If Apple buying Hollywood means I can look forward to more interaction with iTunes, then no thanks.
The last thing we need Hollywood to turn into is an even more walled garden. The best answer for Hollywood is an open approach from end to end, from funding to distribution to better bandwidth.
Fund independent movies and television shows. Continuously. Encourage the death of dvd and bluray. Encourage the death of all hard copies of media, even thumb drives. Give NetFlix and Hulu more money. Lobby the FCC to regulate broadband speeds. Everyone should have 10+Mbps by now. These are the right steps towards defeating Hollywood.
Wait, you deplore walled gardens in one sentence, then call for the death of physical media in the next sentence?
You should be careful what you wish for. The first sale doctrine may be your last and best defense against that walled garden. You're legally allowed to trade DVDs; you're even legally allowed to sell them on the used market; try that with your digital media.
Many of Apple's most annoying policies re: movies and TV are dictated by the Hollywood corporations with whom one must deal if one wants to sell these things. You will probably find that the same forces apply to Netflix, and exactly how is Hulu not a walled garden?
>Encourage the death of all hard copies of media, even thumb drives
This is a pipe dream that doesn't think more than 5 years into the future or understand the realities of distribution.
The properties inherent to physical media are some of the most consumer friendly aspects of distribution. Some can be approximated with a software-only approach, provided that the content provider wants to not only take the time to implement, but also wants consumers to continue to have those benefits. There are also properties of physical media that are impossible to duplicate with the internet, and what they do provide relies on them never going offline and never stop serving any each and every piece of content.
I have NES cartridges in my closet that are much more versatile than games on steam. I have a netflix streaming account that I _can not_ use when I visit my father because he doesn't have an internet connection and I can't cache netflix movies on my laptop. I have a friend, who because of hardware failure, can only use xbox dlc if he is connected to the internet (I don't really know the DRM specifics, but on the original hardware he didn't need to be connected).
I put up with some of these limitations because I hope they are temporary and digital distribution companies will eventually get their act together, but they're still a "last resort" option when I buy media.
>The properties inherent to physical media are some of the most consumer friendly aspects of distribution.
I don't think so. What's consumer friendly about plastic garbage that takes up space, is ridden with unskipable ads, DRM to boot, and is a pain to handle?
The true "problem" (for those relying on this business model) still remains the reality that you ultimately cannot force people to pay for virtually cost-free distribution of content. You cannot stop free sharing either. All efforts to do so will eventually result in heavy censorship (actually, copyright and free speech are fundamentally at odds).
Pretty much all problems with digital media you describe are caused by this failure to accept reality on the side of distributors. It's not a problem with digital media, it's a problem created by trying to make digital media like physical media (-> being able to control distribution), when the former is so much more powerful, versatile and plain better than the latter. Distributions as a business model is dead. The future of digital media is one that doesn't rely on it, and embraces cost-free distribution and free sharing.
What's consumer friendly about physical media is simplicity & independence. My 2-year-old can climb onto the bookshelf, dig out whatever disc he wants, open the Bluray player, insert disc, close it, and watch it - THAT is "consumer friendly". Sure there are things to complain about with discs, but those are way into the "first world problems" realm.
When you buy a disc, it's yours. No remote server can deny you access to it on a whim.
There was an old saw "don't underestimate the bandwidth of a station wagon stuffed with magnetic tapes." Until we get consistent >25Mb/s streaming cheap, you're not going to see Bluray-quality video from Netflix et al ... but a 2-year-old can deliver it in seconds.
If you're seriously basing consumer-friendliness on the ability of a two-year old to operate it, then I'm sorry, but I fundamentally disagree with your idea of consumer-friendly.
Also, if you can teach a 2-year-old to put a disc into a player, you can most likely teach him to click on (or touch) an icon in a digital media library. There's no difference. None at all.
>When you buy a disc, it's yours. No remote server can deny you access to it on a whim.
Again, that is not a problem with digital media, that's a problem of people trying to control digital distribution, which is impossible. I have loads of nice .mkv (and some older .avi and .mp4) files here, in addition to a huge music library, and short of a double harddrive fault, nothing can deny me access to them.
Many physicals disks have copy-protection schemes, too, by the way. What if the industry for disk players decides to not make any players anymore that can play disks with a certain copy-protection scheme. Or switch to a new format of storing media, as they did quite a lot of time in the past. It's the very same thing as a "remote server denying you access". There's no guarantee you'll be able to play these disks you own in 5, 10 or 20 years. I have that guarantee, because short of the complete replacement of the general purpose computer, I will be able to play my aforementioned media collection.
