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Wal-Mart Threatens Studios Over iTunes Sales
Y-Crate writes "It seems Wal-Mart is threatening retaliation against studios who decide to offer movies on iTunes. The Bentonville, AR retailer seems a bit miffed that someone would dare to undercut their prices. This wouldn't be the first time they've turned on a supplier for dealing with Apple." From the article: "Last year when Disney announced it would begin offering episodes of the hit shows 'Lost' and 'Desperate Housewives' on Apple's iTunes, the reaction of the world's largest retailer sent shockwaves through the entertainment industry. Wal-Mart, worried that offering the shows for viewing on iPods would cut into DVD sales at its stores, sent 'cases and cases' of DVDs back to Disney, according to a source familiar with the matter."
Another business whose primary "value added" is their distribution channel (record labels come to mind) trying to fight technological changes that make their business model obsolete. Methinks we've seen this before, and we'll see it again.
The more you regulate a company, the worse its products become.
This seems to me that Wal-mart is using its position as a major distributor to strong arm against its would be competitors. It's not quite a monopoly (read Target, K-Mart, etc...) so is there any legal avenue to take against Wal-mart for this kind of action (other than consumer action which doesn't work so well when dealing with lower prices)?
Mr. Universe: "They can't stop the signal, Mal. They can never stop the signal."
Walmart got where it is today by pressuring suppliers (often right out of business) and if anyone can break the will of the MPAA on something, it's Walmart. Considering that Walmart can't (currently) handle this kind of digital distribution model, and that they are often fueled by impulse/other buying when someone goes to purchase electronics and entertainment, it's in their best interest to stamp down a more convenient distribution system.
I think it's a good move for Walmart (but not for us) because everyone knows that Walmart is "evil" (read: more able to use power in a negative fashion than most companies, which are relative lightweights) and most people don't give a damn because that's how they afford all their stuff. I doubt there will be serious backlash, come monday everyone will still be going to fill up their big boxes at Walmart.
The article conspicuously fails to state whether Wal-Mart was correct or not.
The article assumes that Wal-Mart sent DVDs back to Disney out of spite, but what if Wal-Mart merely made an accurate assessment of the situation? Did Wal-Mart sell out of the whatever titles they returned? Were there customer complaints about lack of these titles? Or was Wal-Mart correct in its assessment that the demand would be lower?
I don't know if it's right or wrong, but from what I've read Wal-Mart requires its vendors to agree that they'll take back overstock if demand is less than expected. If Wal-Mart can send back "cases and cases" of DVDs and still keep the titles on the shelves than they're simply behaving sensibly.
If they can't keep the titles on the shelves then this seems to be a classic case of "cut off your nose to spite your face". We're talking purchase here, right? Not rental? If you're renting a DVD and they don't have the one you want you might rent a different one. If you're shopping to buy a specific DVD, I can't imagine that you'd simply buy something else if the store doesn't have the one you're looking for.
We're not talking about interchangeable products here. If you want "Lost" on DVD and Wal-Mart doesn't have it you'll go elsewhere. Personally I find deepdiscountdvd.com to be a great source, but there are countless others. What percentage of the US is really so cut off from civilization that if Wal-Mart doesn't carry "Lost" they can't get it some other way?
burn down wallmart, its evil! just ask rubbermaid. i hope it will be soon that everybody will buy movies online and skip another part in the chain of greediness.
If they run around threatening suppliers like this, they should be shut down for improper business practices, or at the least boycotted by america for being jerks..
Yes, i realize that until they are declared a monopoly that they have a right to choose who they do business with, but it doesnt make it right.
---- Booth was a patriot ----
Walmart has gotten their logistics to the point where they automatically make 2 to 3 percent more than anyone else for the same product even if Walmart and say Sears sell at cost. That means that no matter what Walmart makes more selling the same product.
Walmart can't make the same money when the distribution model isn't physical, at least not yet.
Walmart uses their selling power to get what they want from manufacturers. If your DVD doesn't get sold in Walmart, you automatically lose something like 15% of potential sales. Disney needs Walmart. Amazon doesn't.
