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Hollywood Against Jobs' Movie Pricing Plan
Alex Romanelli, Variety writes "Hollywood insiders tell Variety why/how Hollywood is in stalemate with Jobs over movie downloads on iTunes. Jobs wants a flat $9.99 per film download, studios are refusing, insisting upon tiered pricing. On the other side there's a
different, longer, analytical story looking at how H'wood executives are still unsure if Jobs should be considered a friend or foe."
Why would anyone pay $10 for a movie that will be available only digitally? I can go to Walmart and get an actual DVD for $5-$15. I think Jobs and the MPAA are nuts.
http://psychicfreaks.com/This is a lie, just like the RIAA saying they want tiered pricing. I'm sure Jobs would agree if the tiers were $2, $4, $6, $8, and $10. But what the industry REALLY means is something more like $10 (just a handful of stuff), $12 (older stuff), $15 (a few years ago), and $20 (anything recent or popular).
Tiered pricing is fine when the tiers are reasonable. THAT is the problem with the industry's proposal.
He forced the RIAA to stick to $1 a song, he has enough clout that if a few small studios would agree he could force the rest of 'em to agree (or lose tons of business).
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
If i can burn it, play it on my dvd player, move it to any of my computers easily, and is on par with current dvd quality.. I'm down for $9.99.
MABASPLOOM!
Which is why it amazes me that they still question whether or not to look at Jobs as friend or foe. Jobs single handedly creates a system that sells over 1B tracks of music, at least a good percentage of which is of a questionably quality. He single-handedly forces everyone into the digital generation, where the studio contracts actually pay the artists LESS per track, while having almost zero overhead cost for the production of raw goods because there are no raw goods.
Yes... with such success... how DOES one reconcile Jobs as anything BUT the enemy?
Bunch of ass-wads, the **AA.
Excuse my speling.
Making The Bar Project
What on earth makes you think that "tiered pricing" means "cheap"? Good money says that the prices the movie industry would charge would start with 10 bucks for the bargin bin crap and scale up from there.
Also, given the industry's stance on fair use, I don't think they want you to be able to rip a DVD for your own purposes. Their prefered model is making you buy the DVD, then pay extra for the download version. Look at the crap that gets pulled with copy protection schemes.
I agree -- Apple and the MPAA/RIAA just want to grab the most money they can. There are bargain bins where you can get 2 movies for 10 bucks... so why should I pay 10 dollars a PIECE for those two movies just because I downloaded them? If I bought them, it would be cheaper, I would get a physical DVD, and I would get a cool DVD case to add to my collection (of 10...). Tiered cost system would help fix that!... but wait... wouldn't they make up for the money they "lost" there by jacking up rates elsewhere?!... probably, yes. Lets say for some movies they raised the price from $10 to $20... this caused half the potential customers to be turned away, so only half as many downloads are made of the movie... well they were sold at twice the price -- do the math, Apple makes just as much money, BUT doesn't have to pay for as much bandwidth (which can rack up if you've got big-big movie files). If Apple didn't stiff people and initiated a tiered system, it would cause people to download more movies than they usually would (i.e. "Who wants to pay 10 bucks for a Pauly Shore movie... oh, what's that? it's only $5? Count me in!").
Tiering would also be a worthwhile venture for iTunes. iTunes has a good idea in that it lets people bypass the $10 cost of a cd (okay okay, $10 is ridiculously cheap... maybe it's on sale or something) just to hear that one song they want. What's my problem with it? Well, I have good taste in music (IMOO) so I don't listen to garbage music where only one song on a cd is worth listening to. If I'm going to buy a whole album off iTunes at a dollar a song, an average of 12 songs would cost me $12 bucks... I pretty much only buy music that's not on the radio, so the cd's I usually look at are between $10-$12... so, for the same price of downloading an album I could have it in physical form (adding the ability to use it in a CD player and to look at pretty album art)... definitely not worth it for me to use iTunes to download all the music I want.
