Steve Jobs is Wrong

There, I said it. and I mean it. Now let me explain:

Steve had a good thing with iTunes Music Store. He understood, intuitively, how people like their music and how people use their music. He knew that people would pay a buck a song, with an average album costing 10 bucks. He knew that people liked to carry their music collection with them everywhere. and that they would listen to their music over and over again. The iPod isn’t just about having a glorified walkman, it’s about not having to lug around a bunch of cd jewel cases. To be able to have well organized music at your fingertips, so that you can be sitting out on a rock-jetty somewhere, feeling the salt spray of crashing ocean waves, against your face, as you’re listening to the Postal Service’s glitch-pop remake of Phil Collin’s “Against All Odds” (ok, maybe i’m projecting a bit here).

Steve proposes the same is true for movies. That people will pay to download movies, on a per download basis. That people love to collect their movies and want to have them on their computer, in perpetuity. Steve is throwing his weight behind the download-own model he pioneered with iTunes Music Store, but Steve Jobs is wrong.

Your average Joe/Josie, does not want to download and collect movies to keep on their hard-drive with compressed movies taking up over 350 megs per. Neither do they want to burn movies to DVDs (then you’re stuck with the pile of badly organized jewel cases scenario). Most people don’t even watch a movie more than once. Yes, there are those one or two movies a year that you love to watch two or even three times, but the majority of movies get watched once and returned back to Netflix or whatever video store it was rented from, and promptly forgotten. The repeat viewers are DVD territory.

Movies are different from music.

Music is listened to, over and over again. Albums get a lot of play and that 10 dollars goes a long way. Music is usually a secondary activity. We listen to our music while driving, or riding the bus or a skateboard or while in front of a computer “working”, but rarely do we ever sit in a darkened room, eating popcorn, listening to music. Music is rarely digested in one sitting. It often takes dozens of listens to your favorite pop song before you start to know the words (nevermind comprehending their subversive meanings) ala Belle & Sebastian’s “Dear Catastrophe Waitress” (I’ve listened to that song 76 times). On the contrary, movies are a one shot experience, that’s why Netflix is so freakin’ cool. The subscription service model doesn’t work for music, I think (although that’s debatable). But the subscription model does work for movies and Netflix is a shining example of this. I’d rather pay 10, 15, or even 20 bucks a month to download a la carte from iTunes Movie Store. But what I will not do is pay 30 bucks for a DRM encrypted movie from MovieLink. And neither will Average Joe/Josie. BTW – MovieLink’s service is only available to computer connections inside the US, so I am out of luck anyway (central pacific mexico).

Back to my point, to download movies I’d pay no more than 3 to 5 dollars per movie. Maybe 6 to 8 dollars if the movie was great and I know I’d watch it again and 10 dollars max for a movie I wanted to keep forever. Paying 20-30 dollars for a movie, as MovieLink’s rates are reported to be (that means you are paying 1 buck for every 3 minutes of movie – what are they thinking?!). It’s almost as if they’re saying, “yes we’ll give you downloads on demand, but we’ll make it so cost prohibitive that you’ll want to go to the store and buy the DVD instead, and hey! that’s where we want you anyway!” I’m not even gonna get into simultaneous theater/download releases issue*

Steve Jobs is taking a different approach. He wants to get rid of the ridiculous DRM measures instituted by MovieLink and follow the precedence he set with iTunes (softer, gentler DRM). But at the root of the argument is still the download-own vs. subscription model and Steve is on the wrong side of the fence. What people are really looking for is an internet based subscription service. They want to have movies on demand, that they can download and watch and then (9/10s of the time) erase from their hard drive to allow for more movie downloading. They don’t care about collecting DVDs, that in turn collect dust. They want to have that same iPod experience they had with music, with movies. Being anywhere, watching a movie, on a bus, on a snowboard, at the gym or in bed at home with the lights off and popcorn. If People do hoard movie download files, it’s so they can trade them with their friends. These are the BitTorrent types and represent a small sliver of the actual population, as Steve has said in the past, if presented with a legal option, most people would rather not be doing something illegal, obviously I’m paraphrasing.

What’s the winning formula? Subscription. Do it like Netflix, they have a winning formula, borrow there’s. The only difference is that you are not stuck sending and receiving envelopes. Effectively, it’s easier then Netflix so implement different levels of subscription depending on usage: 5$/month gets you 5 downloads, 10$/month gets you 15 downloads and $20 gets you 30 downloads. My numbers may not be exact but they’re in the right ballpark. The user can then have the same rights that Apple’s fairplay gives your music, with the one added rule that says something like, once you stop your subscription, you can no longer play the movies you have on your hard-drive. Movie studios could even use this “feature” as a marketing incentive “Pay 5 bucks more for this particular movie and get a DRM-free copy”. If you did some polling with a good cross section of people, you’d find that it would fit the consumption of at least 90% of the people polled. Not convinced? Ask the least technologically inclined person in your family about their home movie viewing habits and you’ll see what I mean. They want two things: cheap and easy. Ownership isn’t one of those two things. Your average Joe/Josie doesn’t give two shits about owning a film, they’d just as soon as go to the movies or rent from the local video store. What a subscription download service is offering is the ‘easy’ part of the solution (as Netflix is doing also). Essentially, you are creating permanent customers, ones who keep paying the subscription fees not because they want any-time access to a million movies at once (as with the music subscription model), but that it’s a cheap and extremely easy way to view movies. Unfortunately, Hollywood movie studios over-value their product so much that they’d rather charge exorbitant rates and limit their product’s exposure. What movie studios (and Steve Jobs to a lesser extent) need to get into their heads is that 90% of the movie viewing public don’t care about owning movies as things to collect. Neither in digital form nor in physical form. Sure there are a lot of people out there that collect movies and those people will always buy the DVD versions, from brick and mortar stores, to have as collectors items, box art, dvd menus, extras etc…

It would be great to see Steve Jobs overcome the hurdles of signing up Hollywood for the iTMS, and I’d even start downloading movies on a download-to-own basis, but to get the iTMS really flying, a subscription model is the only way. Even if Steve can get the movie studios down to that sacred 10 dollar price point, he’ll still sell far fewer films then he’d sell with a subscription based model. This view is even heightened considerably when you take the international market into account, so rather then continue on, I’ll stop the conversation there.

——-

*For the record, I’d say that once we reach a comfortable downloading status quo, simultaneous release will be impossible to argue against – the movie studios will make far more money off of an iTunes Movie Store download then they will on DVDs and theater tickets, just as the music companies are doing now).