>There was an old saw "don't underestimate the bandwidth of a station wagon stuffed with magnetic tapes." Until we get consistent >25Mb/s streaming cheap, you're not going to see Bluray-quality video from Netflix et al ... but a 2-year-old can deliver it in seconds.
Netflix (and other streaming services) are as much part of the problem as physical media are. Streaming is DRM, no matter how you turn or twist it. You pay per watch, and you don't own what you watch. And again, I'm not paying for something that's cost-free to begin with (distribution). Distribution-based business models are dead, and trying to save them will only lead towards more shit like SOPA, ACTA and the DMCA, which hurt the internet and Free Speech.
Internet access isn't available in everywhere and people will always want hard copies. I'm one of them. Who exactly is going to give Netflix money? Are you telling them to take out a loan, offer more stocks? Internet connection speeds aren't slowing down Netflix, it's Hollywood. They're not worried about their videos not streaming quickly enough; they're worried about making more $$$.
You seem to forget that it's not just Americans who consume Hollywood content. NetFlix is great in theory but it's not available to everyone and even when it is the selection can suck. As for 10+Mbps connections? I wish. I had dial-up 4 years ago. Some countries, even 'modernised' western ones, still have crappy telecomms infrastructure.
Apple (and Google, and Netflix and anyone else..) should campaign to have statutory music licensing[1] extended to video/film.
That originally came about when the music industry couldn't agree to reasonable licensing terms for radio, so the government intervened to impose a licensing regime that allowed the new industry to build audiences while still making a return for artists.
What upside is there for Apple in owning the expensive, unwieldy, production-side apparatus of Hollywood? Why should Apple be devoting resources, human and economic, to developing content when its hardware and software businesses are so much more profitable?
All this talk in recent weeks about "destroying Hollywood," and now, "buying Hollywood," focuses too much on Hollywood as it currently exists. If we're so confident that Hollywood-of-today is a ripe for disruption, then let's focus on disrupting it. The way to do that isn't to fight Hollywood on its own terms. It's to make the creation, distribution, and marketing of non-Hollywood films and shows easier for those outside of Hollywood to do. You don't kill Hollywood with a management change. You kill Hollywood by building -- or, really, supporting the growth of -- an alternative to Hollywood.
Apple already has the means to do this. Its software makes filmmaking and editing cheap, easy, clean, and powerful. And, at least in theory, there's nothing stopping Apple from placing independent films right alongside mainstream Hollywood films on the iTunes movie page. Or serving them up through Genius-powered collaborative filtering algorithms. Etc.
Apple already owns the future of Hollywood in a very meaningful way. To suggest that Apple needs to "buy" anymore of Hollywood is to miss the forest for the trees.
Well, that's what you might guess from the title and from the first half of the article where he posits that Apple _could_ buy Hollywood if it wanted to.
But then he goes on to say that what they _should_ do is to buy a bunch of distribution rights so that they can offer true a la carte TV programming.
Where strategic acquisition of distribution would make some sense is as a competitive advantage over Amazon and Netflix (and over any similar competitors who might emerge). But to secure exclusive rights on key pieces of content, Apple would need to pay an exhorbitant amount of cash -- essentially, protection money to Hollywood to keep content out of competitive hands.
This also forces Apple into the game of picking hits, by betting on which pieces of content are going to be worth buying exclusive rights for. Hit-picking is a notoriously tricky business. (Even Hollywood gets it right only about 10% of the time).
Strategic, overall partnerships with key content providers -- HBO, for instance -- might make a great deal of sense. But to do so would be to place Apple's fate in the hands of HBO's development arm, i.e., to bet that HBO will keep turning out hits at the rate it currently is.
Perhaps a hybrid approach here is best: prime the pump with some exclusive, big-studio content, but over time, focus on developing a content ecosystem that is attractive to content developers the way the App Store is to software developers. Hollywood is a very pricey middle-man for content development; the long-term goal should be to build up the independent development system. If nothing else, this forces Hollywood's costs down by introducing legitimate competition.
Seems to me that Apple has already locked down a distribution and promotion model that is significantly less expensive than Hollywood. The only thing left is to replace Hollywood's role as "VC for TV/music/movie ideas".
