Slashdot Mirror

← Back to Stories (view on slashdot.org)

Hollywood Against Jobs' Movie Pricing Plan

Posted by ryuzaki0 on

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."

27 of 423 comments (clear)

  1. Screw that. by SatanicPuppy · · Score: 5, Interesting

    I can hit Best Buy and get stuff for $7.00 now.

    Of course, it occurs to me that the MPAA is whining because they want to charge MORE than that. Oy vey. The problem with ITunes is that there's no damn tail...A dollar (or ten) is too much for 80% of the stuff that could be sold.

    --
    ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
    1. Re:Screw that. by soft_guy · · Score: 2, Interesting

      Anyone who even sets a foot into best buy is taking a dangerous chance.

      --
      Avoid Missing Ball for High Score
    2. Re:Screw that. by cyngus · · Score: 2, Interesting

      You make an assumption here that music and videos have a value universal to everyone. Any given movie at $10 will be priced just right for some, too much for others, and by yet another group be considered a bargain. Two of these three groups will buy the movie, one of them won't. The same goes for music. Britney Spears tracks aren't worth $0.05 to me (except for maybe Toxic, because the video was well...if you've seen it, you know), but clearly they're worth it to many people. In a perfect market these prices would adjust perfectly to their consensus value. Jobs' argument with music that he is trying to extend to movies is that consumers just want a simple pricing system that is fairly inexpensive. There is definitely some value in this simplicity as well. If I'm thinking about buying a song/movie I don't even have to go on-line to decide whether I will, I know the price, if I"m willing to pay it I go to my computer and pay it, if not, I just stay on the couch. That being said, I think that a very simple tiered system might be reasonable for films, because I think there is a wider variability in things like quality and length (I'm definitely willing to pay more for a long period of entertainment like LOTR than I am for a short one).

    3. Re:Screw that. by RsG · · Score: 2, Interesting
      Gotta disagree with you here, anecdotes aren't valid evidence. Anecdotally, the one women whose opinion on the matter I know has no problem with illegal downloads. She has as low an opinion on the record labels as I do.

      As far as that goes, my younger brother was introduced to kazza by his (now ex) girlfriend.

      And the two people I've met who were on the music industry's side were respectively a 40+ male and a 50+ female. My observation is that age is a major factor and gender is not. I've yet to meet someone below 30, male or female, who was anti-piracy, and the women seem just as OK with it as the men.

      All this goes to show is that anecdotes are meaningless. I can cite people I know who think one way, you can cite people you know who think the opposite, and all we'll have proved is that we don't know the same people.

      only on slashdot do I hear males admit to actually buying music

      Might that possibly be slashdot's majority male demographic? There are flamewars fought here as to whether illegal downloading is morally OK, and the vast majority of posters on both sides are male. There are very few women here, and I don't see them clustering on the anti-piracy side.
      --
      Erotic is when you use a feather. Exotic is when you use the whole chicken.
    4. Re:Screw that. by BewireNomali · · Score: 2, Interesting

      Peer networks and BitTorrent show far greater numbers downloading music for free. This obscures your notion of the price that is actually being set by the market. In actuality, it's much lower than anything you derive from ITUNES statistics and approaches zero. Do you still disagree? Your economics post and your perfect price arguments are now refuted.

      Much of your post is fuzzy, and filed with personal insults no less. Let's start here though.

      What else: oh, free. In free, I mean free to the end user. downloading music is free to the end user in as much as they are not paying the producer/distributor to acquire it. So thus it is not a crock. You "nothing is for free" argument belongs somewhere, just not here. Producers are not being compensated for their work by the consumer of the good. If I steal a loaf of bread, I got it for free. We're not taking into account the cost of the calories expended in my energy expenditure during the actual theft. I guess we could take that into acount... if you wish.

      Re: getting out much, homogenous friends, etc? I'll let it ride. Personal attacks appear often in inferior arguments.

      Paying for something that can be gotten for free: that's a sticky one. Let's toss out the moral arguments (as they are variable and difficult to universally agree upon). Downloading gets me little trouble if I'm not sharing. No uploading, and I get what I want when I want, at a price I like. ITUNES can never beat that price, that selection, that availability. In the long term, that model will WIN, unless businesses figure out how to make that work for them.