Furthermore, it doesn't help that I don't own and iPod (go Creative Zen, woo!) so iTunes songs are useless to me.
A computer once beat me at chess, but it was no match for me at kick boxing.
The problem with the flat pricing mechanism is that a $9.95 flat fee would work well for big movie studios whose products are known and in demand, but will be very bad for small film studios because many people won't pay that much for a movie that might suck "because it's not a big name movie." $4.95 for an independent movie would reduce the "risk" that people take when they buy it, and I think that Jobs knows that but doesn't care.
Another thing that is problematic is that flat rates are good only for movies that are middle of the road on cost to produce and popularity. High cost movies actually need to promote an economy of scale to make up their costs every bit as much as small ones do. What is the studio going to do if it actually realizes that the only way to push a big budget movie like King Kong that flopped at the theatres, is to cut the iTMS cost to say $7.95 for a promotional offer, but Apple won't let them?
Flat prices are great if all content is worth the same, but it isn't.
So, this is the same industry that charges me the same ticket price to see a movie whether it cost $280 million or $40 thousand to produce? Whether the top billed star was paid $20 million or scale?
First-run movies have never had tiered pricing before, why is it suddenly important to the studios?
Subscribers can see articles in the future? So what? Everyone gets to see them in the future.
Sure, but that whole method is tied to the fact that they must physically ship, warehouse, display and merchansise these physical music discs. If they don't sell new stuff, and that new stuff becomes old stuff taking up shelf space, they are potentially in a loss and need to get rid of it just to reclaim the space (ergo the Bargain Bin). There is no Bargain Bin on iTunes because there is no shelf space and therefore the whole argument goes out the window.
If Jesus wants me it knows where to find me.
The reason the companies that compose the RIAA exist is that they control the manufacturing and distribution channels for music. They control the ad space, the store space, the presses, and the people trucking the CDs to the stores. They can be the difference between selling CDs at your concert in a bar and being on MTV every day for six months. The difference between working your entire life with two jobs: artist and dishwasher. The RIAA itself only exists to protect the interests of the cartel in a larger, uniform context.
If the iTMS usurps their position, and Apple as the owner of the iTMS dictates its terms, then these companies have lost a large part of their power. Even if they make more money per unit now, they know that eventually they will simply be cut out of the equation because people don't drive to the mall to buy CDs from stores under the thumb of the recording industry. Their presses become less meaningful, and their control of the retail market becomes less meaningful, and eventually Apple can simply take their place. Then people will go to signing deals with Apple, because the iTMS means the difference between being a dishwasher and making piles of cash on music. And that's when it's all over for the RIAA. They sure don't want that, so they want to reign Apple in. They want to control the iTMS like they can control chains of CD stores and factories producing CDs.
The movie industry has a slightly easier time of it, but they too don't want to hand over the keys to the kingdom to Apple. The middle man eventually gets cut out of the equation. Plus all of this digital media means they can't ever expect to resell the same movies on a different format and expect people to pay full price for them. The ability to play MPEG formats isn't going to disappear in ten years. Or twenty years. Or thirty years. It'll exist for as long as there's still a library of media. It doesn't, unlike hardware-sensitive formats like CDs, tapes, and records, cost more to continuously support software that works.
Gee, every music track I've ever bought from eMusic works just fine on an iPod.
We need a snopes entry to send to idiots like the one that wrote this story, pointing out that the "Nobody can sell music that plays on an iPod except Apple!!!111" line is just another urban myth.
Problem with varying prices is that it might theoretically maximise revenues for the distributor, but it is a nightmare at the retail level to manage and it destroys consumer confidence.
Imagine if the price of a movie ticket varied with the length of the line in front of the ticket booth? There would be serious disincentive to getting in line in addition to the wait. Imagine going to the movie theatre and having to check not only the times but the prices? Imagine setting a date on Monday only to find out by Friday that you can't afford dinner and a movie.
