Movie Studios Play Right Into Steve Jobs' Hands

from the history-repeating dept

Wed, Jun 21st 2006 8:29am — Carlo Longino

There's been a fair bit of talk lately about ongoing talks between Apple and Hollywood movie studios so that Steve Jobs and Co. can start selling movies through iTunes. Apparently the sticking point is that the studios "aren't going to tolerate what he did to the music labels" -- meaning they want more money, and more control. What they don't seem to realize, though, is that it was the record labels that made Apple so powerful in the music business, by insisting the music it sells be locked down with DRM. While the DRM may make copying the files more difficult, what it really does is lock consumers in to the iPod and the iTunes store. Should a label pull out of the store, consumers can't, and won't, go elsewhere to buy its music -- unless the labels would sell it without DRM. So, if the movie studios want to avoid such a situation, they should insist Apple sell their movies without copy protection. Of course, this would force them to confront their irrational fears about file-sharing and piracy, so it's unlikely to happen, but it would give them significant leverage over Jobs and his demands if Apple had to face the possibility of competing for iTunes users' media buying. The studios already "compete with free", so allowing the sale of unprotected, low-quality files wouldn't empower much more file-sharing. It would, however, give the movie studios the upper hand with Apple. Consumers, at least the honest ones that DRM "keeps honest", would still use iTunes because of its convenience, and the security of downloading media from a trusted source -- just as tens of millions iTunes users do with music today. Insisting on the use of DRM, and allowing Apple to use its proprietary approach, essentially grants Jobs a monopoly to sell their content to iPod users, and he exploits this to wring low prices and other concessions from content providers.

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21 Comments

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93South, 21 Jun 2006 @ 8:40am

iTune Could Work
The itunes movie offering could work for the reasons you point out in reference to music labels - iTunes has the eyeballs to pull it off. This would be in contrast to many of the studios own attempt with the MovieLink service which currently searching for an new owner.

I love the idea of Movies on demand, although the controlling aspect of iTunes DRM with music it a bit of a turn-off. However, I put up with it because it is easy.

We'll see what happens.
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I, for one, 21 Jun 2006 @ 8:53am

Music and films are different cases
There is a difference between these two examples. In the case of music the major lables had to compete in a much freer marketplace for source material. Had they not jumped on board with Apple the iTunes store would now be a hub for a vast array of new music culture. They basically could have taken the major music lables ball and run away with it.

But while the music business is saturated with high quality independent material that only lacks marketing, the film business is still very much the preserve of large studios and big budget enterprise. There just aren't the independent producers waiting to fill the iMovies roster if the majors don't compete on that ground. That puts the Hollywood movie houses in a much stronger position, they almost have a monopoly on production and can tell Jobs what the rules will be.
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James, 21 Jun 2006 @ 9:10am

I don't see this happening...
... for a few reasons;

First, I don't think most home broadband connections are fast enough (yet) to make downloading a high quality movie a common place thing for most people. I'm not tlaking about people who are into bit-torrent, I'm talking about people like my parents, who aren't going to sit and wait for their movie to download when there are three brick-and-morter movie rental stores in walking distance

Secondly, the movie stuido's see how Jobs has made the record industry his bitch and they aren't going to go quietly. They are going to learn from the record lables mistakes. They are going to dig their heels in on the pricing.

And finally, if I like a move enough to actually buy it, I'm going to go buy it on DVD, which gives me better quality, portability and usually some extras that most downloaded movie content I've seen just doesn't have. If I like a movie enough to buy it, I'm not going to sit in front of my computer, or get the family to huddle around my iPod. I want to watch it on the "big TV."
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Boo, 21 Jun 2006 @ 9:15am

DRM
The fundemental difference between drm for movies and music is that drm for music essentially serves only to keep lables as a middle man where a middle man no longer needs to be. studios are both distribution and "artists". i can understand their desire to keep in control of pricing and drm... fighting a losing battle on both fronts though. evolution is going to take care of large corporate dominance of media
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Grumpy Old Man, 21 Jun 2006 @ 9:43am

of course you will be able to burn it.
Just like with the music from iTunes, they will set up the DRM to allow x number of burns to DVD. Jobs is a megalomaniac, but he knows what it will take to get people to buy the movies. Two step process

