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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."
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.
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!
...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.
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.
I wouldn't be suprised if Sony etc are trying to cripple it as if they give you an iPod version, and a DVD version in one download then we may see this be the "next gen" video player over Blu-Ray or HD-DVD- in the same way that "inferior" mp3's are the next gen over CDA or whatever that high-def stuff was called.
http://skeptobot.blogspot.com/ - A site for the Renaissance man and woman
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).
I hope the MPAA doesn't make Apple put DRM on the movies. Not long after any DVD comes out, it's already on a torrent site being downloaded away. The movie being available from iTunes isn't going to change that. And most people who dowload the movie probably would like to watch it on their TV, not computer, so they'll need to be able to easily burn a dvd. And $10 isn't that much less than a DVD anyways.
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.
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.
I don't really care about the DRM angle. I'm ok with that to an extent. What I have a problem with is that I run my current videos off a PIII 450 with 256 MB RAM and a Radeon video card with TV Out. Now I can comfortably run your average quality Divx encoded movie and play a DVD just fine without dropping frames and without the sound skipping on me. Running a worse quality Quicktime file from iTunes will completely bog the system and make playback unwatchable. If they're not going to offer an alternative format, can we at least get a Quicktime that only consumes as much processing power as its peers?
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.
Movie industry is just desperately hanging in the old "Blockbuster" business model where popular, highly advertised movies bring high revenue for a while before going into DVD and finally to oblivion of bargain bin.
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
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?
But both styles are now generally recognized as correct. Since english doesn't have the equivalent of an Academie Francaise (yes I know, no accents. Well, screw, high school French teachers of the world), thank goodness, it is possible for local variations in common usage to add to to the lexical and syntactic richness and flexibility of the language. For quite a while now, both the xs' and xs's forms have been taught in beginner and college english, and both are in widespread use.
All the techniques ever used to make men moral have been themselves thoroughly immoral... (Nietzsche)
For that same $10 you can rent about 4 Netflix DVD's a month, burn them, play them on your DVD player, move them to any of your computers easily, and they are on par with current DVD quality.
Netflix is just sneakernet file sharing.
Steve
A work that expires before its copyright never enters the public domain and thus enjoys eternal copyright protection.
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.
The problem is that quicktime uses mpeg4 avc, a much more computationaly intensive codec PLUS quicktime is a resource hog. Use VLC or mplayer (I hope they release a good windows GUI soon) to play those quicktime files, you will have much better luck. My X2 3800 went from 80-90% to like 30% during highdef trailer playback when I switched from quicktime to VLC.
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.
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.
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.
Given what you said, you really should consider emusic. $0.22 per track for mp3 (no drm) files, that's $2.64 for a 12-song album. Do yourself a favor, do the free trial, browse the collection, and see how you feel. It sounds like it might be good fit for you...Furthermore, it doesn't help that I don't own and iPod (go Creative Zen, woo!) so iTunes songs are useless to me.
A house divided against itself cannot stand.
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.
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.
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.
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.
$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.
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!
"If he manages to get the movie industry to play along, I propose we send him to negotiate with OPEC next"
Great...so then we'll only have to pay $0.49 a litre for fuel but to get that price we'll all have to drive a white iWagon?
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
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!
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.
For more information, click here.
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.
I'm all for a tiered pricing plan:
$9.99 for newly released, first rate movies. Price drops thereafter based on quality, popularity, and age.
Modern copyright is theft of culture from everyone and it retards the progress of the useful arts and sciences.
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.
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
In the long term, that model will WIN, unless businesses figure out how to make that work for them.
Consider for a moment the choice which confronts media producers at the moment. If they can't make money from selling content, they need to do something about it, or they'll simply cease to exist. So, they could either
1> Make sure freeloading is punished (unlikely, requires more draconian laws and a lot of effort)
2> Tie all content up with DRM so that it's difficult to copy (requires more effort and a system like iTMS)
3> Make extensive and intrusive advertising so intermingled with their content that you can't separate the two (already happening)
In your best of all possible worlds where free downloading has 'won' the battle and DRM and sanctions prove ineffective, which option do you think they're going to choose? Personally I'd prefer to step up and pay for content that I believe in, and not have product placement, obnoxious 'interactive ads', and interstitial ads every few minutes, call me old-fashioned. That way I don't have to tolerate the crap that passes for advertising nowadays.
Yup, that's probably true. But we're hell of a good time. *shrugs*
You don't produce any content, but you expect it to land on your doorstep for free in perpetuity? *shrugs*. Hope you enjoy your brave new world of 'entertainment' tailor-made for those who think quality content can be produced for free.
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!
Axiomatic - evidently not or it wouldn't have been questioned. Axioms are implicitly agreed, not unilateral.
Women overconsume media? - er, what? I can't be bothered to ask what this is supposed to mean.
Industry standard - this means an agreed manner of doing/making things, not an internet-fact you pulled out of thin air.
Hold well to the company line - which company?
Downloading gets me little trouble if I'm not sharing.
The inherent stupidity of your position is all contained in this one line.
There is potentially a revolution in content distribution and thus production coming, which could democratise content production (by opening distribution to all players) and weaken the domination of huge media conglomerates. As a self-proclaimed freeloader, you're making it easier for those companies to monopolise production and keep to an advertising-only model, though updated for the web (ie intrusive and pervasive). If no one pays, the content will keep coming, but will it be any sort of content you want ?
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