There is a very uneasy and fragile relationship between online media giant Apple and the RIAA and MPAA membership. On the one hand, the RIAA and MPAA organizations are making money off the iTunes system that Apple has created and marketed so damn well. Apple basically pushed the music and movie industry onto the online arena to profit from it, when on their own they were just flopping around like fish out of water trying to stop the interweb from existing at all.
Apple is clearly the entity that knows what its doing online out of this bunch, and therefore they have exerted the most control in the relationship. But it was just a few months ago that the RIAA wanted to drastically increase the cost for a person to download a song from iTunes, and they wanted to introduce different price levels for different songs (iTunes has a flat 99 cents per song price strategy right now). After threats and growls and pounding of chests, Apple held the line and prevailed in the argument… and the RIAA continues to make money from Apple’s wisdom.
Now it seems the same sort of fight is spilling over with iTunes and the movie and television industry. NBC and Universal have already announced they were pulling their content off of iTunes so they can go it alone with drastically increased prices (yeah… let me know how that works out for you geniuses). But NBC isn’t he only ones who aren’t really thrilled with the current situation as illustrated by this story from IMDB:
As rumors continued to circulate that Apple is considering slashing the price it charges for video downloads on its iTunes Music Store, News Corp President and COO Peter Chernin has expressed his concern about the reported cuts. In an interview with Reuters while on business in Poland, Chernin said that he plans to discuss Apple’s pricing structures with the company but that at present he’s not engaged in a dispute with Apple — unlike NBC Universal executives who have notified Apple that they plan to remove all Universal movies and NBC television shows from the iTunes website by the end of the year. “Right now we have a perfectly good relationship with Apple,” he said. “But let me say this, we’re the ones who should determine what the fair price for our product is, not Apple.” (An NBC Universal spokesman later agreed with Chernin “without question.”) Chernin’s remarks appeared to raise new concerns about who really does control the pricing
Under normal circumstances I would totally agree with the studio here. After all… it’s THEIR content. Their movies and TV shows, and therefore they should be the ones setting the prices. BUT… Apple and iTunes are the #1 reason that piracy isn’t worse, and why these guy have found a new revenue stream. I’m convinced that if left to their own devices, these clueless studios would flounder yet again in the online world, then complain that no one will legitimately purchase their stuff online and that piracy is once again on the rise and scream that “The internet is bad” all over again.
Personally I think they should just kiss Apple’s feet for making this whole new industry work despite them and allow Apple to continue to call the shots. But maybe I’m missing something here. What do you think? Who should be the ones to set the prices for online downloads of movies?
LOL…
TEDWARD, you are correct… I over generalized in an attampt to make a point. But w/out “government” interference, my point is valid. Even then its consumers job to keep the “bosses” in check. Consumers dictate price. PERIOD.
“With the cost of manufacturing, marketing, shipping & packaging taken out of the equation, why do we still have to pay as much as $1.99 for each episode at iTunes?”
People have broken down the costs of online distribution vs offline distribution. Offline is still far cheaper and more profitable.
“Illegal downloads will not subside until the price comes down even more than iTunes is charging already.”
Illegal downloads will never subside. People aren’t prepared to wait months or years for a series to reach their country. Some stations are now are airing selected shows the same time the States do and prominently advertising it. It’s not going to help until all shows are simulcast and even then there are other issues.
Then there are the cases of shows not being released to DVD. Sometimes that’s because they haven’t aired it locally and sometimes there are rights issues. But the end consumer doesn’t care. We want something and if it isn’t available legally we wil resort to the only means available.
“We never asked to double the wholesale price for our TV shows. In fact, our negotiations were centered on our request for flexibility in wholesale pricing, including the ability to package shows together in ways that could make our content even more attractive for consumers”
Except they aren’t just talking about bundling the whole season together for a discount. Apple is stopping this in its tracks. Sure, it may start off innocent enough and just clutter up the search engine with multiple versions of the same episode.
But we all know it will devolve into:
Want the first episode of season 2 of Heroes? Well only if you buy it in a triple pack with other shows we’re sure you’ll love, According to Jim and Sex in the City. What’s that? The episode of Heroes happens to have a samurai in it? Well you’re not watching it unless you buy the movie The Last Samurai as well.
Having different ways to get your tv shows and movies legally is always a plus but the sticking point will always be the price – can the studios be trusted to give a fair price?
Chris,
Lossy is lossy, lossless is lossless.
I dare you to try to listen to an AAC file or a good mp3 file (even if it’s encoded at 320k) of something that requires full ‘fidelity’ like a classical piece of work. I’ve tried it (specifically, with Gorecki’s Third Symphony) and it sounds like shit.
