XM & RIAA

The RIAA employs two main activist strategies. It leverages its control over content in negotiating with content distributors such as XM, and it employs an army of lawyers to deal with copyright issues. The RIAA also is active in government lobbying efforts.

I would respond to the RIAA as follows. The Inno technology is emerging, therefore there is no legal precedent. XM’s lawyers disagree with the interpretation of the RIAA. However, the issue is not going to be settled through bullying, but rather mutual discussion. There are other firms in the industry using this service, and several manufacturers of this type of device. They will all work together to find a solution, rather than having the RIAA dictate their interpretation to the industry. The RIAA is going to have to meet with everybody to discuss the issue.

LO 1-6. Strategy is how the company is going to achieve its objectives. A market strategy refers to all aspects of the strategy that relate to trade, either with suppliers or with customers. Non-market strategies are those not dealing with trade — PR strategies, government strategies, etc. These should be integrated, so that all components of the company’s strategies are oriented towards the same objectives.

2-1. Stakeholder management is where the firm manages the interests of all of its internal and external stakeholders. Stockholders are just one stakeholder, so their interests must be weighed accordingly — in balance with the interests of other stakeholders, in order of their relevance to the company. At XM, there are many stakeholders including the RIAA, the customers, competitors, suppliers like Pioneer and the content creators.

2-2. The life cycle stages are introduction, growth, maturity and decline. The focus initially is on creating awareness. The growth stage sees a focus on building market share. The maturity stage focuses on generating profits from the market share. The decline strategy should focus on finding an exit strategy.

2-3. Public affairs management deals with public opinion and public issues; issues management deals with any issue. That issue may be strictly internal. In this instance, there is public affairs management to be dealt with in terms of XM’s public image, gearing up for a fight with the RIAA over copyright.

3-5. Corporate stakeholders are those who have a stake in the corporation’s success — shareholders, suppliers, managers, employees. Their power lies in their importance to the corporation. The degree to which the corporation cannot succeed without them is relevant to their power. The RIAA, as a needed supplier, has more power than Pioneer, a supplier the company can live without.

3-6. Government protects stockholders through the enactment and enforcement of laws. One such law would be Sarbanes-Oxley. The FTC is a government enforcement body that may help protect stockholders. Most enforcement for stockholders, however, is done through industry bodies like the SEC.

3-7. Inside members of the Board are those who work for the corporation (CEO, etc.). Outside members work for other companies, or are retired from other companies. Insiders are a risk because they may promote strategies that are in their own interest, rather than the best interest of the corporation.

4-2. A reason for CSR is that it looks good. It benefits multiple stakeholders, instead of just one. Against CSR would be if you took the Friedman view that only the shareholders are important.

4-3. The three levels of CSR are institutional (e.g. paying taxes); organizational (taking ownership of all the firm’s outcomes) and individual (deciding how to give back) (Fast Company, 2011).

5-1 Community reflects the broader society that interacts with the business, especially in the business’ home area, where it has the most direct impact. Business cannot exist without the community — that is its customers, its suppliers and its owners. The relationship, while not always direct, is strong because business is part of the community and its outputs affect the community.

5-2. Community relations refer to the building of better relationship with the community and its key members. Community involvement programs are one way for the company to do that. They involve, for example, charity work or setting up outreach programs, or making a contribution in some other way.

5-3. Customers are people who buy from you. Consumers are all people who could buy from you. Consumerism is the concept of consumer behavior and the structure of consumer society.

6-1. The media is a disseminator of content, be it news or entertainment. Its business is capturing an audience and then selling that audience to advertisers. Some media, such as XM, operate on a subscription model rather than an advertising model, so the customers are the consumers, rather than marketers.

6-2. The role that the media plays is to provide content to an audience. XM cultivates its audience by playing music. It has no news function, but instead simply provides entertainment, its most important role (why people subscribe in the first place).

7-1. Each group of societal activists has its own objectives; they all seek to affect change in some way. Their role is often to publicize things they would like changed, and occasionally to act as agents provocateur to initiate change.

7-2. Societal interest groups are financed at the grassroots level, with donations from their members. Business interest groups are financed using business funds — proceeds from operations diverted to promoting the business’ causes. In terms of operations, societal groups range from formal to ad hoc, which business groups are often well-organized.

7-4. Business interest groups seek to promote their business interests, usually at the government level. This means affecting legislation, trade policy, environmental protections and other items of interest to business. These groups act as advocates for the interests of business.