I would imagine with their huge cost advantages, Apple could offer much more attractive deals to the creative people in the industries. Why not just start funding productions?
Hell, content is just Apple's carrot to get people to buy hardware. They don't even need to make a profit from it.
Imagine any show or movie on demand on your TV, way beyond what is available in iTunes now. There is no program guide, no schedule. Everything is there, organized according to your taste...
This is what I want. Despite paying for Hulu, Netflix, and Amazon Prime, and being willing to pay for other such services I still can't get it. I have the Plex client installed on my Google TV, streaming shows that I torrent (even when they are on Hulu) and I rip Netflix movies. Not because I'm cheap and won't pay -- I would if they sold all this to me.
I can watch any content, on any device, anywhere but only because I'm a thief.
I'm starting to wonder if all these SV guys talking about fixing Hollywood is kind of like Hollywood saying they're going to fix SV (or revolutionize it with a poorly conceived product, poorly conceived because they have no domain experience there). Hubris?
I tend to agree there's likely a better model, but I suspect there's a bit more to it than the tech industry seems to think. Something to consider.
as the article says, the concept of actually buying hollywood is a little ridiculous and a little pointless, but they don't need to.
putting up billions to license first-run shows is a terrible idea though. it validates all hollywood's reluctance to change any of their old business practices, and encourages then to keep being stick-in-the-muds. Hollywood needs to be disrupted, and a huge pile of cash is exactly what is needed for that to happen. If apple wants access to high-quality content for their TVs, they need to do something drastically different to scare hollywood into playing with them.
What they should really do is distribute some of those billions to their employees, and set a precedent for fair/social capitalism. Because yeah Steve Jobs was a genius, but any engineer who uses their devices knows that the folks who executed his ideas were just as critical for Apple's success.
Apple has tremendous proven ability to create/ride new markets, but no demonstrated ability to rescue doomed businesses with (soon-to-be-)failed business models. Why should they start now? Sure, that's only a backwards-looking argument against Apple buying Hollywood, but the burden is on those arguing in favor to explain why this makes sense for Apple. Seems like it'd be better for Apple to just milk the distributors while they can and at the same time make it easy for the next generation of content to be distributed via Apple... which is exactly what they're doing with iTunes.
Hm, what are some new business models (or more generally, pivots) that would make the dying distributors continue to be relevant?
The rest of the quote is relevant too: "no demonstrated ability to rescue doomed businesses with (soon-to-be-)failed business models".
If you're referring to Macs, the Macintosh line is more like a luxury clothing brand than a horse-drawn buggy manufacturer. Macs sell because they're commodities that have been dressed up with a luxury veneer[1], like a boutique clothing brand or "luxury"-class car. The perceived (and monetary) value of "luxury" commodities comes from the cachet of owning it more than any increase in value from better quality. Sure, luxury goods do usually have better craftsmanship too, but the high profit margins of luxury brands is pretty good evidence that consumers are paying for more than just the increase in quality.
There isn't really any analogue to luxury commodities in the media distribution space. The closest I can think of is HBO, and that's a pretty good model of the future: it's a service you subscribe to if you want it, and it's delivered over a generic pipe. More pure HBO-like entities are the future, except without the artifacts of having to be shoehorned into a cable and satellite distribution system.
1. Some would argue that they're also better from a functional perspective too.
Apple is where it is because they see "where the puck is going" and high risk, blockbuster-driven Hollywood is not that. If anything, they should be looking to the far more complementary game industry. Exclusive games would translate directly into iPhone and iPad sales (ie their main profit centers!) in a way that's hard to imagine with movies. An acquisition or exclusivity deal with the increasingly desperate Nintendo would be money well spent.
I'll be surprised if there aren't a round of game company acquisitions to this effect in the next few years for exactly this purpose, as blue chip game makers struggle to compete with increasingly rich $3 smartphone apps, and as games are the main beneficiary of increasing smartphone power. Microsoft understands the value of a well timed acquisition (buying Bungie basically made the XBox an instant success), so I wouldn't be surprise if they initiate.
>An acquisition or exclusivity deal with the increasingly desperate Nintendo would be money well spent.
Please elaborate, in what way is Nintendo "desperate"? I'm not really following the console market anymore, but last I checked was Nintendo being the only of the big three console manufactures pushing innovative new concepts and making a killing with the Wii and DS. I know they are worrying about the mobile market, but is that really true competition for them right now?