Step 1. provide people access to the content they want at a price they are willing to pay and a way to play it on the equipment they currently have (ala burn a CD for a CD player for the launch of iTunes)

Step 2. offer an Apple product that allows you to access the content easier (I can see the new iCinema a 17" ibook screen with a simple to use interface that plays movies on the screen or with either a docking cradle or perhaps a Bluetooth attachment that plugs into the video input of your TV)

and while it may take a while to download, not a problem really just set up a portal like Netflix and stores it in your computer till you connect your iCinema. And for near instant viewing would really only have to wait short time into the download to start sending it to your Monitor/TV and start watching.

Just my take on it, But what do I know I bought a Batamax when they were new...
and while it may take a while to download, not a problem really just set up a portal like netflix stores it in your computer till you connect your i cenima. and for near instant viewing would really only have to wait short time into the download to start sending it to your Monitor/TV and start watching.

just my take on it, But what do I know I bought a Batamax when they were new...
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Anonymous Coward, 21 Jun 2006 @ 9:46am

"There just aren't the independent producers waiting to fill the iMovies roster if the majors don't compete on that ground. That puts the Hollywood movie houses in a much stronger position, they almost have a monopoly on production and can tell Jobs what the rules will be."

Not true. What the studios have is a monopoly on distribution. The indie producers probably started stalking Jobs the minute they heard the word "iMovies". This will be Apple's game played by Apple's rules. The prospect of IMovies turning even one indie film into a moderate hit is a horror film the studios don't want to see. (But, sooner or later, will.)

Payback is a bitch, ain't it.
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Grumpy Old Man, 21 Jun 2006 @ 9:46am

Re: of course you will be able to burn it.
Ack bad copy paste, dang me and my wanting to spell check prior to post, and Come on guys let me edit my post :(

GOM
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Yet another Anonymous Coward, 21 Jun 2006 @ 9:51am

The format is wrong
When Apple produces a 27" 16x9 iPod, then I want to watch a movie on it.

I have found this media/industry driven clumps of articles interesting, in that practically the only successful movies for the tiny screen are pr0n, usually viewed in bathroom stalls.

The major talk of video these days is 1080p on at least a 50" diagonal scale.

Is iTunes going to host pr0n? I doubt it. The video iPod will probably be as big of a hit as the Newton.

I can walk down the street, mow my lawn, drive, or even write this comment and listen to music. I can't watch a movie and do any actions in that list. Yes, there is a big fundamental difference between the two.
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Anonymous Coward, 21 Jun 2006 @ 10:24am

Pathetic rationalization
"...they should insist Apple sell their movies without copy protection. Of course, this would force them to confront their irrational fears about file-sharing and piracy..."

So you're saying... We know people are stealing our product. Instead of trying to stop all the thieves, let's make it easier for them! Maybe if we completely surrender and give everything away we'll stop the thieves!

Hey, if it works for the Entertainment Industry, maybe it'll catch on for Governments!
If you can't win easily, don't bother fighting.

We can topple the whole world with this. Anarchy for everyone, no need to obery pesky things like laws...
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Topher3105, 21 Jun 2006 @ 10:32am

Apple movie store will bomb
At a time the industry is turning to high definition, Apple will offer poor quality, overly compressed movies for a specific device. Haven't we seen this fail already? (UMD anyone).

Given that I don't know what to expect from Apple's next generation TRUE video iPod, here is pretty much why selling movies at the iTMS will fail:

1) Apple won't offer 1gb+ high definition quicktime videos. Trailers are topping 100mb for 2 minutes of high definition content, Apple won't offer a 90 minute feature films topping 3gb. Therefore, Apple's movie offering will support 5G video (320 x 240) or possibly some widescreen version of the iPod that will still be less then standard definition in order to keep file sizes low. The format will also be overly compressed, reducing its quality. Apple WON'T support surround sound either, making the file size smaller. Apple doesn't even support Digital 5.1 surround sound on their comoputers, so the iPod won't have it.