Walmart wants attention or something else they aren't telling the general public. Neither side wants to stop selling disney stuff. Disney could easy turn around and go somewhere else and exploit all other retailers, but that would require work Disney doesn't want to do, and ost them money they don't want to spend, and Walmart doesn't want to get rid of ~20% of their media sales just because they don't like the iTunes store. Disney would come out on top of a silly thing like this if they actually wanted to fight it out in the market, but not without losing a little share price.
My bet is someone at Walmart asked to talk with the Board of directors at Disney, and the board snubbed them. So Walmart punched them in the arm with this little stunt like a petulant child and is demanding attention. The real life answer to this is to ignore it, but I'm sure they'll have a meeting now and work something out.
Personally I hope they eat each other alive but whatever, that won't happen.
"All great wisdom is contained in .signature files"
Wal-Mart, for once, has no leverage here. If customers can't get The Little Mermaid super platinum eternal edition from Wal-Mart, they'll go down the street to Target or Kmart or Amazon.
I can't imagine studios would lose money if Wal-mart didn't carry their albums, especially if they replace physical sales revenue with digital. Of course the studios would like to keep physical and digital revenue flowing, but steady revenues are better than declining revenues.
If the studios did cave to this threat they are short sighted and craven.
obviously no deficiencies vs. no obvious deficiencies
Sure you can say such expensives aren't really translated to entertainment or electronics. I mean, when you're poor and shoping for house hold items, medicine etc that brand new DVD isn't a top priority. But some people can't really afford to boycott it. Not all towns/cities have other discount stores that are cheaper or equal to Walmart, and those that do often aren't as cheap as Walmart for some items.
For example, a family doctor recommended some over the counter vitamins and supplements for my grandparents. At a pharmacy they cost around $10 a bottle. At a grocery store it's slightly less. And then at places like Target, K-Mart, it's again slightly less than the pharmacy. Now Walmart? That same $10 bottle of vitamins is now like $2.50 or $3.00 at most. Name brand. They end up saving like 2/3 the cost. That's just medicine that's not crucial for day to day living too. Imagine how much you save on every day stuff like pet food, paper towels, etc
People on fixed incomes, low income jobs, and people living pay check to pay check depend on Walmart. People think it's silly that you buy groceries at Walmart/Super Walmart but hey, when it's cheaper on bread, eggs, soda etc at Walmart than it is at a grocery store, you buy there.
Aw Frell this
This is a major problem with shopping???
Christ almighty, get out of the big box stores, and go shop around at conventional grocery stores and little vegetable shops.
Maybe it's all stuff I learned from my father, but you save MORE money by shopping at a series of "normal" stores, buying a few items you need at the places that tend to offer the best prices (and I'm not talking about cherry-picking the specials each week, but just heading to the stores that tend to offer the best boneless chicken breat prices, or the best tomatoe prices). Not to mention you get the warm fuzzy of voting with your dollar, and supporting the little guy.
There's no reason to purchase a huge cart of stuff at one particular store, and especially not at a Super Walmart or a Costco.
WhiteWolf666 an exBush supporter. All you new-school,compassionate,save the children Republicans can rot in hell
The question is whether or not the MPAA will do what it must do: Guarantee online distribution.
The MPAA is the movie's industry cartel. They are SUPPOSED to strength the industries negotitating power when it comes to disputes like this. As a group, if the MPAA stood up to Walmart, not to say, "Fuck You", but instead to say, "Wally, we can't do that", it would change the market.
Unfortunately, I truly believe that the MPAA spends all of its time pursuing piracy and the like, and couldn't be bothered to support innovative technologies.
WhiteWolf666 an exBush supporter. All you new-school,compassionate,save the children Republicans can rot in hell
WalMart is threatening to hurt a competitor by reducing the amount of business they do in specific ways. This is pretty much a clear admission of monopolistic practices, because only in a monopoly situation does this sort of behavior lead to a better financial outcome.
It seems that everyone has it in for apple. From the people on the street that say "Don't go ipod, buy something else" (ummm.. no one is making a public move relating to windows on that.. and there are FAR more windows users than podHeads).