      Re: women overcomsuming media? It's axiomatic. Women overconsume all media. Google it.

      Re: women less likely to download? This isn't peer knowledge. This is the industry standard. Google it as well. It's free!

      Men of a certain age are far more likely to download. Before the internet, men of a certain age were far more likely to burn CDs. Before that, men of a certain age were far more likely to make mix tapes, or dub from the radio. Consequently, popular music focuses primarily on young women as the primary demographic to market and sell to instead of making drastic changes to the business plan. Google it if you disagree. Again, it's free.

      Re: my buddies being freeloaders. Yup, that's probably true. But we're hell of a good time. *shrugs*

      Your argument has holes, but you hold well to the company line, hence your moderation. I was actually hoping for some discourse - maybe the tossing about of ideas about the future of media delivery. Alas.

      --
      un burrito me trampeó.
    5. Re:Screw that. by neurojab · · Score: 2, Interesting

      Cites? Sources? A single shred of empirical evidence published in an accredited, peer-reviewed journal?

      Can I have some of what you're smoking? This is Slashdot, not an AMA meeting. Around here, almost nothing is ever substantiated. If you want make a strong argument by citing some sources, knock yourself out... you'll probably get mod points for it, but asking someone else for sources on their conjecture is a bit ridiculous. I, for one, read the comments in Slashdot not for accurate information, but for what the community is thinking. Sometimes it's enlightening, sometimes it's crap. Welcome to the digital, collaborative age.

  2. $9.99 sounds good... by mitchell_pgh · · Score: 3, Interesting

    ...but the real question will be... what is the quality like? If it's not better than DVD quality, I'm not sure how it's going to be accepted. 4 movies ($39.96) will buy a few months of Netflix.

    1. Re:$9.99 sounds good... by sesshomaru · · Score: 2, Interesting
      Probably the quality will be lower. I have two copies of the Lost episode "Dave." One is the iTunes version, one was gotten through... other means. The iTunes version is of notably inferior quality to the other version.

      However, iTunes has an advantage, I didn't have to wait weeks for the download.

      My guess? The film companies will only allow you to buy inferior versions of film downloads so you buy the DVD anyway. Currently, the only reason to buy downloads is if you must watch it right now, otherwise DVDs are the superior format. (Weaker DRM, better quality.)

      --
      "MIT betrayed all of its basic principles."
  3. Cue Long Tail Argument by thatguywhoiam · · Score: 4, Interesting
    I work for a DSP, and we deal with this all the time. The problem is that the idea is actually sound, IF the major labels wanted to implement it properly... and they don't.

    Tiered pricing makes sense as a way of dealing with demand and maximizing profit. New singles should cost more, especially if they are popular, for a short time. The problem is that the labels don't want to price things in the back catalog down, which is where this argument is really useful. They only want to go up from the base 99/$9.99 model that Apple has established.

    There are songs in catalog that actually have a value approaching zero. You try telling a record exec that fact, and they will spin on one heel and exit the room before you finish your sentence.

    I'd like to see a system whereby the price is directly tied to short-term popularity as measured by downloads. So your new Christina Aguilera single comes out at a base price of 99; it shortly becomes very popular and creeps up over the course of a few days to $1.99 (there should be a ceiling, obviously). If you really want that "hot new track" (gag) right now, you pay the premium (or go elsewhere; different story there). Conversely if you really want to buy old Fleetwood Mac tracks from Rumors, which has paid for itself several times over already, you should only need to pony up 19-29 per track to cover bandwidth and processing.

    If labels wanted to really invest in the long tail argument they would probably find themselves with a lot of new cash and not only that, from basically no promotion! But they are too stuck in the old sticks and bricks mindset, which is to promote a lucky few lottery-winner bands and maximize profit from those acts, at the expense of literally everything else.

    (eMusic gets it, by the way.)

    --
    If Jesus wants me it knows where to find me.
    1. Re:Cue Long Tail Argument by Lave · · Score: 3, Interesting
      They typically don't do this. In your typical HMV or Virgin all the new singles and albums are much cheaper, as people who've heard it will pick it up on a whim. Then in a few months when it's left the common conscience the price rises.

      If someone is looking for a Fleetwood Mac song - they know that by now that isn't an impulse buy - so they can get away with a higher price.

