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Five Fixes for Apple’s iTunes Video Woes

Apple claims its iTunes music store recently passed Amazon (AMZN) and Target (TGT) to become the number three online music retailer in the U.S., with sales from the segment that includes iTunes up 33 percent to $601 million in the third quarter, from $452 million in the same period last year. The store offers six million songs, 550 television shows and more than 500 movies.

Note, however, that only the first number in that list has “million” attached to it. The other two categories — TV and movies — total just over 1000 items combined. [digg=]

While Apple (AAPL) makes competitors tremble in music, its video offerings and achievements get less imposing by the day.

iTunes sold some four million movie downloads in the first year it’s offered them, according to a New York Times story from yesterday (an Apple press release from the last week puts the number even lower, at “over two million.”) Sure, nobody’s cleaning up in the video distribution store space, but Amazon Unbox, Netflix Watch Now (NFLX), Jaman, and GreenCine are all waiting in the wings. And Apple is losing momentum in television distribution, where it stubbornly gave up a key deal with NBC (GE) that gave it access to push TV shows popular with geeky watchers like Heroes and The Office.

On the Apple earnings call this week, CFO Peter Oppenheimer pretended not to understand the question when an analyst asked if Apple would include anything other than professional long-form content in its store. “I think our store is unparalleled to anybody else’s,” was his brush-off response.

People want to buy from you, Apple — look at your impressive ascent in the music space. So why are you holding yourself back from selling? There’s no point in tucking in your turtleneck and waiting for the networks and studios to come around to a better way of being. Here are five ways you should make your video catalog bigger and your service better, right now.

  1. Get out there and rustle up independent and international videomakers. In the Times story, which was purportedly about Apple revving up its film section, reporter David M. Halbfinger was only able to find 28 independent films in the iTunes store. Make it easier for indies to list and sell their work. This is like shooting fish in a barrel.
  2. DRM. Amazon Unbox’s and Netflix’s adoption of protected Windows-only streaming and downloads have helped them win deals you can’t score because of your proprietary DRM. You’ve got to do something about that. Force your way in by making QuickTime more widely adopted. Succumb and use Windows DRM. Start a revolution by dropping DRM altogether. I don’t have the real answer for this, but you should really stop being stubborn and figure it out.
  3. Ad-supported downloads and streaming. Web users are totally willing to put up with a couple of ads to get premium online video, and 16 percent of U.S. Internet households already watch TV online. OK, so you might not be able to sell enough ads to justify giving away a hefty movie download for free. But it’ll definitely work for a short or a TV show. You probably don’t have enough bargaining capital to get the networks to renegotiate their cable deals, but try to finesse something.
  4. Subscription and rental deals. Apparently Steve Jobs hates this idea almost as much as he hates buttons on his devices. But getting access to content is what’s important here, and a little flexibility will nudge the business along.
  5. Better search and discovery. The iTunes Store interface has become increasingly cluttered, losing some of its early simplicity. But having access to millions of iTunes client downloads means anything that gets featured gets a huge audience. Help us personally find what we’re looking for, and keep in mind that your customers might buy more if your store weren’t so confusing and slow.

13 Responses to “Five Fixes for Apple’s iTunes Video Woes”

  1. Adrian L. Davis

    One thing Apple needs to take into account is that if the are only interested in selling music to promote selling hardware (whih I agree is the case) they are contributing to alot of the piracy that goes on by NOT having a larger catalog. I don’t steal music. I’ve spent THOUSANDS of dollars on my catalog because I don’t believe in it. BUT, when there is something semi-obscure I want that isn’t available, YES, I will LImeWire it or borrow it from a friend.

    Apple would be smart to try harder to make the iTunes catalog more comprehensive, or allow some type of sharing for obscure things.

    And by the way, there are certain movies we’d LOVE to BUY on iTunes. Alot of us would do it just for the COOL factor. Yes, I have Transformers on my iPod Touch or iPhone. But we can’t do that because they are only renting it..Trust me, people that buy movies on iTunes ALSO own the DVD, you won’t lose DVD sales by making it available for sale on iTunes.

  2. I’m not sure what the solution will be on the DRM stuff, but it seems that the networks and studios are being a little more free with their content when it’s being distributed in Windows Media Player. I’m not a proponent of DRM at all but it does seem to be one way to get people to start letting out their content and seeing where things go.

  3. Why does it come up repeatedly that “Apple is the proponent of DRM”? It only exists because the studios have insisted on it in their fight to maintain their 40 year old business models.

  4. Brian has a good point…pushing all that data around so someone else can make the money is a non-starter. And I also agree that Apples DRM is way better than Windows, no reason to switch. They’ve got to have a reason to push video and it just isn’t there yet, neither is the bandwidth. Let the other waste their money. Apple wasn’t the first in music, they can afford to wait the others out a bit I think.

  5. hmm…well, nice try but you have missed the major points of concern for Apple.

    Apple never wanted to be, never set out to be, the #3 music retailer in the US. It happened and that’s great, but Apple’s goal with iTunes MS was to sell hardware, ie that little white thing everyone now owns.

    The music store was a gateway to sell more iPods.

    Apple views video consumption much differently than music consumption. Jobs really didn’t want video on iPods but he finally gave it (kind of)…they have kept it slow because honestly, there just is not much money in pushing hundreds of gigabytes of someone else’s data around.

    Why would Apple care to build the biggest movie download service? How much money is there to be made here? Having Transformers available for download available isn’t going to sell that many new iPods.

    Apple does have a new piece of hardware that they can hope to push forward in Apple TV. It will be interesting to see where they take Apple TV and what growth we see there. They’ve been somewhat quick to cut the cord on things that don’t work so time will tell.

    As for “proprietary DRM”… Apple should use Windows DRM? Really? Apple supports open standards such as H.264 (the world is catching up) and AAC. Their Fairplay DRM is so well designed that most consumers never notice it, unlike MS’s offerings. I don’t think adding Windows DRM is a solution for anything.

    Finally, for the indie producers. Well, we hope Apple continues to be slow on this front leaving the indie filmmakers and producers to us small fish like We are here to, on a much smaller scale, be an iTunes like solution for the low budget filmmakers out there. We’ve seen some great content come by and we are hoping that more will join us.

  6. Some place like Film Baby/CD Baby would benefit so much if they gave their producers the option to also have their albums/films on iTunes.

    Its a shame that Google’s video store didn’t take off…