Selling music videos on Apple’s iTunes makes economic sense

“Apple Computer, whose iTunes and iPods took a major step toward rescuing the music industry from the grip of pirates, is poised to do a similar service for videos,” David A. Andelman writes for Forbes. “Some of the top music labels say they’ve been contacted by Apple about the prospects of selling music videos on iTunes—probably ahead of a fall debut of a color-screen Apple full-motion video iPod. The labels ought to be jumping for joy.”

“Since the debut of MTV nearly a quarter century ago, the top music companies have been churning out music videos to fill an instant need for 24-hour services that reach their music buyer audience directly and immediately. As one music industry insider put it, ‘the labels watched MTV build a multibillion dollar business on material they supplied for free.’ And that was at a big, sometimes enormous, cost. Some of the highest-concept, most elaborate videos soared well into seven-digits for the hottest groups,” Andelman writes. “Now, suddenly, Apple is dangling the prospects of turning these into a profit center, or as one senior record label exec put it, ‘at least it might let us recover our costs.'”

Andelman reports, “According to the Recording Industry Association of America, music video sales (DVD and VHS) jumped 51% last year to 32 million units, good for a haul of about $607 million.”

Full article here.

MacDailyNews Take: Apple already is selling video content via iTunes music store — it’s bundled with music albums. For example, Coldplay’s “X & Y” Album costs US$11.99 and comes with a video interview. You can’t buy the album without the video unless you buy each of the album’s 13 songs individually for 99-cents apiece or $12.87. Um, we’ll take it with the video for $11.99, thanks. Albums without bundled video extras cost the normal iTunes Music Store price of $9.99. As more video content is added, and Apple and the labels see people paying the extra amount for such “enhanced” albums, expect the “normal” iTunes album price to become $11.99.

Related MacDailyNews articles:
Report: Disney considers teaming with Apple to deliver iPod video content – July 19, 2005
Ars Technica peeks at Apple’s portable video plans – July 18, 2005
More info about Apple’s reported iPod+iTunes video talks – July 18, 2005
WSJ: Apple in video iTunes talks, may unveil video iPod by September – July 18, 2005

11 Comments

  1. Enhanced albums are fine for new ones but there are tons of videos from the last 20+ years that I want to purchase. I already have the song and/or album – just let me buy the video.

    I see this being more important in conjunction with a living room device rather than a video iPod. You buy lots of videos and then you manage a video playlist on your Mac which you send to your TV device. No more MTV.

    MW=plan, as in Apple has a master plan…

  2. What would be cool is if they do start doing videos they make it so the audio can be played on your regular ipod. .mov files can be configured to be seperate files for audio/video etc (as opposed to being self contained) surely making them available in this way would be the best, they can sell videos at a slightly higher price than regular songs but have the audio still function on existing devices as it if was a regular song – until such time as an iPod video (or similar) gets launched and subsequently becomes the norm.

  3. I didn’t really think that video iPods were going to happen for the very reasons Steve articulated. Watching movies is not a very mobile experience.

    But I can see why this might make sense in terms of strategy.

    Every few months, if not weeks, there needs to be a reason to buy new iPods, and download the latest iTunes.

    Podcasts don’t make Apple money yet, and I’m skeptical they’ll make much money every. But jumping on that bandwagon led to lots and lots of iTunes downloads, and having iPods be Podcast-ready adds to the perception at least that you’d better buy an iPod rather than a competing player or you might be left in the cold.

    For that reason alone, it seems playing small bits of video on an iPod makes sense.

    The real channel they are setting up is Video > iTunes for the living room.

    In the short term they generate buzz, work the bugs out of the model, and sell a few more iPods this Christmas.

  4. Music videos are ok and all, but there aren’t a lot of people that will run out and buy a “video” iPod just for that capability. Now if some TV shows were available, plus you could play any QuickTime content, etc, that would be different. We’ll just have to wait a few months to see what Steve has up his sleeve. I’m sure there is more to it than just music videos…

  5. why does apple selling videos = video ipod? unless we get an ipod with a screen like the psp, who wants to watch content on a 2″ screen?

    now if apple wants to sell me a movie for $10, with a good idea on distribution (iTorrent anyone?), then I might just have to get another harddrive.

    mw=trade…I’ll gladly trade going to the video store to buy dvds if I can instead buy and download them online.

  6. What other major additions could Apple possibly be holding out on before releasing iTunes 5.0? Podcasts were a great way to update it to 4.9 but beyond that, 5.0 has to have some major revisions in order to justify a whole integer version increase. While the current iTunes does have video capabilities, it’s management of those is quite poor, nearly nonexistent! The management of PodCasts is pretty weak IMHO, as well. I hope they allow for more customized arrangement and sorting, or even the ability to create categories and sub-categories.

  7. If anything…videos are just enhanced advertising. No video = less
    sales. Less sales = fewer stars.

    Someone chose to give the music more life with videos and it worked!

    Selling videos alone at iTunes would be interesting, in the model of
    songs. I’d give it a YEA! ” width=”19″ height=”19″ alt=”cool smile” style=”border:0;” />

    CT =====]———- Balancing STUFF ~~~ recoup?

  8. If Apple implements video as part of iTunes then they need this. You download a movie (or music video) that can play on you desktop at full resolution. When you load it to your video iPod it loads at reduced resolution to save space and processing power on the iPod. (no need to put a 20gB movie on a 2 inch screen). The same happens now with music, you can load it to your iPod at different sample rates to save space. This way you get a movie worth watching but one that is still transportable. A music video on a 2 in. screen is really no problem because you tend to watch it play against the music. It is just a background display. But a feature movie you need to see all the detail. I don’t see much value in watching these on an iPod.

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