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.

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.

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