [upload] when done.
>I raised my hand and asked if it was required that we use their software. They said yes.
>I asked again, saying we had over 100,000 albums, already ripped as lossless WAV files, with all of the info carefully entered by the artist themselves, ready to send to their servers with their exact specifications. They said sorry - you need to use this software - there is no other way.
>Ugh. That means we have to pull each one of those CDs off of the shelf again, stick it in a Mac, then cut-and-paste every song title into that Mac software. But so be it. If that's what Apple needs, OK.
Right.. but there are always ways around scripting repetitive tasks.. even if we're talking about creating a virtual drive, building a virtual image, querying and populating metadata from your db, and still using their transport mechanism/software.. it should still be possible.
I don't think was that easy to do all this virtualization stuff back in 2003. And even if it was, why would he invest resources to do this when the artists were willing to pay him?
It's interesting to me that Apple's complaint is that anyone could get their crappy music into iTunes for $40 and that's a problem, but that free is fine.
What you should have been doing (hindsight 20-20 and all that) was quietly going around to the other hundred or so people and getting together on this. Come through with one legal team representing the newly founded consortium and then negotiate from a position of strength.
Sign the deal, get cash up front, and then begin the drudgery of complying with Apple's byzantine requirements as a group.
You and only a few other commenters have recognized the abuse of power here:
> They said sorry - you need to use this software - there is no other way.
It would have been easy for Apple to work with entities such as CD Baby to whip up an alternate method to handle the importation of large catalogs of music. Once specified I'm sure such a trivial web API could be implemented and tested quickly.
But Apple and Jobs didn't do this because they knew they had the power to insist that their software be used even though it was only suited for single CD submissions.
I find it interesting that many commenters are critical of Sivers while completely overlooking Apple's abuse of power.
dmourati not only recognized the abuse of power but recommended a method for meeting it head on.
Wow! The things to learn. I am not sure how I feel about this or what to get out of it, although I am feeling a bit dizzy/warm. Should we buy music from Apple or other "nicer" companies? Pretty messed up though what Jobs did, although posting their business plan was most likely what made "them" angry. I am with you though that if it was confidential, you should have been given notice.
I saw a documentary on a guy who has amassed the largest vinyl record collection in the world. The claim was made that 87% of all vinyl is not available on CD or other formats.
It'd be nice to see all that back catalog stuff available. I know I have a number of records that are good, but are not available digitally.
The fact that a statement like this will never be voted up says so much. Do we rational hacker types really believe in ghosts? He did great shit, and he was a dick. Is that so hard to accept?
CD Baby was HUGE in the early 2000s, especially for independent bands/musicians. This was before anything like Amazon music, iTunes store, etc. For the most part, digital music was still heavily being pirated at this point in time, at least until the music industry got a better grip of the digital music market.
Absolutely! This sort of jingoism at corporate level, the sort of moral imperative front-facing cleverly marketed idealism is the new religion, I swear. I can understand when a company puts itself "out there" with "Being the best" or "Customer first" or some bullshit like that. But when the rhetoric enters the realm of good ol' fashioned morality and talks about Good and Evil .. yoh! ... Our bs sensors should now be howling, thanks to companies like Google.
HN already does a check, if the submission is recent. For older submissions, very wisely, PG decided that they can be resubmitted - lots of interesting stuff comes out from time to time that is new to newcomers.
I'm glad it was posted. I hadn't read it before and was glad to have done so. Its not like I'm going to spend my life searching through three years of archives to find interesting stuff.
You can try to hit HN search or something, but if you didn't purposefully alter the URL to make it "unique" and the system accepted it, then you are playing by the rules that matter. Meta-disagreements from the community, notwithstanding, I appreciated your post. People like to complain. It's something you expose yourself to when you participate in a community.
> When I woke, I had furious emails and voicemails from my contact at Apple.
How was this unexpected? Who goes to a business meeting with a potential partner that can make your business soar, and then goes and blabs all over the internet about the partner's business strategy. Who does that shit?
He literally published Apple's perfected pitch and detailed strategy online the very next day:
http://apple.slashdot.org/comments.pl?sid=66729&cid=6133882
Apple & CD Baby's partnership was ultimately very beneficial for both companies, but Derek certainly went a bit overboard publishing those meeting notes.