It’s still not the same as a lossless format. As I already said, for most pop stuff, it’s fine, even for me, but don’t actually say that’s it’s as good as the lossless data on a cd or dvd-a.
The costs you’re talking about are there regardless of how the distribution is done. Media companies have been ripping us off for decades. If you don’t feel that way, I’m not going to try to convince you of this here. How much they charge for tracks & albums as downloads is proof enough.
TED,
Apple doesn’t use the MP3 codec for audio they use the AAC format. But regardless the MP3 format when encoded at 192K is as good as CD quality audio. And if it is encoded from the source material and not converted from a CD then the audio quality can actually be better.
What actually would you want to pay for a song or album? Walmart runs their download service at .89 cents I believe. But at some point the companies involved have to make their money. Apple needs to get paid, The label needs to get paid, the producers need to get paid and the artists need to get paid.
Thuorn,
Is that why gas prices are so low?
I don’t disagree with your statement completely, but I would adjust it to;
“Prices are set by consumer compliance / ignorance” more than anything else.
Prices will as “ALWAYS” be determined by consumers… ’nuff said.
Chris, you’re wrong.
Mp3’s are not as good, quality-wise, as a lossless file. Not even close. That’s like saying the quality of a VHS copy of a film is as good as a Blu-Ray High Def film.
Perhaps for most pop-rock songs, mp3’s are fine for your car stereo or iPod headphones (mp3’s are good enough for me for everything except orchestral stuff), but they’re not even close to being as good as the raw data on cd’s.
After a few million downloads, the cost of bandwith is certainly noticable, but only a fraction of the cost of getting the actual cd’s/dvd’s to stores.
At 99 cents a song, for a whole album, I’d pay anywhere from 8 to 20 bucks for it. That’s a complete rip-off.
If the studios want to ride the “Apple can do no wrong” wave then they’ll have to kiss Apple’s feet. Maybe if studios had balls they would
put up their own movies on their own sites and charge whatever the hell they wanted. May not be a successful business model – who knows?
TEDWARD,
The audio quality is the same as you would get if you bought a CD, sometimes the albums are even cheaper and have more extras than the in store versions do as well.
As for the video downloads the quality is still not up to par with DVD releases but it is getting there. As for pricing, you also have to take into account that Apple is storing this all on their servers for download so I’m sure the overhead of such a popular online download only store is rather high and that would be why the prices are where they are.
Shane,
You do lose the packaging cover art, collectible extras, content extras and hard drive space (you make a backup of all your purchases and store it on an external hard drive or disc media just in case) and no I wouldn’t want to watch 300 on a 12 inch screen but you can take it with you, media bought from Apple with DRM is playable on five authorized computers, plus if you have Apple TV that can act as a television iPod and as long as you have what you want to watch on the ATV hard drive you can bring it wherever. Also, at least in my case iTunes TV downloads have turned me on to shows I probably wouldn’t have watched ever as $1.99 is an impulse buy for me and if something looks cool, $2 is a small price to pay if I like it.
Any price over 99 cents for a TV episode is ridiculous.
Although studios should have final say as to how much their product should sell for, Apple has the right idea about charging less, than more (even though 1.99 for a show & 99 cents for a song is still too expensive).
If a buy a season box dvd with the extras at say…$45.00 (except for those damn HBO sets), that’s still 2 bucks for each of 22 episodes, at DVD quality.
That price includes the cost of manufacturing, marketing, shipping & packaging.
With the cost of manufacturing, marketing, shipping & packaging taken out of the equation, why do we still have to pay as much as $1.99 for each episode at iTunes?
And now, the studios want to have the option of charging more for season finales & ‘special’ episodes?
Illegal downloads will not subside until the price comes down even more than iTunes is charging already.
I just heard Universal is going with UnBox. Is this a joke? The other reason Apple is so succesfull is the ease-of-use of iTunes. No one else has come close yet to offering anything that even a grandmother can use. Until they do, Apple will still rule the download pooch, for better or worse.
Sure, the studios deserve to charge whatever they want, unfortunately that’s why the studios are in the crapper when it comes to sales, and will be if they continue down this road of ripping us off.
Have they not yet figured out that the reason that TV box-sets sell so well is because they’re cheap? Guess not.
I refuse to pay for a download of a show, movie or song as long as they’re charging the same price as buying the hard copy, which has better quality to begin with, wether it’s video or audio.
First of all it is their product and mode of download, they can, and will charge and do whatever the hell they want anyway.
