Sony America Latina

This case is part of a three-party negotiation (see also UVA-QA-0576 and UVA-QA-0577). The three parties are Yupi Internet, Quepasa.com, and Sony Corporation. Sony is searching for a partner in the Hispanic and Latin American portal space to carry its content in order to boost music sales. Sony is offering a variety of combinations of content and promotional support to the portals. A fascinating characteristic of this negotiation is that it is unclear whether the portals will pay Sony for access to its content or whether Sony will pay the portals for access to their audiences. The case is set up for Sony to get the two portals bidding for the contract. But the most value can be unleashed for all parties (including Sony) if the portals can get together in a merger or joint venture and do one deal with Sony. Excerpt UVA-QA-0578 Version 1.4 SONY AMéRICA LATINA It was late 1999, and Sony Music Corporation's Latin American division was reviewing its options in the ongoing negotiations with Yupi Internet and Quepasa.com. Yupi and Quepasa were both growing Spanish-language Internet portals catering to the U.S. Hispanic market, the Latin American market, and other Spanish-speaking European markets. Sony was looking for new ways to reach new audiences, and the Internet seemed to be expanding audiences throughout the world. Sony knew that the Internet would soon become vital to the music industry as music downloads were becoming popular with early adopters, so Sony was actively seeking strategic alliances in the Internet space, and Yupi Internet and Quepasa.com were both attractive potential partners. Sony's Internet Play Sony's music sales were in a mild slump—1998 had not been a good year, and 1999 was not shaping up to be much better. Sony was looking for a way to boost sales, and decided that one of its major areas of focus would be in the Latin American region. Sony made this choice because of its current market strength, the rapid expansion of Internet infrastructure in the region, and the breadth of the Spanish-speaking market. (Spanish was the primary language spoken by 350 million people in 21 different countries.) Sony Music was already a leader in those markets, producing albums for many of the top Hispanic and Latin American artists, and there was potential for higher growth in this market than in any other. The company had recently acquired Luna Music, a Mexican production company, as part of this growth strategy. . . .