iPhone Price Drop: The Aftermath

September 7th, 2007

AppleA few more tidbits of info, then I’ll put this subject to rest.

Blogger Corey at Didn’t You Hear? (which I read and do find funny) got in a bit of trouble for setting up a Google ad that mimicked the language of a Nokia ad but directed users to Apple. Some people thought it was coming from Apple itself. All a big strange mess.

Second, I got a link and was quoted slightly out of context on the BusinessWeek website in their article “Apple Averts a ‘Fanboy rebellion’” - that’s cool, but they spelled my name wrong. Oh well, a link is a link.

Lastly, Variety claims Apple was pushing the networks to sell their TV show episode downloads for 99 cents in the iTunes Music Store. Once again, Apple supposedly hopes to lower prices to grow the download market while the content creators have an overly inflated idea of how much their content is really worth.

What I think is rather amusing is the studios’ fear that a low price would cannibalize DVD sales. I believe that the episode downloads are actually in competition with far cheaper options - as in free over television when the episodes air (with commercials), TiVO, renting the DVDs, or flat-out piracy - either streaming online or download via BitTorrent.

Basically, from my own experience Apple managed to get me to do something I rarely have done - pay to download episodes of television shows. That’s a big accomplishment if you think about it. Plus, I’m planning on buying the Battlestar Galactica Season Three DVD when it comes out - for the better quality and all the extras. As far as I see it, sometimes the episode downloads are a stop gap until the DVDs are released - not a replacement.

Apple is really doing all these old media entertainment companies a huge favor by promoting their content in digital form as downloads. 99 cents an episode might seem cheap but in comparison to the free options I daresay it’s money the studios wouldn’t have gotten otherwise, let alone DVD sales. At the price of 99 cents, I’d check out tons of episodes whenever the impulse struck. Too bad the studios don’t see it that way.

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  • Kool-Aid Alert! Kool-Aid Alert!

    Jason, you know I love ya, kid -- but you're really giving Jobs & Co. too much of a pass on this. When you say that Apple got you to do something (download media) you're overlooking that what they really got you to do was shell out hundreds of dollars for a piece of hardware at (we now know from the iPhone debacle) an incredible markup. They use other companies' content to move that hardware.

    I'm not in love with any of the big media companies, but once upon a time there was at least the myth of a free market that would, through competition and demand, set prices for products. Apple's extraordinary (and hopefully brief) market dominance in media distribution turned that on its head. And, ironically, their strong-arm tactics ended up reducing your ability to enjoy the media you want to acquire (from NBC).

    I'd like to see the Apple acolytes demanding lower prices on hardware to help offset slightly higher prices for media. Less profit for Apple, likely more media choices for customers.
  • There's one other thing to keep in mind - the networks are under huge pressure from the cable and satellite companies not to sell their content to ANYONE. If iTunes started selling TV shows for $0.99 (or for arguments sake, less) the Comcast's, Cox's, DirecTV's of the world would pitch a fit. They're already pissed off about TV shows being made available on DVD. And by pitch a fit I mean throw millions and millions (billions) at lawyers, policy-makers, gov't officials, anyone they can - to stop it from continuing. Those cable companies pay each network a certain amount of $ per customer, and they're already using iTunes and TiVO as examples of why they should pay the networks less than they already do. They (cable companies) were the original 'distributors', and for every new distributor they feel more and more threatened.

    And they certainly have a history of screwing over anyone that gets in their way. Think back to Excite@Home. Most people think that @Home went bankrupt because of the stupid purchases of Excite, Blue Mountain and some other over-priced .com's. What really happened is that the cable companies finally figured out that they could make more money without @Home in the loop, and built their own networks (with AT&T leading the way by completely stealing - coming in to @Home under the guise of helping improve the network, but in actual fact they copied all of the network schematics to build their own).
  • Sprauge - yes I have drunk the Kool Aid, and we'll see how this plays out - if content providers start leaving Apple after NBC that will be disappointing, and I'll blame the big media companies, but it will also show that there's something amiss with Apple's approach. I'll admit that. (I'll get season 4 of BSG one way or another).

    And as Ross points out the cable companies have a huge interest as well that I pretty much forgot about in my post. Yes, they are super powerful with broadband and now their own PVRs, HD, and movies on demand and if all of that gains traction there is even less reason to have rent, download movies and TV shows or get an Apple TV. Without being a service provider that is a big problem for Apple - I don't know how they'll compete with that in the long term.

    Maybe the file management method I hope for is antiquated. If someone could give me streaming-everything of TV shows and movies for a monthly fee on the computer I'd go with that as soon as it showed up on the Mac. Netflix is close - I hope they create a Mac client.
  • Since I love ranting about cable companies, and it's almost on topic - OnDemand, (slightly) improved digital TV guides/listings, digital cable and to a lesser extent HDTV, only exist because of satellite. Cable had such a monopoly that they NEVER had to do anything innovative for.. basically decades. It wasn't until DirecTV showed up that they had to find ways to improve their services, because they finally had something in the form of competition. If IPTV becomes more of a reality, you'll see them scramble again to keep customers.
  • I broke down and got an iphone yesterday. I feel guilty, but excited.
  • Well at least you got a good price. Hard to argue with the new lower value.
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