Pricing flexibility based on short term demand works in some product areas, but it doesn't work when you are trying to establish a mass market. People need price stability in order to make plans for purchasing something, especially when it is as discretionary as a movie. Jobs realized this with itunes. Now tiered pricing may be possible based on some objective criteria such as new release or something, but if you have arbitrary tiers based on some industry formulation that isn't simple, then customers will be put off by it.
This isn't like gasoline for the car, where the station can piss off its customers all they want because we need to get to work. If prices vary in seemingly arbitrary ways in a discretionary mass market, then you will lose not just market share, but you will risk losing the market.
He also understands that most people do believe that "the enemy of my enemy is my friend" no matter how often it is proven wrong.
Put another way it is a good thing Steve Jobs is an american and not say in charge of China or Russia or america would be in deep shit indeed.
Look at the current story. "We", the consumer, want to pay as little as possible for our entertainment for what I presume are obvious reasons. Steve Jobs offer us movies for $9.99 the movie industry wants a tiered system where they can charge more for "better" movies. We, the consumer, ain't complete idiots and know that this probably means the movie industry sees $9.99 as the absolute minimum and everything that even got 1 star in the grocers gazette is going to be more expensive.
So Steve Jobs is the lesser of two evils, he has divided the consumer and the industry and because the movie industry doesn't like him and we don't like the movie industry Steve jobs must be our friend.
Put it simpler. For extra work I help at a convention stand with building and breaking. Sometimes they have a stand open during those times but they charge about 3 euro for a can. So instead I usually stop at the trainstation little supermarket and buy a bottle of water for 0.75 euro. A great deal. Well no, the real supermarket only charges 0.45 cent but compared to what is charged at the convention hall it is a good deal.
But you can explain that the little supermarket at the station has higher operating costs, stays open far longer and that warrants the extra price. This is true.
But now look at what Steve Jobs offer us. He actually has fewer operating costs. He never overstocks, distribution costs over the net are trivial, wages are a pittance compared to a chain of music shops and yet he charges prices that in the case of music are the same and with movies are actually HIGHER!
It is the VHS to DVD screw allover again. In europe we got different languages so different subtitles. This is was a real problem in the days of VHS when you could have only 1 subtitle. This meant that not only did you need a different product for each language region but also a subset of products wich were labelled imports and had no subtitle. For belgium (dual language) this meant a store had to stock 3 different versions of the same movie. Get it wrong and a customer coming to the store would just not buy it.
DVD changed this. Most big productions for instance are now dutch/french with dual language text on the box and you can choose the french dub, the original english and various subtitles.
Bam, in one fell swoop you elimated a whole logistics nightmare, forgetting for the moment that tapes are more expensive to produce and stock (size/weight) and how is the consumer rewarded, DVD is more expensive then VHS.
The entertainment industry is the only industry were cost savings result in higher prices. Imagine if Henry ford had done that. A T-ford would have cost more then a Spyker and the japanese would have charged a million dollars for a car while McClarens were given away with breakfast cereal.
But when it comes to entertainment/computers normal rules don't apply and Steve Jobs knows it.
$9.99 for a movie is bloody expensive when you realize most DVD's sell for less and Steve Jobs saves a fortune on not having to deal with a physical product.
But at least he charges less then the industry wants so he does us a favor right? No, not really. It is thanks to Steve Jobs that most people now accept that a non-physical product should cost the same as a physical product. Yes he has allowed us to buy a portion of the physical product but depending on the album CD price and the number ofsongs often times the portion price ($0.99 per track) is more expensive per track then if you bought the whole CD. It is like that snack store that sells you a single candybar, cheaper then the package of ten BUT more expen
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
i think it's a bit further than that. downloading illegally is primarily a male bastion, whereas music purchasing skews towards girls and women.