2) Apple won't offer HDMI upconverting or support in their iPod product line. This will add too much licensing and technology costs to their iPod product, making it too expensive to sell. Apple will stick to composite and s-video modes (probably won't support component video either). Remember, Apple is targeting movies for the iPod products, NOT as movies shippable to be played on full featured computers. The movie formats will be crippled to the capabilities of the iPod hardware.

3) Apple will sell movies only. There will be no special features or additional content, except as individual downloads. Apple WOULD be smart to create some kind of compressed DVD file that would include menus and content, but I doubt Apple will do this. Apple will not want to spend the time and money to repackage movies into some all-in-one format, and the industry will not bother either. Apple isn't even doing digital booklets right for CD's. I mean, why can't the digital booklet be viewable in iTunes or on an iPod? People want and care about the special features on DVD's, its part of the reason the format was so quickly adopted. It offers more value for the money then just shipping the movie alone.

4) Who actually wants to watch a movie on a tiny screen for 2 hours. When you hold something in your lap for 2 hours ( I don't think you going to hold it up for 120 minutes) and have to crane your neck to watch it, it becomes very unenjoyable to watch, quickly. Also, I am sure Apple won't implement LCD's with fast refresh rates in their next generation iPods. THis means that video output will be blurred and ghosting will occur, as on other video players like the PSP and 5G iPods. This causes some people to get headaches and nausea after a short period of time. Most people actually hate watching a movie on a tiny screen, except if your 5 years old and have an 8 hour road trip to take.

People won't want to pay $9.99 for a movie that looks like crap, has no special features, and must be handicapped in order to support the iPod on a tiny screen.

Movies iare not analogous to music. Music can be listened to while doing something else, movies require full attention. Music can be listened to for short durations, movies require hours of time. Music can be downloaded quickly in high quality formats, movies must be crippled in quality in order to make them small enough in size to be quickly downloaded.

Even though it is Apple, Apple will still fail to make online movies as successful as online music, as the idea of online movies played on tiny screens is a failed concept in general.
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alternatives, 21 Jun 2006 @ 10:40am

That puts the Hollywood movie houses in a much stronger position, they almost have a monopoly on production and can tell Jobs what the rules will be.
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Adam, 21 Jun 2006 @ 10:44am

Re: Pathetic rationalization
But this clearly doesn't stop all the thieves. It doesn't stop any of the thieves. It just takes one success to make free music available to the world, and there's nothing you can do about that. Therefore, rather than inconveniencing the legitimate users while not affecting the thieves in any way, why don't you add useful things to either your content or the way you distribute it.

This isn't if you can't win easily, this is if you can't win. Not only can't you win, you can't affect the outcome. It's like deciding you don't like the universe, and wanting to destroy it. There's no way you're going to destroy the universe, thus any steps you take towards that goal are wasted.
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alternatives, 21 Jun 2006 @ 10:47am

That puts the Hollywood movie houses in a much stronger position, they almost have a monopoly on production and can tell Jobs what the rules will be.
Bullsh*t. Hollywood is not the onl;y producer of video content. India's Bollywood comes to mind and the counter-example of 'monoploy of production'.
It used to cost millions to put together a recording studio. Now, under $25K. As HD video equipment becomes more aviable, a video content maker price-point will drop were people who want to be a video maker, they can.
The home-mades on youtube shows this trend
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I, for one, 21 Jun 2006 @ 10:57am

Re:
Writes AC... "Not true. What the studios have is a monopoly on distribution. The indie producers probably started stalking Jobs the minute they heard the word "iMovies". This will be Apple's game played by Apple's rules. The prospect of IMovies turning even one indie film into a moderate hit is a horror film the studios don't want to see. (But, sooner or later, will.) "

I agree with that last sentiment, and I sincerely hope you're right. For me, personally, the culture is the most important issue at stake. I am utterly fed up with expensively made souless Hollywood garbage promoting nationalistic propaganda, violence, soppy faux emotional pap, special effects instead of story or dialogue, and shying away from sexuality with the guilt of a Catholic schoolgirl.