To the music business that keeps wanting to raise prices because they feel they are not getting "enough" money.. (dispite the fact that they actually save money from the elimination of the distribution/packaging/shipping/retail costs.. but oh well, sure, they need another solid gold toilet)
To the movie business (ditto above, except its a solid gold dildo)
And now walmart is scared because someone might out-price them. Forgetting the simple fact that a sizable chunk of the people that shop in walmart are not heavy on-line purchasers (for other goods and services) so they loose a little money in one department but make it up in another. (it would be better for them to partner with apple, like they do now with the itunes credits) and clip a little off the top for those impulse purchases, than whine that we are not making enough money because the big bad apple (funny huh?) is taking our lunch money.
Give me a break wal-mart, so you lost a little ground in a particular market because of a different distribution channel. Big Whoop.
Its been that way all throughout history. (the milkman lost his job because of the grocery store, the news paper boy lost his job because of mailing lists, the indie bands lost their money because of the RIAA, etc...)
God made the Idiot for practice, and then He made the School Board -- Mark Twain Look for http://Thebar.steelbeachca
...of the Age of The Replicator.
Today, I can download a perfect image of a DVD. I can burn it to a blank DVD that will work in my DVD player, just like the storebought version.
I can also take that DVD, and, if I have the right printer, print a full color "label" right onto it, just like the storebought version.
I can also download the keepcase cover insert and print that as well, so that the keepcase from the stack of empty AOL CD keepcases in my closet will look just like the storebought version.
Tomorrow, I will be able to legally download the DVD, the DVD "Label" and the DVD case cover insert and make my own DVD with case, with the blessings of the movie studio. (They're taking the halting baby steps already, via iTunes. They'll eventually see that there's money to be made by letting the consumer do all the work of making the DVD.)
Essentially, I have a replicator that takes data and makes a product in my home at my demand. A DVD in a keepcase.
While I don't think I'll live to see a "Transmetropolitan"-esque 'maker' in every home, it IS coming. I regret that I won't be around to hear the howls of outrage from WalMart over that leap of technology.
I won't regret, however, the societal upheaval that will occur when anyone can have anything, as long as they pay the power bill and can keep the source matter bin full.
Oh, and the lawsuits over cracking the DRM for the makers will be hysterically entertaining. I'll miss following them, as well.
Seriously, though. Who neds Gap, Old Navy, Victoria's Secret, Bananna Republic or Levi as a physical place to go and buy something, when you can download the maker source code for a fee, tweak that code for yourself for size and color, and push a button to have that garment drop down the chute 30 minutes later?
Go to Apple.com, pay a fee, get the source for the new iPod, and there it is the next day, courtesy of your home maker.
What need have you for the Apple Store? And what need has Apple for factories in China?
Yeah, the world economy is going to get very sporty for a while once the maker is perfected.
And if it can make anything, why, I can have ALL THE HEROIN AND POT AND E that I want!
I can have all the prescription medicines I want!
I can have all the Coca-Cola I want!
Imagine THAT table full of lawyers. The PRC, The Taliban and Colombian govts (Opium and Cocaine), EVERY pharm hypercorps, and Coca-Cola, INC.
All trying to maintain their monopolies over atoms and molecules that have been stitched together in a particular manner and that, by tradition, belong to them and them alone.
Good luck, guys. You'll need it.
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Huh? Companies were moving production overseas decades before Wal-Mart became popular. They would keep doing that even if Wal-Mart died overnight. Blaming off-shoring of manufacturing on Wal-Mart is like blaming off-shoring of technical jobs on Fry's. It's quite possibly the silliest logic I've ever heard.
Wal-Mart started really being able to apply price pressure by the 1980s. By that time, Japanese automobiles were more popular than American, every toy I bought by then was made in China/Taiwan/Singapore, etc., and this had been true for a couple of decades. The big push towards manufacturing of products overseas began shortly after WWII in the 1950s and 1960s. Wal-Mart didn't even open its first store until 1962.
I'm not saying Wal-Mart hasn't encouraged some companies to do this, but the fact remains that they would have done so eventually anyway to make a greater profit. Expecting them to do otherwise is like believing in the tooth fairy.
