“Steve Jobs says consumers don’t want to rent music, which is why his iTunes store only sells songs that consumers download, then own. Yet he’s now trying to get major film studios to let him launch an online movie rental business,” Louis Hau reports for Forbes.
“What gives? There’s the most obvious reason: Consumers already get the concept of renting movies, whether they do it at their local Blockbuster or the mail-order business that Netflix pioneered,” Hau reports. “But the overriding factor appears to have less to do with consumer behavior than it does the vastly different environments in which the music and film industries are operating.”
“Clearly, the music industry is in far worse shape… Comparatively, film studios are doing pretty well. U.S. box office receipts are on the rise, and while DVD sales have been slowing, they have yet to actually decline,” Hau reports.
“In a reverse image of Jobs’ relations with record labels, it is the film studios that are in the driver’s seat when they deal with iTunes. That’s been clear ever since Jobs added movies to iTunes last fall. His first preference wasn’t a rental service–it was to sell movie downloads,” Hau reports. “The pressure on Jobs to supply more movies to iTunes has been ratcheted up several notches now that he has finally launched the Apple TV settop box, which can play iTunes video content on a TV set.”
Hau reports, “Pricing remains the key sticking point between iTunes and film studios, because the studios are leery of doing anything to weaken the enormously profitable sales of DVDs.. iTunes reportedly wants to sell movie rentals for $2.99 a pop with the ability to play each title for 30 days… if Apple and the studios can work out a deal on pricing, Jobs may just get the expanded roster of movies he wants.”
Full article here.
We’ll reiterate a recent Take on this subject: Business models that fly in the face of human nature are doomed to failure.
Most people like to listen to favorite songs over and over. They like to own these songs, so that they can play them over and over. They do not want to pay someone an unending monthly rate in order to be allowed to hear their favorite songs.
Now, for the limited amount of people that would like a music subscription, Apple should offer it – if it makes business sense (i.e. development and operational costs are less than profit potential).
Regardless of what happens, the fact remains: The music labels only want subscriptions to succeed because they dream of a recurring revenue stream, not because music consumers desire such a service.
Now, for TV shows and movies, a subscription service makes perfect sense because it better fits the way people consume those types of content than does outright purchasing. Not to mention, where do you store all of that content that you own, but are only going to watch once or twice? Most people can count the number of movies they’ve watched three or more times on their fingers.
We believe the vast majority of people want what we want: to buy and own music and to subscribe to a TV shows and movies plan via Apple’s iTunes Store.