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Hollywood Against Jobs' Movie Pricing Plan 423

Posted by Hemos
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."
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Hollywood Against Jobs' Movie Pricing Plan

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  • Screw that. (Score:5, Interesting)

    by SatanicPuppy (611928) * <Satanicpuppy AT gmail DOT com> on Monday June 19, 2006 @10:05AM (#15561234) Journal
    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.
    • Re:Screw that. (Score:5, Insightful)

      by IAmTheDave (746256) <{moc.oohay} {ta} {ds-evademanesab}> on Monday June 19, 2006 @10:14AM (#15561285) Homepage Journal
      A dollar (or ten) is too much for 80% of the stuff that could be sold.

      Which is why it amazes me that they still question whether or not to look at Jobs as friend or foe. Jobs single handedly creates a system that sells over 1B tracks of music, at least a good percentage of which is of a questionably quality. He single-handedly forces everyone into the digital generation, where the studio contracts actually pay the artists LESS per track, while having almost zero overhead cost for the production of raw goods because there are no raw goods.

      Yes... with such success... how DOES one reconcile Jobs as anything BUT the enemy?

      Bunch of ass-wads, the **AA.

      • Re:Screw that. (Score:3, Insightful)

        by grasshoppa (657393)
        He single-handedly forces everyone into the digital generation,

        Uh, no. There were a variety of motivators, not the least of which was napster.

        It can be argued that his company single handedly made the industry legitimate, but we were well on our way to forcing everyone into the "digital generation", as you call it.
        • Re:Screw that. (Score:3, Insightful)

          by Have Blue (616)
          He found a compromise between customer-unfriendly label domination and artist-unfriendly massive disregard for copyright and compensation, personally went to the table to convince the RIAA to give his scheme a try, and maneuvered to cement his compromise as the standard by which competitors, both existing and future, are judged, to the benefit of pretty much everyone. "Singlehandedly" may be an exaggeration, but the field of online distribution would not be where it is today without Steve.
      • Re:Screw that. (Score:5, Informative)

        by Ryan Amos (16972) on Monday June 19, 2006 @10:27AM (#15561363)
        Jobs is the enemy because he is removing distribution control from the record labels. They seem to care about this as much as they do about profit. Now he wants to do it to the movie industry. They don't understand that one of the reasons iTMS is so popular is that the pricing scheme is so simple. No needing to worry about what price the thing you want to buy is, just $1 a song. They don't realize that whatever hamstrung service they try to use to sell low quality downloads for the same price as the DVD won't catch on.

        Or, I'll put it this way for the MPAA, so they might understand: The alternative for most people is NetFlix and a DVD burner.
        • Re:Screw that. (Score:2, Insightful)

          by BewireNomali (618969)
          i think it's a bit further than that. downloading illegally is primarily a male bastion, whereas music purchasing skews towards girls and women. Females are less likely to download and more likely to buy music and less likely to be tech savvy. Women in general are also paranoid of breaking the law. I have female friends who are horrified at the notion that I might have ever downloaded something, under the notion that it's horribly illegal and wrong. So ITUNES fits a perfect sweet spot for the average consum
          • Re:Screw that. (Score:4, Insightful)

            by maxpublic (450413) on Monday June 19, 2006 @11:42AM (#15561860) Homepage
            i think it's a bit further than that. downloading illegally is primarily a male bastion, whereas music purchasing skews towards girls and women.

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

            Females are less likely to download and more likely to buy music and less likely to be tech savvy.

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

            Y'know, the only thing your statement proves is that you don't get out much, and that your personal clique of friends is highly homogenous.

            I'll get flamed to death for this, but only on slashdot do I hear males admit to actually buying music.

            No, you'll get pitied. Do you honestly think that your anecdotal exposure amounts to anything like an actual prediction of behavior across the entire population? Although you seem to have completely missed it, iTunes tells us that tens of millions of males - apparently no one you know - are more than willing to pay for downloads of music, if they think the price is right.

            Downloaders know what the perfect price for music is. It's free. The perfect price for film is also free.

            The perfect price for YOU is free. Perhaps your friends as well. But again, there are a great many of us (iTunes once again providing us with STATISTICAL evidence proving the point) who think that the value of music and movies is non-zero. We might think that the price point set by the **AA's is too high, but unlike you and your freeloader buddies we don't believe that music and film are worth nothing.

            ITUNES is a stop gap measure - because there is NO COMPELLING REASON for anyone ot actually buy music.

            Economics 101: a thing is worth whatever the buyer thinks it's worth. iTunes has shown us that tens of millions of people think that the value of music is non-zero and will pay for music even when they could get the exact same songs for free. The "compelling reason" here is whatever the buyer says it is, and for that you'd have to sample the buyers to find out why they're paying when they could get it for free. But I seriously doubt those tens of millions of people are all pansy-asses afraid that the Big Bad Lawman is going to find them and haul them off to jail. Most of those folks aren't spineless little college twats, after all.

            Google is making free work, so it's possible.

            What a crock. Somebody always pays - nothing is for free. In Google's case the people paying are advertisers. Just because YOU aren't forking over cash doesn't mean it's 'free'.

            Max
            • Re:Screw that. (Score:3, Interesting)

              by BewireNomali (618969)
              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. downlo
              • 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 sy
            • Re:Screw that. (Score:3, Interesting)

              by neurojab (15737)
              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 f
          • Re:Screw that. (Score:3, Interesting)

            by RsG (809189)
            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 some
        • Re:Screw that. (Score:5, Insightful)

          by Anonymous Coward on Monday June 19, 2006 @11:07AM (#15561597)
          The reason the companies that compose the RIAA exist is that they control the manufacturing and distribution channels for music. They control the ad space, the store space, the presses, and the people trucking the CDs to the stores. They can be the difference between selling CDs at your concert in a bar and being on MTV every day for six months. The difference between working your entire life with two jobs: artist and dishwasher. The RIAA itself only exists to protect the interests of the cartel in a larger, uniform context.

          If the iTMS usurps their position, and Apple as the owner of the iTMS dictates its terms, then these companies have lost a large part of their power. Even if they make more money per unit now, they know that eventually they will simply be cut out of the equation because people don't drive to the mall to buy CDs from stores under the thumb of the recording industry. Their presses become less meaningful, and their control of the retail market becomes less meaningful, and eventually Apple can simply take their place. Then people will go to signing deals with Apple, because the iTMS means the difference between being a dishwasher and making piles of cash on music. And that's when it's all over for the RIAA. They sure don't want that, so they want to reign Apple in. They want to control the iTMS like they can control chains of CD stores and factories producing CDs.

          The movie industry has a slightly easier time of it, but they too don't want to hand over the keys to the kingdom to Apple. The middle man eventually gets cut out of the equation. Plus all of this digital media means they can't ever expect to resell the same movies on a different format and expect people to pay full price for them. The ability to play MPEG formats isn't going to disappear in ten years. Or twenty years. Or thirty years. It'll exist for as long as there's still a library of media. It doesn't, unlike hardware-sensitive formats like CDs, tapes, and records, cost more to continuously support software that works.
      • Re:Screw that. (Score:3, Informative)

        by MooUK (905450)
        The artists getting paid less is however not his fault at all. He didn't write, suggest, or sign the artists' contracts.
      • Re:Screw that. (Score:3, Insightful)

        by ronanbear (924575)
        Yes... with such success... how DOES one reconcile Jobs as anything BUT the enemy? Simple. Avarice. Jobs is putting market size (and share) ahead of gross margin. He could charge more for something and still have it sell almost as well. This would really improve income in segments of the market in the short term. DVD pricing varies incredibly in some retail environments. The distributors understand the market very well and price accordingly. They set huge prices (30 euro is not unusual) for a while on ne
      • by SmallFurryCreature (593017) on Monday June 19, 2006 @11:23AM (#15561717) Journal
        Steve Jobs seems to have really understood the meaning of "the lesser of two evils" and "divide and conquer".

        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

        • by SkyDude (919251) on Monday June 19, 2006 @12:29PM (#15562220)
          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.


          This is not a new business model by any stretch. The banking industry embraced the ATM for two reasons: ATMs brought in more cash than they dispensed, and one ATM serves hundreds of transactions each day. The human teller, who wants vacations, sick time, etc, might serve 50 people all day. Yet, fees continue to go up at most US banks. And, even the convenience of a withdrawal from an ATM costs you.

          It's just another industry picking up the same concept.
    • Re:Screw that. (Score:5, Insightful)

      by MrSquirrel (976630) on Monday June 19, 2006 @10:19AM (#15561321)
      I agree -- Apple and the MPAA/RIAA just want to grab the most money they can. There are bargain bins where you can get 2 movies for 10 bucks... so why should I pay 10 dollars a PIECE for those two movies just because I downloaded them? If I bought them, it would be cheaper, I would get a physical DVD, and I would get a cool DVD case to add to my collection (of 10...). Tiered cost system would help fix that!... but wait... wouldn't they make up for the money they "lost" there by jacking up rates elsewhere?!... probably, yes. Lets say for some movies they raised the price from $10 to $20... this caused half the potential customers to be turned away, so only half as many downloads are made of the movie... well they were sold at twice the price -- do the math, Apple makes just as much money, BUT doesn't have to pay for as much bandwidth (which can rack up if you've got big-big movie files). If Apple didn't stiff people and initiated a tiered system, it would cause people to download more movies than they usually would (i.e. "Who wants to pay 10 bucks for a Pauly Shore movie... oh, what's that? it's only $5? Count me in!").
      Tiering would also be a worthwhile venture for iTunes. iTunes has a good idea in that it lets people bypass the $10 cost of a cd (okay okay, $10 is ridiculously cheap... maybe it's on sale or something) just to hear that one song they want. What's my problem with it? Well, I have good taste in music (IMOO) so I don't listen to garbage music where only one song on a cd is worth listening to. 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.
      Furthermore, it doesn't help that I don't own and iPod (go Creative Zen, woo!) so iTunes songs are useless to me.
      • emusic (Score:3, Informative)

        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.
        Furthermore, it doesn't help that I don't own and

      • Re:Screw that. (Score:3, Interesting)

        by cyngus (753668)
        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
    • 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.

      Retail CDs stores are at the mercy of the RIAA. They charge what they are told or they die. The RIAA has been convicted numerous times of price fixing. Thus when Apple started the ITMS they included a flat rate in the contracts. This eliminated the possibility of price fixing and

    • 7 bucks? Where do you see the DVD movies for that much? I see like 15-20 bucks.
    • What it all comes down to is, "if the customer is willing to pay more for it, we want to charge them more for it".

      From a strictly business perspective, this makes good sense for maximizing proffit. You find the "price point" where (sales volume x price) is the maximum value. You cannot do this with a flat rate price. Of course this assumes you have correctly calculated your price point, and have factored in all the market effects at work.

      The flat rate is (correctly) perceived by the consumer as a value ov
    • Re:Screw that. (Score:3, Interesting)

      by soft_guy (534437)
      Anyone who even sets a foot into best [worldnetdaily.com] buy [loebrich.org] is taking a dangerous chance.
  • by gasmonso (929871) on Monday June 19, 2006 @10:06AM (#15561237) Homepage

    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/ [psychicfreaks.com]
    • by 10Ghz (453478)
      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.

      And I haven't seen new movies available for under 9.99. Older movies yes, but not new.
      • by Firethorn (177587) on Monday June 19, 2006 @10:22AM (#15561341) Homepage Journal
        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.
      • 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.

        A lot of us still rely on food for sustinance (which requires leaving the house). We drive by WalMart / Best Buy / etc. I can wait a day to get my movie. I can wait a day to save a few bucks and get something of value.
      • Or imagine you are me. You live in Plainville, KS (town of 2100 people). I want to buy a new DVD...okay. I have to drive 23 miles south to the closest Walmart or Hastings. So, my ride gets about 24mpg on the highway. So two gallons of gas + cost of movie = $5-15 + nearly $6. Looks like $9.99 just got more attractive...
        • Do you work in town? Do you buy groceries there? If so, you're going to be there for something anyways. I'm in the same boat (I live in Huger, SC, which has a single mom-n-pop gas station. anything else is 20 miles away). I do work in a nearby town though, so it's much more likely that I'll just buy a DVD on the way home.

          For me, the simple convenience of buying online is not enough. A file-only copy of a movie (ESPECIALLY one crippled by DRM) is to me an inferior product to purchased media containing t
    • by fistfullast33l (819270) on Monday June 19, 2006 @10:17AM (#15561303) Homepage Journal

      If they let me rip the thing to DVD, then we can talk. Even better would be able to move the file from one machine to another for playing. Of course, iTunes doesn't let you do that easily, but it is possible. I think if they do it right, then I'd consider the $9.99 price because that's what I buy most of my DVD's at now. The only difference is that it's a hard copy that I can kind of illegally without conscience rip when I want to. However, I bet the best they'll let you rip to is HD-DVD or BluRay because the copy protection can be enforced better.

      The best online distribution so far is Steam (ducks). I was really impressed when I could install it both on my desktop and my laptop with the same username/password and it just updated both properly. I can install as many copies of HL2 as I want, but I can only play one at once. That's totally fine by me. As long as they know what I own and make it available to me whenever I want, I'm willing to put up with their system. AFAIK, iTunes doesn't give you your music back if you buy the songs and lose the original copy.

      • AFAIK, iTunes doesn't give you your music back if you buy the songs and lose the original copy.

        You are incorrect in this. I have a coworker that wound up having his hard drive go belly-up and trashed his collection of music. After getting that recovered and fixed, he went back to iTunes and (through some process that wasn't explained) managed to regain copies of his music.

      • The best online distribution so far is Steam (ducks).

        No, the best online distribution so far is BitTorrent. Steam is merely the best legal one (notwithstanding the fact that BitTorrent can be used legally). But that's not saying much, seeing as how Steam sucks hairy goat balls anyway!

    • I live in boston, we dont have walmarts here. Heck, I've never even seen one before. Can you really get new release DVDs for $5? I think there is the added advantage of the following which would make it better than a DVD:
      1. you get it instantly
      2. you can actually put it on your ipod
      3. you can put several on your ipod

      while 2 and 3 are sort of nice to have, 1 is a killer app. Imagine being able to download instantly from a huge selection of movies which you can browse by reading descriptions and watching tra
      • I think you need to define instantly. I am pretty sure I can drive to the local store, buy the DVD, get home, and start watching it before a DVD download from iTunes completes. Unless of coarse the quality of said iTunes download is so low that the download isn't a terribly large DVD sized download. In which case I would still rather pay the $15 for full quality hard copy disc, instead of $10 (why do companies insist on this $9.99 crap, marketing gimickry), and have half or less of the quality of a DVD,
        • what if it is 10pm on a Friday and you have chick over. Would you rather borwse movies from the sofa and click download, wait a few minutes then click play or get in a car, find an open store, find your movie, pay for it , drive home, open packaging , insert DVD then finally click play movie?

          • On Demand (Score:3, Interesting)

            by IANAAC (692242)
            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.

    • You can't go to Walmart and get new releases for that price.

      I'm seeing the start of a new movie selling scheme -start selling the (lower quality) online version, but not the DVD, the day the movie is released to theatres. That adds another level of purchase to those who have to see it in the theatre, buy the DVD as soon as it comes out, buy the Director's Version, then the "Special Edition" followed by the specially packaged "Ultimate Edition". Then cry about having to buy it in HD...

      Personally, its too hig
  • Tiered Pricing (Score:5, Insightful)

    by MBCook (132727) <foobarsoft@foobarsoft.com> on Monday June 19, 2006 @10:07AM (#15561241) Homepage
    insisting upon tiered pricing

    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).

    • So you're saying that Uwe Boll's movies would actually earn a profit now?
      • Uhgg! Just got around to renting Bloodrayne.

        Were those "Special" effects trying to be funny (they weren't), or was he going for the "Let's impress the 8 year olds" look? Not that any sane person would let an 8 year old watch this (or anyone for that matter).

        And, is there something about a vampire's fangs that prevents them from drinking out of a cup without dribbling/spilling large quantities of their "drink"? Seems to be a common theme in every vampire movie I've seen in the last few years.
    • Re:Tiered Pricing (Score:2, Insightful)

      by J-1000 (869558)
      Both parties are correct in making their case. The industry relies on Jobs because he is a major distributor of their goods. Jobs relies on the industry for a good selection of music in his store. If the industry wants to charge more for their material that's actually okay (free market, remember?). But apparently they need Jobs more than he needs them, if the argument over music pricing is any indication.

      It's not about greed versus good. Jobs wants your money every bit as much as the other guys do. From a t
    • Re:Tiered Pricing (Score:3, Interesting)

      by Jeff DeMaagd (2015)
      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
  • $9.99 Works for me (Score:4, Insightful)

    by neoform (551705) <djneoform@gmail.com> on Monday June 19, 2006 @10:08AM (#15561246) Homepage
    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.
    • 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
    • by Rob T Firefly (844560) on Monday June 19, 2006 @10:34AM (#15561397) Homepage Journal
      If it's something I can burn to disc and watch forever after buying once, I'd be into it as well for $9.99. If nothing else, it's worth it to get rid of the hassle of renaming "X.-Men_-_3_-_.ws.cam.dvdrip.xvid.mp3.divx.vcd.tmd .rsvp.cod.0u812.turk182.subs.dubs.tubs.releazed.by .fr0d0.da.man.[downloaded.form.somefreakingtorrent site.net].(1.of.1).pls.seed.omg.kthx.avi" to "X-Men 3.avi".
    • You are a customer, so nobody realy cares what you desire.
    • I'm guessing it would be similar to the television shows. You can burn it as a data file to CD or DVD for backup or transfer. But not as a normal video DVD that can be played in a stand-alone player.
  • $9.99 sounds good... (Score:4, Interesting)

    by mitchell_pgh (536538) on Monday June 19, 2006 @10:10AM (#15561255)
    ...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.
    • 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, otherwi

  • by thatguywhoiam (524290) on Monday June 19, 2006 @10:10AM (#15561258)
    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.)

    • But doesn't the higher pricing for short-term demand imply that a digital delivery system is somehow tied to the economics of supply and demand, when it isn't? Supply is unlimited, everyone can have a copy downloaded to their machine in the entire world if they so chose as iTunes would just keep copying it over and over. If a similar system were implemented at say, Wal-Mart when they started selling out of a certain CD, they jack the price up to $20 a CD instead of $13.99, wouldn't the FTC cry foul and co
      • But doesn't the higher pricing for short-term demand imply that a digital delivery system is somehow tied to the economics of supply and demand, when it isn't? Supply is unlimited, everyone can have a copy downloaded to their machine in the entire world if they so chose as iTunes would just keep copying it over and over. If a similar system were implemented at say, Wal-Mart when they started selling out of a certain CD, they jack the price up to $20 a CD instead of $13.99, wouldn't the FTC cry foul and cons
    • by Lave (958216) on Monday June 19, 2006 @10:22AM (#15561339)
      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.

      • by thatguywhoiam (524290) on Monday June 19, 2006 @10:36AM (#15561411)
        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.

        Sure, but that whole method is tied to the fact that they must physically ship, warehouse, display and merchansise these physical music discs. If they don't sell new stuff, and that new stuff becomes old stuff taking up shelf space, they are potentially in a loss and need to get rid of it just to reclaim the space (ergo the Bargain Bin). There is no Bargain Bin on iTunes because there is no shelf space and therefore the whole argument goes out the window.

        • Whilst I agree with you - they don't. They see world of people rushing from the latest thing to the next latest thing - with niche fans really getting into old stuff. Hence they want to charge those people who want old things (and so must really want them) through the nose. As a Pixies fan they know I would pay through the nose to complete my collection. And they screw me because of it.
    • "course of a few days to $1.99 (there should be a ceiling, obviously)"
      Why? There will be a ceiling by nature. When it gets to a certain point people will not buy it. The problem is that in the digital age many of the classic economic models just totally fail. Think about good old supply and demand. In the digital music world there is almost an infinite supply! Okay so you could claim that there is a limited number of new artists. Then you run into the a new problem, that old back catalog. There is a lot o
    • by bigpat (158134) on Monday June 19, 2006 @11:17AM (#15561672)
      Problem with varying prices is that it might theoretically maximise revenues for the distributor, but it is a nightmare at the retail level to manage and it destroys consumer confidence.

      Imagine if the price of a movie ticket varied with the length of the line in front of the ticket booth? There would be serious disincentive to getting in line in addition to the wait. Imagine going to the movie theatre and having to check not only the times but the prices? Imagine setting a date on Monday only to find out by Friday that you can't afford dinner and a movie.

      Pricing flexibility based on short term demand works in some product areas, but it doesn't work when you are trying to establish a mass market. People need price stability in order to make plans for purchasing something, especially when it is as discretionary as a movie. Jobs realized this with itunes. Now tiered pricing may be possible based on some objective criteria such as new release or something, but if you have arbitrary tiers based on some industry formulation that isn't simple, then customers will be put off by it.

      This isn't like gasoline for the car, where the station can piss off its customers all they want because we need to get to work. If prices vary in seemingly arbitrary ways in a discretionary mass market, then you will lose not just market share, but you will risk losing the market.

  • by Lave (958216) on Monday June 19, 2006 @10:10AM (#15561259)
    Well let's see what we can do it with. I don't care how little it is - or how much Apple think their computers are a media hub - If I can't burn a full DVD quality disk for use in my DVD player stuck under my TV I won't be paying $10 (inevitably £10 in the UK). Especially considering how long it will take to download (and thus hog my use of the web).

    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.

    • Well let's see what we can do it with. I don't care how little it is - or how much Apple think their computers are a media hub - If I can't burn a full DVD quality disk for use in my DVD player stuck under my TV I won't be paying $10 (inevitably £10 in the UK). Especially considering how long it will take to download (and thus hog my use of the web).

      Out of curiosity, what if you can burn the actual episode you bought to DVD just fine, but it has no extras and is only 320x240 (albeit with an admitte

  • DRM? (Score:3, Insightful)

    by jdhutchins (559010) on Monday June 19, 2006 @10:13AM (#15561284)
    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.
  • It's a start (Score:3, Interesting)

    by Pliep (880962) on Monday June 19, 2006 @10:14AM (#15561288) Homepage
    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.
  • The DVD (Score:3, Interesting)

    by hsmith (818216) on Monday June 19, 2006 @10:15AM (#15561295)
    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.
  • by hal2814 (725639) on Monday June 19, 2006 @10:17AM (#15561306)
    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?
    • 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.
  • 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.
  • Bargaining Power (Score:4, Interesting)

    by Patersmith (512340) on Monday June 19, 2006 @10:19AM (#15561317)

    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
    • 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.

      Ted Turner 2010? Rupert Murdoch 2020? I'd welcome Gates to the party, since there is little enough major competition in media currently.

      I'd look instead for Gates to get involved in politics -- not in an elected capacity, but instead in an advisory or diplomatic capacity. Hosting dinner with Hu Jintao recently just foresahdows

  • You also have to consider the cost of bandwidth downloading these monsters.

    A 10 year old clunker is going to cost the same in bandwidth as a first-tier release.
    The simplicity of average cost goes beyond marketing I suspect.
  • Yeah Right! (Score:3, Interesting)

    by dafz1 (604262) on Monday June 19, 2006 @10:19AM (#15561323)
    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?
  • by MikeRT (947531) on Monday June 19, 2006 @10:25AM (#15561350) Homepage
    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.
  • Looks like I'm a tight bastard :D I wouldn't spend 10 euros (I just know it's not going to cost 8, as it should) for a downloaded version of a movie even if it were DVD quality. Make it burnable with no trouble and ask me FIVE euros. I think that's the threshold for me.
    Anyway I see this as kinda broken from the start. Movie downloads are only interesting to people who watch a lot of movies, and these are the ones who won't pony up 10$ every friggin time they feel like watching one. Make it more palatable f
  • DTS, DD5.1, etc. (Score:5, Interesting)

    by Agelmar (205181) * on Monday June 19, 2006 @10:34AM (#15561394)
    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. (Score:4, Interesting)

      by Jherek Carnelian (831679) on Monday June 19, 2006 @12:13PM (#15562096)
      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.
  • by myawn (562028) <(moc.snwaYeht) (ta) (ekim)> on Monday June 19, 2006 @10:34AM (#15561396) Homepage
    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?
    • It's already tiered (Score:3, Interesting)

      by maggard (5579)

      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

    • EasyCinema (Score:3, Interesting)

      by jacobw (975909)
      There was actually a theatre chain in the UK that introduced a variable-pricing model: Easy Cinema [easycinema.com]. 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
  • anything that is in expense of the general populace, as long as profitable.

    Heck, i guess we might see bills that are offering establisment of 'an aristocracy' based on wealth sometime, when some big corp ceo comes up with the 'bright idea'.
  • Urban Legends (Score:5, Insightful)

    by mattsucks (541950) on Monday June 19, 2006 @11:17AM (#15561668) Homepage
    FTFA:
    Since Apple does not license its antipiracy software, other online retailers can't sell music or video that works on an iPod, and other manufacturers can't make players that work with iTunes content.
    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.
  • by Maxo-Texas (864189) on Monday June 19, 2006 @11:30AM (#15561771)
    $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.
  • by Hellboy0101 (680494) on Monday June 19, 2006 @11:37AM (#15561817)
    There was an article [rollingstone.com] 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?
  • by LordZardoz (155141) on Monday June 19, 2006 @11:55AM (#15561969)
    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
  • Business Model (Score:5, Insightful)

    by SomeOtherGuy (179082) on Monday June 19, 2006 @12:16PM (#15562118) Journal
    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 :)
  • by Digital Vomit (891734) on Monday June 19, 2006 @12:31PM (#15562236) Homepage Journal

    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.

  • by Animats (122034) on Monday June 19, 2006 @12:49PM (#15562389) Homepage

    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.

  • $10 is fair (Score:5, Interesting)

    by Ghost-in-the-shell (103736) on Monday June 19, 2006 @01:56PM (#15562840) Homepage

    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.

  • by swordgeek (112599) on Monday June 19, 2006 @07:57PM (#15565558) Journal
    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.

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