I honestly can't think of anything worse for consumers.
By purchasing the content producers they would own the entire supply chain (from production to delivery), purchasing (nearly) every content producer would make them a monopoly both horizontally (owning every player in a single stage of the supply chain) and vertically (having interests at each stage of the supply chain).
I doubt (I'd hope at least) the US government would ever allow this to happen due to anti-competition laws. Honestly I'd be surprised if they weren't already investigating Apple over their current music/movie (and future book) distribution businesses.
I'm pretty disappointed that Erick (the author) could think this would ever be good for consumers.
The big problem with both the music and movie industry, from a consumer perspective, is that they operate a lot like a cartel. They should be competing with each other, not their customers.
Louis CK has shown one way to bypass hollywood. If more artists replicate the CK model; if there are more online distributors that can reach any device (youtube, netflix); and if there are angels, VCs and more crowdfunding platforms for content creators, we can move closer to killing hollywood. What this does validate is that content is king. It needs better/alternate funding and distribution systems.
I wish Silicon Valley knew who they were talking about before coming up with this "kill hollywood" nonsense. As if Hollywood is 7 guys with rich parents sitting around waiting to be bought.
Hollywood BOUGHT congress, I doubt Apple or MS can buy Hollywood. I really need to write a piece on this.
Remarkably, Hollywood bought Congress while being a remarkably small part of the economy, both in terms of revenue (http://en.wikipedia.org/wiki/List_of_companies_by_revenue) and jobs (http://en.wikipedia.org/wiki/List_of_companies_by_employees). These are global lists, but you'll notice that not even Disney makes either one. As an economic matter, why should Congress be more responsive to Disney, Time Warner, and Viacom than to, say, Kroger, which has more employees and revenue than the others combined? The MPAA is visible far more than it is important.
As far as being for sale, publicly owned companies are always for sale.
Look at revenue, not profit. The economy doesn't care how much the company profits, it cares how much the company is spending (on employees and other services).
They say they have 96 billion in cash, yet their financial statements only list 54 billion. Where is the rest? Is it in a subsidiary? If so, aren't there also liabilities in the subsidiary? I don't get it.
I assume you are looking at the 'Total current assets' in the balance sheet of their latest 10Q [1]. Instead, add together 'Cash and cash equivalents', 'Short-term marketable securities' and 'Long-term marketable securities' to get $97,601 million.
Education is not free and it certainly isn't open. You pay for it with your taxes; the government decides what goes in the books and curriculum and unions don't let us create a competitive marketplace where bad teachers evaporate from the radar and truly good teachers compete and make two or three times the money they make today while providing a better education. Much like anything that government touches, the system is a mess and our competitors are eating us alive.
Apple is great and all but there seems to be almost a call from some people that the world would be best run by an international dictatorship with the half eaten fruit as it's flag.
That’s not what a walled garden is. You can walk out at any time and keep everything you bought. There is nothing forcing you to stay there. Getting in is a bit harder than opening a web browser – but that’s getting in, not getting out. It doesn’t matter. It’s not like you have a right to buy something there.
No you can't just walk away. You need to authorise a machine to play DRM infected media from iTunes and you cannot play DRM infected media on devices which do not support FairPlay.
I am referring to music purchased pre-2009 (which is a large volume of sales), current movies, books, and television shows.
I don't have a right to purchase but the majority have a reasonable expectation to be able to take their purchases away in the future in the same manor as they expect their purchased DVDs to be usable on every DVD vendor's equipment.
This is getting more idiotic every time. Are you for real?
First, I was explicitly talking about music. Second, DRM is no more. That’s it. The music store was a walled garden. It is no more. To call it a walled garden is stupid.
"One thing they could do is buy their way into Hollywood. Think about it for a second."
If only the author did, then maybe he wouldn't have written this post.
Why would anyone want to buy an industry in self-imposed decline when they can sit on their hands, wait for them to wither, then push them around with whatever terms they like.
The last thing we need Hollywood to turn into is an even more walled garden. The best answer for Hollywood is an open approach from end to end, from funding to distribution to better bandwidth.
Fund independent movies and television shows. Continuously. Encourage the death of dvd and bluray. Encourage the death of all hard copies of media, even thumb drives. Give NetFlix and Hulu more money. Lobby the FCC to regulate broadband speeds. Everyone should have 10+Mbps by now. These are the right steps towards defeating Hollywood.