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."

Comments

Screw that.

[SatanicPuppy]

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.

$9.99 sounds good...

[mitchell_pgh]

...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.

Cue Long Tail Argument

[thatguywhoiam]

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.)

Re:Cue Long Tail Argument

[Lave]

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.

It's a start

[Pliep]

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.

Bargaining Power

[Patersmith]

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

Re:$9.99 Still Too High

[Firethorn]

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.

DTS, DD5.1, etc.

[Agelmar]

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.

Re:DTS, DD5.1, etc.

[Jherek Carnelian]

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.

Why the hell should I pay $9.99 when I can pay

[Maxo-Texas]

$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.

EasyCinema

[jacobw]

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.)

$10 is fair

[Ghost-in-the-shell]

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.