Cites? Sources? A single shred of empirical evidence published in an accredited, peer-reviewed journal?
Females are less likely to download and more likely to buy music and less likely to be tech savvy.
Cites? Sources? A single shred of empirical evidence published in an accredited, peer-reviewed journal?
Y'know, the only thing your statement proves is that you don't get out much, and that your personal clique of friends is highly homogenous.
I'll get flamed to death for this, but only on slashdot do I hear males admit to actually buying music.
No, you'll get pitied. Do you honestly think that your anecdotal exposure amounts to anything like an actual prediction of behavior across the entire population? Although you seem to have completely missed it, iTunes tells us that tens of millions of males - apparently no one you know - are more than willing to pay for downloads of music, if they think the price is right.
Downloaders know what the perfect price for music is. It's free. The perfect price for film is also free.
The perfect price for YOU is free. Perhaps your friends as well. But again, there are a great many of us (iTunes once again providing us with STATISTICAL evidence proving the point) who think that the value of music and movies is non-zero. We might think that the price point set by the **AA's is too high, but unlike you and your freeloader buddies we don't believe that music and film are worth nothing.
ITUNES is a stop gap measure - because there is NO COMPELLING REASON for anyone ot actually buy music.
Economics 101: a thing is worth whatever the buyer thinks it's worth. iTunes has shown us that tens of millions of people think that the value of music is non-zero and will pay for music even when they could get the exact same songs for free. The "compelling reason" here is whatever the buyer says it is, and for that you'd have to sample the buyers to find out why they're paying when they could get it for free. But I seriously doubt those tens of millions of people are all pansy-asses afraid that the Big Bad Lawman is going to find them and haul them off to jail. Most of those folks aren't spineless little college twats, after all.
Google is making free work, so it's possible.
What a crock. Somebody always pays - nothing is for free. In Google's case the people paying are advertisers. Just because YOU aren't forking over cash doesn't mean it's 'free'.
Max
My god carries a hammer. Your god died nailed to a tree. Any questions?
I can see why the Hollywood film studios want tired pricing. Some movies are just better than others, can they can command the higher price. Also, some movies are just more expensive to make than others.
Than again, if they want to use that arguement, why the hell does a ticket to a LotR or KingKong cost me the same amount of money to see in theaters as Gigli?
END COMMUNICATION
Frankly, I'd rather pay $15 new / $10 used to have a movie in full DVD-grade quality, with extras, playable on any of the billions of DVD-playing devices out there. $10 sounds like a better deal (it's cheaper than Best Buy's prices) until you realize that you can't play the movie on other devices and you can't resell it. If the quality is the same as iTunes video's "it looks like my crappy digital cable so it's Good Enough For Me" resolution, forget about it.
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Who is buying all of these movies?
:)
The rental model (netflix, blockbusters, etc) seems perfect for movies - the ending does not change the 10th time through.
Who wants to own all of these things? What kind of persona is sitting down right now putting in that Pauly Shore flix for the 14th time going, sure am glad I own this one, pass the popcorn.
I am actually surprised DVD's sell so well. Kids movies are one thing, those little rascals can sit down and watch the same thing a hundred times. But what is the drive for adults to actually own so many movies? Sure, if you did not see it in the theatre -- and it is cheaper to buy than rent, and you need to fill in all of those ugly empty storage spots in your entertainment center...I guess so.
Online movie purchases are even weirder -- for something to be DVD quality, I think would put it in the 2 or 3 GB range....I could watch 2 or 3 movies in the time it would take one of those to download on my connection. Let alone the time it would take me to burn it onto hard copy media. Sounds like a lot of work for something I can just have show up in the mail from Netflix and watch in my DVD player -- and then send back for another one that I have not seen, and do not know how it ends
(+1 Funny) only if I laugh out loud.
That's way too much for a downsized version on a tiny handheld screen. If you get an HD version, sure, but sub-TV resolution movies aren't worth that much.