      The Record Companies want this so they can price old material much higher in price - not lower. As they know if you want it you will pay. That and there is more music in their vaults than you could ever listen too - and they need to keep you interested in their new acts.

      --
      http://skeptobot.blogspot.com/ - A site for the Renaissance man and woman
  4. Re:typo by hector_uk · · Score: 2, Interesting

    Fixed, anyway the only way i'd buy films through itunes is if dvd burning was built in like cd burning is and they were £6.99, it's always bugged me that in the UK tracks at 79p ($1.46).

  5. It's a start by Pliep · · Score: 3, Interesting

    At least Jobs is trying. I'm happy to pay $10 to own a movie as long as they're new releases and not old crap. Oh, and better than iPod-quality.

    The problem though with movie downloads is lack of instant-satisfaction. A movie download of, say 700 MB, will take a while to be finished. If Apple can fix that (play-while-downloading), I'm game.

  6. Insightful/Interesting? How? by Anonymous Coward · · Score: 1, Interesting

    I can hit Best Buy and get stuff for $7.00 now.

    You don't get it, Jobs wants $9.99 FLAT for EVERYTHING, just like iTMS. You can't get "Kiss Kiss, Bang Bang" for $7 right now, or most any recent release. Just like iTMS, you end up saving a bit for newer stuff, but pay more for older stuff, they're just cost averaging to have a simple (and marketing friendly, just like $.99 music downloads) pricing scheme.

  7. The DVD by hsmith · · Score: 2, Interesting

    Will they mail you a hard copy at $9 a film? that would be the *only* way i'd consider it, at all. $9.99 for something I have to store on my drive. ha.

  8. Bargaining Power by Patersmith · · Score: 4, Interesting


    It was my understanding that, since the Disney/Pixar deal, Jobs is the largest single shareholder in the Disney corporation. If his influence extends to the other Disney brands such as Miramax, ABC, Buena Vista, Caravan, and Touchstone, I would say he commands a lot of power.

    Regardless, we should all be keeping an eye on Jobs. It's only a matter of time before he consolidates his power base into the single largest converged media empire on the planet.

    JMHO :)

    Matt

  9. Yeah Right! by dafz1 · · Score: 2, Interesting

    First of all, when's the last time "the x industry"(x equals music or movies) was right about iTMS pricing? "We think they're going to go to tiered pricing...", WRONG! Apple has the music companies, who also happen to be the movie companies, over a barrel. It's not going to change for movies. The fact that Jobs sits on Disney's board, as well as being the single largest stock holder, helps Apple dictate terms.

    Secondly, as a previous poster noted, I can go to Target and buy a DVD for $5.50(just bought Trading Places). I'd rather have the physical media, if the movie is going to be in 320x240. Once it's in 480P, I'll buy from iTMS.

    Finally, is a new version of iTunes coming? Is there one coming that will allow you to rip DVDs? It's only a matter of time until the entire HTPC system using Front Row, to rip the DVD in the background while it's playing, is on your Mac. Next up, TV tuner and DVR?

  10. Re:$9.99 Still Too High by Firethorn · · Score: 3, Interesting

    Yeah, but you need to get up from your chair, go to a frigging Wal-Mart, stand in line and then drive back home in order to get that movie. And when you watch that movie, you get FBI warning, RIAA warning and studio-warning that copying the movie is bad.

    Don't forget that you have to hope that the local walmart/best buy has it in stock. Even if you already own it, you might have to sort through hundreds of DVD's to find the movie you want to watch, unless you have the skills and discipline of a librarian and actually sort your movies. 1 DVD/week for 10 years leads to 500 DVDs in your library.

    And when you watch that movie, you get FBI warning, RIAA warning and studio-warning that copying the movie is bad.

    Well, you might still get this. Or have it come up every time the propriatary locked down player required to play the encrypted movies is started.

    --
    I don't read AC A human right
  11. DTS, DD5.1, etc. by Agelmar · · Score: 4, Interesting

    A lot of comments have been directed towards video quality and codec, but what about the audio? At least when I buy a DVD of anything filmed recently, I know I'm going to get a DD5.1 track, and hopefully also a DTS track of even higher quality (usually a much higher bitrate). Think about this: I want to download a two hour movie. Take 120 minutes * 60s/min * 1.5Mbit/sec (DTS) * 1 MByte / 8MBits, and you have about 1.35 gigabytes just for the audio track alone. Somehow, I don't see Apple giving me that. I'm much more worried that they will expect me to watch Lord of the Rings with a 128kbit 2-channel audio track, and there's no way in hell I'm doing that.