.
But as for my opinion, any price over 2 or 3 bucks is overpriced.
You lose the packaging/cover art.
You lose collectable extras.
You lose the fancy chapter list page and special features locations
You lose a lot of digital content extras.
You lose disk space on your hard drive.
(and pray your computer won’t ever crash.)
You can’t take it over to another persons house.
Enjoy your house party watching big movies like 300 or
Transormers with 6 other people crammed around your 15″ to 19″
moniter.
.
But hey, if you guys really want to spend the money they are
going to have you pay, then knock yourselves out.
.
I’m not buying it. Literally.
I back Apple on this one. Low price = Good value, more repeat business! High price = Ticked off viewers, stop purchasing altogether.
I think $.99 for a TV show is perfectly reasonable. I watch the show on TV for free. If I want to rewatch it in my home or on my ipod I shouldn’t have to pony up a ton of money to do so. Like “THEFLYINGWORM” so wisely poined out, at $4.99 that would be $115 for 23 episodes of “The Office” and you know that the box set will only cost around $40 when it’s released after the season is over.
NBC are well within their rights to have the final word and thats fair enough it is their property.
doesn’t change the fact that it is incredibly stupid.
i tunes pretty much has the monopoly on the legal downloading market. i mean if NBC set up their own download service will it be ipod compatible? or will it only be for the 5 guys who own zunes?
i know there are many machines out but you get my point…..it just seems like a silly move and like you said john they should thanking apple for having pretty much saved the studios and record labels from themselves in all of this downloading shit….
and this is the thanks they get…..
I think NBC have looked at the apple charts and gotten greedy because it is their shows that dominate the i tunes top ten……30 rock, the office, heroes…they are always right up there taking several top ten slots each……i kind of hope their greediness bites them right on the knob…
I don’t agree that the studios should set their own pricing. If a company has figured out an ingenious marketing strategy, distribution network, etc. that sets it apart from the competition and allows it to lower the price and still profit, why shouldn’t that company be rewarded? The studios have a target profit margin; if they can sell movies to Apple for that price then they should do it and that should be the end of the studios’ control.
When I physically visit stores now I see all different prices for DVDs and CDs. Best Buy, Circuit City, and Target all have different prices for the same movie. Why should an electronic store be any different?
Ahh lame! This means I won’t be able to watch Heroes while I’m at school :(. 1.99 was fine, but I won’t be able to do $4.99 or more per episode.
NBC has a right to charge more, but that doesn’t mean it’s a good idea for them to do so. The reason why itunes works is because it’s a service that’s legal (meaning I can use it at school), and it’s actually affordable. People will be more likely to illegally download the tv shows/movies they want to watch now.
You know, first off, I agree with you. Apple has done us consumers a favor. To be honest with you, I actually am surprised that the 99-cent song charge isn’t $1.29 now. But to answer your question, the studio should control the price of the product, and companies like Apple should distribute accordingly. THAT IS NOT TO SAY I AGREE WITH NBC. But, I am saying that I absolutely 100% think Apple should set its own distribution prices. The unfortunate downside to that is that Apple has two choices, either distribute at a price that will make them enough money to profit and pay their bill to NBC; or drop NBC altogether. Obviously they went with the latter. The real question is, which choice will lose more money for Apple in the long run? I am no business major, and am more likely still the pot-head I used to be, but I think their loyalty to the customer will actuall hurt them in this case. I repeat though, I like Apple’s decision, if this is true. One more thing, if the 4.99 thing is true, that would be $115 for 23 episodes of “The Office” if you so choose to buy them.
ON THE FLIPSIDE, I saw this quote from executive vice president of communications for NBC Universal, I won’t name the website, just google the guys name.
“We never asked to double the wholesale price for our TV shows. In fact, our negotiations were centered on our request for flexibility in wholesale pricing, including the ability to package shows together in ways that could make our content even more attractive for consumers”
you sir are correct John. Movie/music studios should be able to price there own content but clearly they are incapable of doing so(successfully).
The thing that seems to anger the studios so much is that apple is aloud to make money as well off these deals. I think there used to charging 10/20 times the distribution costs with dvds and cds but apple is taking around 25%(which little of is actually profit for them). There theory is “well if apple is selling our stuff so well we can do the same thing without them plus charge more.”
The main problem I think they have is that by selling there content online it’s going to harm there other revenue streams (dvds/cds). but the thing is the type of people who buy lots of content online are the same people who will just illegally download it if the content is either to restrictive(won’t work on my portable) too expensive(cheaper to get at the store) or simply non existent.