7-5. Activists use a number of techniques. They use public protests, publicity and media campaigns, direct actions such as sabotage and they use lobbying. Activist groups organize boycotts, and can sometimes seek to make impacts internally by organizing workers. Lastly, activists sometimes identify concerns and approach businesses directly with these concerns.

Case Analysis: CASE ____XM/RIAA____ Ch ____ Name ____ Date

Issue Identification [1]

Interested Strategic Stakeholders [2]

[Fig 1-5, p. 28 Blue sheet: Name each Bus, Soc & Gov. Sentiment for (+) or Against (-) Business or neutral (=)

Incentive of Stakeholders What can they gain or lose?

[3]

Will they help us? Cost vs. Benefit Analysis

(C > B = No, B > C = Yes they will help us

Objective for issue and Information [4]

to be used to meet objective.

Fact (F), Assumption (a), (#s}

Should XM stand up to the threats of the RIAA?

Stage of Life Cycle

[Figure 2-4 p. 54 Blue sheet]

Stage One — the RIAA has just made its first veiled threats to XM. The issue is not yet public

Business:

Owners +

Managers +

Employees +

Customers +

Consumers +

Competitors (Sirius) +

Suppliers +

Society:

Sentiment +

Community and Consumerism +

Media +

Social Interest Group (Free speech advocates) +

(RIAA)

Government:

Legislative/Congress =

Regulatory Agencies =

*Legal status of RIAA’s claims is in dispute

Profit B > C

More work B > C

More work B > C

Better service B > C

Better service/more freedom B > C

They offer the same service B > C

More business from XM B > C

Generally in favor of freedom and innovation B > C

In favor of innovation B > C

In favor of innovation, but may dislike XM B > C

Free speech is good B > C

Wants control over content dissemination C>B

Unknown — buy RIAA is a strong lobby so probably C >B

1st amendment vs. targeted legislation, status not yet determined

Objective

To allow consumers to record a playlist

Facts

– This is a legal grey area

– Has similarities to recorded music, and to streaming music

– Competitors want to do the same thing

– the devices are legal

– the RIAA is known to be incapable of dealing with new business models and prefers to eliminate them rather than work with them

– the RIAA is a much more powerful lobby than XM/Sirius/Suppliers

Assumptions

– the legal status of the Inno will be decided in court, eventually

– the RIAA will want new laws even if it loses

– Consumers generally like the Inno concept

Interaction Strategies:

Alternative strategic action to meet your objective(s) [5]

[Figure 1-4 p. 23 Blue sheet

Info, Societal, Political, Legal — w / # from Blue sheet]

Alt market + Nonmkt [6 + 7]

analysis Mkt reactions

Select strategic action [8]

Is it legal and ethical?

Selected? (Yes / No / Wait)

Implementation of strategic action for ” each” strategy [9]

Provide details of what you will do to achieve your objective(s)

Id strategy by its # [Identify facts, figures, #s, outside sources}

Information

1. Gather more legal information

2. Get a clearer picture of the RIAA’s end game

3. Talk to Sirius, suppliers to see what they are doing

Societal Strategies

1. Launch PR campaign

2. Develop media relations campaign as well

Political Strategies

1. Donate to Congress campaigns to increase influence

2. Build coalitions

3. Work with FCC to determine status of the Inno device

Legal Strategies

1. Deflect lawsuit long enough to see what the product is actually going to be worth

2. Go directly to the FCC to work on this issue, bypassing the RIAA entirely if need be

Yes

Yes

Yes

Yes

Yes

Legal, yes; ethical, no

Yes

Yes

Yes

Yes

Talk to legal team, order research

Talk to RIAA more, try to ascertain their motives

Talk to Sirius CEO, and to device suppliers

Formulate plan, broadcast it to XM customers first

Formulate plan, be ready for when the issue hits the press

If money is available, target “free speech” advocates, those who traditionally oppose the RIAA

Identify key stakeholders, hold a meeting

Talk to FCC liaison

Get lawyers to stall any legal action; do a cost-benefit on the product and analyze its market potential

Talk to FCC liaison

Works Cited:

Fast Company. (2011). Is corporate social responsibility stealing money from the shareholders? Fast Company. Retrieved October 29, 2011 from http://www.fastcompany.com/1725752/is-corporate-social-responsibility-stealing-money-from-shareholders