    1. Re:DTS, DD5.1, etc. by Jherek+Carnelian · · Score: 3, Interesting

      Almost all DTS tracks are "half-rate" at 768kbps - the studios found that including full-rate DTS often consumed so much disc-space that they were prevente from including other features like commentary tracks or had to make visible sacrifices in video quality.

      In addition - AC3 (on DVD) is usually 448kbps nowadays and is often indistinguishable from an equivalent half-rate DTS track. One reason for that is that AC3 uses a shared "pool" of bitrate for all channels while DTS keeps them seperate. Thus when the encoding algorithm needs lots of bits for just a couple of channels - like front left & right - AC3 can "steal" them from the other channels like the rears which may not even have any sound at all during that period. DTS can't do that, each channel is limited to a set bitrate and so channels with "dead air" just waste their bits.

      Then there are newer, more efficient, algorithms like AAC - for movie and tv soundtracks it is reasonable to expect to get roughly equivalent 5.1 audio fidelity out of say a 300kbps AAC track as one does from a 448kbps AC3 track.

  12. On Demand by IANAAC · · Score: 2, Interesting
    Would you rather borwse movies from the sofa and click download...

    Thank's called "On Demand" with Comcast. It's included with the subscription price. Many, many movies are free. The premium ones cost $3.99. And if you have a DVR, you are able to record the movie to that.

    $9.99 is way to high for what you're getting.

  13. It's already tiered by maggard · · Score: 2, Interesting

    Actually there is a "tiering" in effect, though you may not be aware of it.

    Theater chains negotiate with studios for films. They promise n-number of screens, guaranteed showings, buy-in on promotions, and even limits on discounts (last night the cinema I was in advised that "Due to contractual obligations to the studio there are no discounts on The Davinci Code".)

    Furthermore in many cities there are more & less expensive cinemas. For example in Montreal the Paramount Theatre downtown charges a premium (it's the busiest cinema in Canada), in Boston the Sony charges more per showing. Outside Montreal the Guzzo chain is always cheaper, for Boston suburbs that would be Flagship.

    Beyond that there are first-run/second-run cinemas, where the first runs, paying a higher rate for their film lease, won't surrender it until they've wrung all of the profit they can out of it. Then the second tier, who don't do much advertising, tend not to have high-end sound-systems, vibrating seats, giant screens, stadium seating, etc., pick it up and carry it until it can't draw anyone more.

    So if you want to see the latest "blockbuster" on opening weekend you'll likely have to pay $12 with no discounts at the hyperplex, however if you're willing to settle for a no-name comedy or last season's hit then it's showing for $9.50 in the strip mall and they'll accept coupons/bought-at-discount tickets.

    That's tiering.

    --
    I don't read ACs: If a post isn't worth so much as a nom de plume to its author then I wont bother either.
  14. Re:Tiered Pricing by Jeff+DeMaagd · · Score: 2, Interesting

    I honestly don't see their problem. With iTunes, you might get "package art" but unless Apple changes things, you get VCD resolution video with a single stereo audio track and no extras, with no package costs, no shipping, warehousing, no distributor markup, as well as a video DRM that hasn't been cracked yet. I'd say that 9.99 is a pretty good price if I had a video to sell. The market is too young with too small of an installed base to try to force higher price points when you can get the full DVD with multiple audio tracks, multiple languages, commentaries, outtakes and such. They tried to sell UMDs for $15-$20 but that was rejected by the market, and those were higher resolution than what iTunes sells.

  15. Why the hell should I pay $9.99 when I can pay by Maxo-Texas · · Score: 4, Interesting

    $5.00, $5.50, and $7.50 for many fairly recent movies?

    Why would I want a DRM encumbered version when I can get a hardcopy that I can easily make a backup copy to use when I travel. The last time I traveled, I had two disks destroyed. Both fortunately being backup copies.

    I think Gates is a bit out of touch with fair pricing on movies. Pricing for movies is non-linear and has a wierd logic.

