Media Companies Out of Shape & Style Fighting iTunes & the Illegal Boys

The current fight between the media companies versus the illegal boys versus iTunes is not much of a fight.

The media companies stride into the ring, all prettified up – wearing satin trunks, doing exaggerated neck warm-ups and trying the intimidation stare … sure, they are still 6 feet tall but now they’re just 135 lbs and they have stepped into an octagon ring where the illegal boys while a foot shorter are fighting a new, different fight – swarm from everywhere – kicking out their legs and are pummeling the kidneys with punches, kicks and head butts. iTunes meanwhile is just walking around the ring and gets in a punch whenever the media weakling’s now bloodied head get exposed for a second.

And as each media company weakling gets carted off, another immediately runs into the ring after spending $100 million in training – only to receive the same UFC treatment.

It ain’t a pretty fight.

The media body count is pretty piling and yet, they refuse to give up.

That is how the fight is going – in fact, the bigger question to ask is why fight at all?

They’d rather spent HUNDREDS OF MILLIONS/A BILLION? to launch new efforts to topple what consumers want – instead of reducing the cost of a TV series online at iTunes to $.99 and make a legal customer, they’d rather spend hundreds of millions launching a new effort.

Instead of selling DRM free music because it’s more convenient to customers AND can make an extra $.30 a track, they’d rather spend millions to launch/help launch a new effort to force listeners to listen to ads in front & after a music track (maybe someone should tell them we already have that – it’s called Clear Channel AM radio).

SONY

The king of formats that consumers reject being forced down their throats (MiniDisc, MemoryStick, Betamax, ATRAC, etc, etc …) has launched more stores than they can probably even remember:

THE STORE (Nice name – really well thought out not just in a trademark sense but also as creative force – lots of thought went into it). For some reason, tracks that RENTED for $3.50 per was not that enticing.

DUET/PRESSPLAY (with Universal – surprise, another failure).

CONNECT (the recent ATRAC tracks store just folded up shop). Launch PR. Death FAQ.

And of course, instead of knocking a few bucks off of CD’s, not only do they waste $12 million paying for the copy protection, they had to spend another $10 million settling the rootkit lawsuit.

EMI, AOL/Time Warner and BMG

MusicNet. Also noted by PC Mag as one of the worst 25 tech products in the last 25 years (also rented tracks for 30 DAYS).

MTV (Viacom)

Launches URGE with Microsoft in 2006. A year later, merges from lack of any traction with traction-less RhapsodyONE and Verizon to form RhapsodyAmerica.

Viacom iFilm

This one is a real beauty. Viacom claims that YouTube for copyright violations but often hosts the EXACT same videos on its own site, iFilm or worse yet, Viacom’s VH1 uses this guy’s video without permission and then turns around and sends a takedown notice for this guy posting it on YouTube.

NBCU

Instead of re-upping with Apple, they decide that people would either buy a TiVo and then pay $1.99 to watch or watch it on a PC and of course, the other course of action … to spend millions to launch a new site (hulu.com) with Fox (of course, here’s what we think of that venture) to get people to pay them directly or watch with ads – because the TV network model is the only one they understand. Yes, that is of some interest to people but an iTunes-YouTube like business? No.

NBC has spent the most (including paying $600 million for ivillage.com – that’s the revenue from 300 million video downloads) in trying to launch websites and they have FAILED with every venture – guess all those network ads are really not that effective … shhh, don’t let that secret out:

And one from CBS/Viacom:

Hey, what’s $600-$900 million dollars spent on new ventures that they fold up a year later? That’s much more exciting that offering discounts on iTunes or selling DRM free music – after all, that’s just steady revenue – who wants that when I can talk the board into spending $600 million … quote from 2006 that you can pretty much re-use on their launch of hulu in 2007 – all just PR BS:

“iVillage immediately gives us scale and a profitable, established platform to expand our digital efforts, especially in the rapidly growing areas of health and women’s interests,” Beth Comstock, president of NBC Universal Digital Media and Market Development, said in a statement. “We envision connecting more deeply online, on mobile and on demand with key consumers throughout their various life stages.”

Here’s the follow-up a year later (August 2007). Surprise, they have no clue.

Yes, they’re always excited to buy and form partnerships but then, it’s just like the DMV, we’ll shuffle paperwork and then some more and then have our lawyers review your lawyer’s work.

Meanwhile, consumers will now just make up their own distribution net.

The networks & media companies think they’ve been kidney punched … maybe the fight’s not as fair as it used to be (well, from their point of view), maybe the rules are different and maybe it’s a different fight … but they don’t seem to have to notice that the ring is no longer square …

See ya, wouldn’t want to be ya.