As to the filing of complaints, some local governments have found they have a way to fight back-just not allowing them to build stores with zoning regs. Granted, not a perfect solution, but it's something that can be done. Say some area does it, some of the people local will still travel to the next town over. But if THAT town does the same, eventually the distance travelled means the consumers will stay put locally and use the smaller stores.
It's a terrible idea. Most of those local stores are already thoroughly screwed by availability of products on the internet. So now in ten years when they find themselves unable to survive (Ace Hardware and K-Mart in Santa Cruz, anyone?) even without Wal-Mart, those towns will find themselves without any way to buy the things they need to survive and will have to drive large distances to buy basic products.
Further, lower prices are better for everyone in the long term. All the knee-jerkers say "Oh, look at all the stores that will close" and forget that Wal-Mart brings consolidated shopping, which causes stores to be able to survive that otherwise could not. It brings down prices of groceries and gasoline dramatically. It brings down the overall cost of living dramatically.
And small stores can survive and even thrive with Wal-Mart because of the proximity effect. Stores physically close to Wal-Mart actually get more business after Wal-Mart moves in. Stores do, however, have to specialize and carry the stuff that Wal-Mart doesn't. Wal-Mart has to cater to general audiences, so it can only provide the most common basic needs in any category. A hardware store does just fine with Wal-Mart next door because it carries lots of stuff that Wal-Mart doesn't and can't---screws and fasteners, higher quality tools, possibly building materials, etc. A clothing store does just fine because teenagers want brand names. And so on.
The most important thing, though, is that the store owners have to do exactly the opposite of what they usually do. Most of them try moving away from Wal-Mart thinking that they can be closer to the population and thus people will go there instead. Doesn't work that way. People will drive 20 minutes to a Wal-Mart store. That means that the best place for any store to be is within a block or two of Wal-Mart. That's why zoning laws to block Wal-Mart don't work. The end result is that the vast majority of people drive there anyway, then bitch about how much fuel costs.
It's a shame to see the fraction of a percent of people who are so anti-Wal-Mart spoil it for the rest of us. *Sigh* I guess the loudest voice really is the only one heard... but it shouldn't be.
Check out my sci-fi/humor trilogy at PatriotsBooks.
Competition.
You got where you are by competing and undercutting everyone else, even going to extents such as forcing your suppliers to fire Americans and offshore manufacturing, forcing them in cases to decrease product quality and/or create "budget" models to meet your pricing strategy, and you've pretty much driven other big-box discount stores out of business.
Now you get miffed when not only are you getting undercut, but you're being undercut by an honest player who isn't bullying the suppliers to the extent that you do?
Competition. You got where you are through competition, and now that Apple is beating you at the movie game and Target is rabidly nipping at your heels by offering similar pricing and better quality, you're crying wolf? WTF?
Competition. Sucks for you, but it's good for us.
The Christian Right is Neither (Christian nor right). See: Matthew 23, Matthew 25, Ezekiel 16:48-50
Every economic indicator shows that globalism and offshoring has hurt the economy. The proof is in the stats, and we have many years to look at now. And they even have to keep fudging them to make it look better than what it really is, I mean really, having to call burger flipping *manufacturing*? c'mon! that's a clue. We are now the largest debtor nation when before the largest creditor nation. that's a clue. The dollar keeps dropping in international value. that's a clue. We have a huge rate of bankruptcy and people staring at losing their pensions.that's a clue. Largest trade deficit ever and growing, sets new records about every quarter. That's a clue. The numbers of people with better paying jobs with benefits keeps dropping, not rising. That's a clue. Savings rates are the worst for more than a full generation. That's a clue. Ya, it started back then, and a lot of us "back then" warned that this is exactly what would happen, and it has. And that's because some of us really *had a clue*. "Back then" I warned folks-anyone who would listen-that the combination of crap built and being too greedy would bork the auto industry (I was in the UAW then). I got laughed at, ridiculed, got told in person and by proxie in print from all the "economic experts" that "it will never happen, no one will buy them cheap little cars". They were wrong, I was right. Yes, it started back then, listening to the coke addled and drunk economic experts and following the captains of industry advice as a nation. Rubbish, and it was *clear* to see, abundantly clear to anyone who can think more than two steps ahead or some years ahead and run some common sense extrapolation scenarios.. Both management and labor needed several good bashes with the clue stick back then, but they kept dodging, about the only thing they are good at.
