This Rookie Mistake Cost The Beatles $100,000,000
The Beatles’ Manager, Brian Epstein, was a 30-yr old, former furniture salesman when Beatlemania hit America in 1964. When he was approached by savvy Nicky Byrne to license the Beatles’ name and likeness for various novelty products and toys, he firmly stated that he would not accept a penny less than 10%.
Nicky had a difficult time hiding his surprise, as the typical range for such licenses was between 30% to 50% of the product’s price. Mr. Byrne quickly signed dozens agreements with merchandisers that subsequently cost the Beatles approximately $100,000,000 in lost royalties. Mr. Epstein later re-negotiated the Beatles’ share to 45%, but by then, Beatlemania was on the wane and the financial damage had been done.
Get Out Of The Zone
As shown below, every negotiation entails a buyer and seller comfort zone. In order for a deal to be consummated, an intersection of these zones must exist. In the example below, agreement is achievable between $145 million and $185 million. In general, an agreement cannot occur outside of this range, unless new data, coupled with a persuasive argument, are introduced in order to drive the buyer or seller outside of their initial comfort zone.
Despite his frequent business blunders, the Beatles would have remained an obscure bar band if it had not been for Mr. Epstein’s career guidance and tireless promotion, which led to their recording deal with EMI. This reality was recognized by the Beatles, who appreciated Brian’s contribution to their success and excused his inadequacies. As Paul McCartney has graciously noted, “British people didn’t know that stuff at that time. I think he looked to his dad for business advice, and his dad really knew how to run a furniture store in Liverpool.”