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5 Comments

Filed under Advertising, Computing, Financial, Gadgets, Internet, Marketing, Media, mobile, Music, Retail, TV

5 responses to “Media Companies Out of Shape & Style Fighting iTunes & the Illegal Boys

  1. Peter

    I’m actually going to take the content producers’ side for a moment because I see their argument.

    A show costs money to produce. The producers want to see a profit. So, needless to say, they want to be able to fiddle with different ideas. Would you get more than twice as many people downloading the show at half the price? Would you get better than half the people downloading the show if you doubled the price? What will the market bear?

    If I want to promote a show to a certain audience, I might want to try tying shows together. Simple example: NBC has a hit with “Heroes.” Some of the people who watch “Heroes” might be interested in “Bionic Woman.” Perhaps a sale where you get the season premiere of “Heroes” and you get the premiere of “Bionic Woman” for 50% off. Or they want to have a 30 second plug for “Bionic Woman” at the outset of “Heroes”.

    Could I sell the show for less with commercials? Would customers be willing to pay 99 cents for a show with commercials? Would they be willing to pay 49 cents? Would they be willing to pay $1.99?

    These are all questions that content producers have. And these are all questions that won’t be answered as long as iTunes Store is involved.

    First, iTunes sets the price: $1.99. Customers might be willing to pay $2.50, but I’ll never know because I can’t set the price. iTunes Store won’t let me add commercials, so I can’t experiment with that. iTunes Store won’t let me tie shows together so I can’t experiment with that.

    In short, it’s Steve’s way or the highway.

    In theory, one of the advantages of the Internet is that it gives producers more direct contact with consumers. Things can be adjusted quickly based on customer feedback. We all consider this to be a good thing. It removes “The Middleman.”

    Apple’s iTunes Store is a middleman. It’s a store that Apple runs for the content producers–analogous to Target or Best Buy or Amazon.

    In fact, Apple is a powerful middleman. I believe Steve said they are the third largest music retailer. #1 is Wal-Mart. Ask the music industry about their relationship with Wal-Mart. It’s a huge reseller, but if Wal-Mart doesn’t like an album cover? It’s either change it or Wal-Mart won’t sell it.

    Wal-Mart also sets prices. “You want to be in our store? You meet our price.” We consider this to be a bad thing when Wal-Mart does it. Why should we not consider it a bad thing when Apple does it?

    In short, I think it’s a good thing that NBC/Universal are going to try out Hulu. Personally, I won’t be buying from them because I don’t have a Windows PC. If they have web-based advertiser-sponsored stuff for free, I might consider watching it on their site if my DVR fails to record.

  2. Max

    Unfortunately, that’s not what they really want to do. If they just want to promote a new show, there are ways to do that already. iTunes Store regularly has promotional materials. What NBC wants is the ability to bundle shows without giving customers a choice to buy a show without the extra crap.

    While playing as a producer, you should also pretend to learn the reality of P2P networks and flash video websites. You shouldn’t rely on your subordinates to give your reports. These things are your biggest competitors and they give you zero cent profit. Making an enemy out of a business partner that pours millions of dollars in profit into your pocket and pissing off the consumers with your greediness are stupid things to do.

  3. I’m with you on this on Max. The studios have been trying desperately to replicate their bundling efforts for years and failing miserably at it. The exhibitors (movie houses) hate it when the studios force them to take Piranha IV along with Pirates of the Caribbean. And now here they are again trying to force feed crap that they agreed to fund and market down someone’s (anyone’s) throat so they can ‘leverage’ the gain to be made from so called blockbusters. Well, doom on you people. I do give them credit for trying to develop their own channel ala Hulu. That’s what the free market economy is for.

  4. “In theory, one of the advantages of the Internet is that it gives producers more direct contact with consumers. Things can be adjusted quickly based on customer feedback. We all consider this to be a good thing. It removes “The Middleman.””

    This is all well and good, but when you come up with your product and then don’t change it after you get your feedback, then just what is going on here?

    I think why so many people get mad at the music industry and media outlets is because they are not really interested in what people want to buy, they are way too interested in selling it they way they want to.

    I agree that iTunes, Wal-Mart and other middle men freeze media companies out of playing with their product, but come on!!!

    Bit-Torrent is the most perfect way to transmit movies and music and to this day they have YET to find a way to use it. The music industry has to many contracts just to get a album out so its hard to get permission to distribute ANYTHING and Hollywood just doesn’t understand the technology enough to use it.

    I’m willing to pay 1.50 a song without DRM. I’ll pay an extra 3 dollars for an album online without DRM. I’ll watch a movie online (Netflix) or whatever with commercials, just don’t force me to watch crap I don’t want to see.

    Guys… come on. They don’t want to change because it is the unknown to them and quite frankly what business that is set in its ways wants to change its cash cow for something new? Its going to stay this way until they collapse under their own weight.

  5. Pingback: Media Companies Out of Shape & Style Fighting iTunes & the Illegal … | dropblinks

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