    *Roughly*
    1) If it is mega popular, it will be cheap the first few weeks only- then go up to about 17.99 to 19.99 and then drop to $14.99 on major holiday.
    2) If it is reasonably popular, it will be cheap the first few weeks, then go up to a lower price (maybe 14.99) than the mega-popular movies. After six months it will drop to $10 at least once a month and $7.50 on major holidays.
    3) If it is not that popular but a solid niche film- it's going to behave like #2.
    4) If it is not that popular and not a niche film- it's going to drop to $9.99 and go on sale for $5.00 (or "two for $10.00").
    5) Then there are some funky movies which have wierd prices for years before they suddenly collapse (Time Bandits was $25 to $34 forever. So I just didn't buy it. Finally it broke on a holiday down to $7.50 and I picked it up).

    $9.99 is unreasonably low for a few movies and unreasonably high for most movies and it completely ignores the time value of movies.

    The underlying problem with all entertainment is a growing glut and the fact that people only have about 21 hours a week to consume entertainment in. At 21 hours a week, I have about 500 *weeks* of entertainment to choose from right now plus 10 hours a week of new stuff piling in via cable (Mostly "Whose line is it Anyway" right now-- losing sleep so I can cram it in). And I havn't even bought the Superboy seasons on sale at fry's for $22 per *season* ($1 per hour) yet- which would be 3 more weeks of entertainment.

    Then you have to subtract out time you spend on concerts, hanging out with friends playing board games, online computer games and if you think about it much at all, you begin to wonder why the price on this crap is so high.

    --
    She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
  16. Similar to the Wal Mart/RIAA dispute. by Hellboy0101 · · Score: 2, Interesting

    There was an article talking about how Wal Mart wants to move the recording industry to sell them CD's cheap enough so they could retail them for no more than $9.99. Sounds like Apple is trying to do something along these lines as well, but can Apple move an industry like Wal Mart (which constitutes about 20% of all CD's sold) is trying?

    --
    Because teenage pranks are fun when you're about to die!
  17. EasyCinema by jacobw · · Score: 3, Interesting

    There was actually a theatre chain in the UK that introduced a variable-pricing model: Easy Cinema. They avoided having to make subjective choices about which tickets are worth more by a simple, objective pricing model.

    Basically, for any given screening, the first ten tickets they sold cost 40 cents. The next ten cost 95 cents. The next ten cost $1.50. (I'm completely making the numbers up off the top of my head here, just to give you an idea of the pricing mechanism.) And so on up until it topped out at whatever the maximum ticket price is.

    Of course, if they did this in person, it would be a recipe for madness at the ticket window. So all sales were online. You bought a ticket from your computer, print it out, and then when you got to the theatre, you scanned it into a bar code reader. The place was virtually unstaffed--they didn't even sell refreshments, and you are encouraged to bring your own popcorn.

    You will notice that the above is entirely in the past tense. EasyCinema opened in May 2003 and closed in May 2006, although the website survives as a DVD rental site. Apparently they just couldn't make enough to justify the rent on the building.

    You can read more in this article, written when the cinema first opened. (The article is, unnecessarily and somewhat annoyingly, spread across 6 pages, but it's worth clicking all the way through if you're interested in this subject.)

    --
    Arr! Read The Government Manual for New Pirates!
  18. $10 is fair by Ghost-in-the-shell · · Score: 5, Interesting


    I would be willing to pay $10 for my movies if I have two of the following rights! I can burn them to a DVD to play on my DVD player. Also I would want the FULL catalogue available, so I can get a copy of some MGM classic for $10 or get the latest and greatest blockbuster for $10. Either way once I download it, I own that copy.

    --
    -Ghost
  19. Why tiered pricing is GOOD!!! by swordgeek · · Score: 2, Interesting

    This is how Tiered pricing SHOULD work. It's the model they use for selling videos, and it's remarkably successful there.

    The companies have a captive audience. They get to set the prices. SOOooo, they crank the price UP on the popular movies to extract maximum profit from them. The movies that won't sell well at a high price, they move downwards. It's supply and demand, the way it should work.

    Why do I like this? Because I could get all of the really good movies for next to nothing, and all of the CRAP would pass me by as $30/download.

    Oh well. That's my fantasy and I'm sticking to it.

    --

    "People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban