Digital Movie Downloads

September 11, 2006 at 7:51 pm Leave a comment

Digital video downloads have been the flavor of the week for a while now, but things are really heating up now. Youtube is the company to beat these days on the Internet. Grouper, a competitor, sold for $65 million recently to Sony. Even Microsoft is jumping into the act. Google Video has been selling TV Shows for as little as $1.99 each for a while now, but no one to date had really sold feature length Hollywood movies on the Internet in an organized fashion. Until a couple of days ago. Amazon.com, of all the people, launched a new website which enables digital movie downloads. Called Unbox.com, Amazon has pretty much scooped Apple on this one. And I’m sure it hurts.
Its pretty obvious that Apple has been working on a movie download store for a while now. Makes sense if they’re going to introduce large screen, video capable iPods soon (as the rumour goes). They’ve been working with major studios and I’m sure Job’s & Co. have been milking his Disney connections for all they’re worth.

But here’s something curious. Disney is the only major studio that hasn’t signed up with Amazon yet. And apparently, Disney is the only major studio Apple has signed up to date for their own store. Something is rotten in California. Should Apple be panicking now that Unbox.com has launched? How much value does Amazon scooping Apple really have?

Apple’s greatest advantage is iTunes. That is the reason why the iPod took off like nobody’s business. Allowing common folk download legal digital music quickly and simply sparked the iPod generation (Napster was great for techies and college kids, but most folks didn’t have the time or the willingness to use it).

But now the iPod is pretty ubiquitous, including the Video capable model. Any iPod Apple launches with large screen movie support is sure to be a success. So Apple has time on it’s hands to negotiate with the major studios to secure better pricing for us, which is the most probable reason for this delay. Luckily, Amazon doesn’t have the hardware to support their store just yet. End game: Consumer wins(cheaper pricing hopefully)!

This is a good time to talk about the flat pricing iTunes has for its music store, which is what Apple wants for its movie store as well. Frankly, it just doesn’t make sense to me on the face of it. Why should more popular music (or movies) cost the same as less popular stuff? Instead, let a free market be created for digital media. Who knows, new bands (or indie movies) might even profit by undercutting better known ones on price and get heard. Better yet, let users participate in a real time auction for digital media online, with Apple (or anyone else) only releasing certain number of licenses per track/movie per day. Result: You might have to pay $10 for the best song off the new Black Eyed Pea’s album but might just pick up a B-side no one really wants for very, very little. This model could definitely work very well with respect to optimizing revenue for the music industry, especially if only applied to new music, say all tracks released in the last 6 months (After which they are all sold at a flat rate).

Disclaimer: Yes, this model would definitely be againt artistic principal (Yadayadayada), but really, if your band is worried solely about their art, they should be on eMusic, instead of hiding behind Apple’s DRM.

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Entry filed under: Apple, Business, Media.

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