You make money by manufacturing wealth, and having it be good quality and fair priced, not over priced ridiculous stupid crap or the cheapest possibly falling apart crap. Wealth is grown, mined, manufactured or a combination of that, everything else is wealth re arrangement or wealth service.
We have swapped making wealth to trying to just manage it and service it. Nuts! Insanity! It will not work for the long run. It can for the short run,then you'll see it starting to crumble in the medium run (now, today) and it will eventually collapse in the long run. They can run their printing presses all they want, it won't matter. It's been tried before, it doesn't matter.
We have forgotten the middle ground, the middle ground which at one time had the strongest middle class with real wealth ownership in the world, now we have the largest class of debtors ever. Only took one generation to pull that off. BUT, we sure do have a lot more billionaires now! Damn funny how that worked out....
Yep, you can show a ton of paper profit by being a tradesman and selling off your tools friday night,and getting a loan on your work truck and handing over the keys and parking it at the lot, but come monday morning you are going to be hurting. Sure, you'll seem "rich" over the weekend,you can go out and buy all sortsa stuff with that flush cash, but it won't last.
That's all we have been doing for a long time now and they are running out of options, and I don't care how much the goons at the Fed try to tweak things, eventually we won't have a dang thing that other folks want and then they'll even stop buying up your grandkids debt. Aren't you just a teeny bit ashamed that little babies not even born yet will be born into debt? Just a little?
And walmartization is a big part of it. When they first started, and I remember it clearly as well, it was buy american there, keep you and your neighbor working, and it was fine. then..well, he passed on and now it is FU america, we are gonna milk this baby out and retire multibillionaires and go pound sand. sure, they got cheap crap now, and people with some money to buy it, but it won't last. It just can't
-1, reading comprehension problem.
No one was blaming the off-shoring of manufacturing on Wal-Mart. Wal-Mart is blamed for grossly accelerating it. There's a major difference there.
-1, worst example EVER
Wait, people are going to pay shipping and wait x days to purchase a drill & batteries online (which they may need today) instead of going to Ace Hardware/Home Depot/Lowe's? Exactly what planet is this version of Santa Cruz located on?
-1, tunnel vision
It also brings down the wages, too. And cheaper gasoline & groceries mean nothing when you're out of a job because your store closed down. Also, Mom & Pop music stores had employees who knew their product; ever asked a Wal Mart employee where the industrial rock/pop/hip hop/country/etc. section is, or who's the new up&coming artist in that genre? Try it sometime.
Also, consolidated shopping is even more fun for superior products that Wal Mart decides they don't want to carry. So instead of you getting your favorite brand that you want, now you're railroaded into buying whatever Wal Mart dictates is okay to sell, because no one else is around to compete and sell other brands. So much for consumer choice there.
Also, so much for employee choice. The old adage, "if you don't like the working conditions here, QUIT!!! and find another job" doesn't work as well in a city with a Wal Mart store. By the time they're done, there's not many other places to work, except Burger King.
Oh, and Wal Mart stores are also known to close down from time to time; leaving an entire town without a department store at all. You want to talk about driving times?
And another thing: Wal Mart is also known for refusing to sell some artists' music because it's "objectionable". Where do you go to get those artists, then? Cue this article. Now, Wal Mart wants to cut out your online alternatives to preserve their outdated business model. And the consumer gets hurt if Wally World gets their way.
-1, Theory conflicts with reality
Yes, but few stores can survive just on selling the things that Wal Mart doesn't. Wal Mart's strategy is to sell the lowest common denominator products at the lowest common denominator prices, to maximize foot traffic (and sales). There simply isn't enough profit to sell other products to uphold a store.
Yeah, yeah, I know what you're thinking... if there isn't enough profit to uphold a store selling product B, C and D, then product B, C and D don't deserve to exist. That's the worst lo
--- Grow a pair, liberals... stop letting the Republicans bully you!