I watch European independent films as far as possible, and even subtitled Scandinavian or French films are preferable to a Hollywood title. They have stories. They are about humanistic reality. They are simply superior films.

As with music it isn't the purveyor or the price that bothers me, it's the product. What I am saying is that with *music* there's already a vast sea of quality independent produce out there, so the "Big Studios" had no choice but to pitch in to promote their talentless plastic "stars" or face a revolution in independent culture. So far they have succeeded in holding strong, look at the top 10 of iTunes, it's still full of crap like Britney Spears and a cacophony of overhyped manufactured rubbish.

While I don't think the equation is the same for films because of the economics of film production, I hope I'm wrong and you're right.
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I, for one, 21 Jun 2006 @ 11:09am

Re:
Says Alternatives... "Now, under $25K. As HD video equipment becomes more aviable, a video content maker price-point will drop were people who want to be a video maker, they can. The home-mades on youtube shows this trend"

If you were talking about music then YES! Independent musical artists on a very small budget create a superior product to the major studios. I can download music directly from an artists own site which blows away the crap I can buy in the shops or on iTunes. But it's wishful thinking to believe that I want to watch a shakey hand camera 5 minute short from YouTube. I'm not saying independent film will never catch up with the major studios, it will, perhaps in just a few years, but right now it still costs a whole pile of money to make a good feature film. There are great independent artists out there, but fewer of them than with music.

Take for example Shane Meadows "Dead mans shoes" http://www.imdb.com/title/tt0419677/

No studio would touch it because the story is just too real and disturbing. It's an excellent film, but it cost a lot of money and time to make. It has no special effects, shot on location in a small village.

But if you think you and your mates could easily go out and do the same thing - well I don't wish to discourage you from trying, but think again... there are actors, vehicles, props, editing, sound...

Making a movie is a different art to music, it's intrinsically more expensive and there are less indies who are good at it.
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Mr. K., 21 Jun 2006 @ 12:36pm

DRM almost irrelevant
I'd argue that if the price were right, I wouldn't care about DRM. Reason being, for the vast majority of films out there, I'd most likely watch it once and delete the file. Yet I could still see myself paying $9.99 for a download. That's the price of a movie ticket and I don't get to own that film either.

For movies I wanted to own, I'd buy the DVD anyhow, with its superior image quality, surround sound and extra features. The download would be reserved for films I'd rent. And DRM is a non-issue in that case since I can't see wanting to own, copy, or pirate a film I'm never going to watch again.
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Anonymous Coward, 21 Jun 2006 @ 2:36pm

"So far they have succeeded in holding strong, look at the top 10 of iTunes, it's still full of crap like Britney Spears and a cacophony of overhyped manufactured rubbish."

Unfortunately that reflects the taste of the downloaders not the power of the labels. And is quite consistant with the sort of TV programming that gets the highest ratings.

"We have met the enemy and he is us." - Pogo
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Freedom Warrior, 21 Jun 2006 @ 2:37pm

Why talk bad about steve jobs
You guys say things like "Steve Jobs has made the record companies his bitch."

What Steve did was stick to what was right, a fair price for downloads. If it weren't for Steve the record companies would be making YOU their bitch with $3 downloads.

Or do you enjoy paying $18 for a CD with one song on it that u like?
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Max Howell, 22 Jun 2006 @ 7:32am

I'd prefer non-drm stuff, but they don't have to use non drm formats to prevent lockin to itunes. They could just use an open drm format. Not that I can think of one.
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Jeff, 22 Jun 2006 @ 7:53am

Re: I don't see this happening...

If I like a movie enough to buy it, I'm not going to sit in front of my computer, or get the family to huddle around my iPod. I want to watch it on the "big TV."

I don't own an iPod so forgive my ignorance on this subject. Does this mean no one has yet figured out how to get video from an iPod out to their home theatre system?
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Swiss, 2 Jan 2009 @ 11:49am

what is this? Who cares about this? Put good resources. It was ok what u wrote. U should take more care of your self.

From-Swiss
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