[opendtv] News: Apple Looks To Sell Videos And Ipods To Play Them
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 19 Jul 2005 10:21:51 -0400
Apple Looks To Sell Videos And Ipods To Play Them
July 19, 2005 12:00am
Source: Nikkei English News
(From THE WALL STREET JOURNAL)
By Nick Wingfield and Ethan Smith
APPLE HELPED ignite the digital music craze. The next possibility: video.
The Cupertino, Calif., computer and electronics company has recently
held discussions with major recording companies, seeking to license
music videos to sell through Apple Computer Inc.'s iTunes Music
Store, according to several people in the media industry briefed on
the discussions. The negotiations are a possible prelude to a version
of Apple's hit iPod that would play video, a widely expected gadget
that Apple has told some entertainment-industry executives that it
could announce by September.
An Apple spokeswoman, Natalie Kerris, declined to comment on "rumors
and speculation" about the company's plans.
Any foray into video would represent a major gamble by Apple that it
could translate its smash success in digital music into a broader
entertainment franchise. If successful, such efforts could help
create a significant new source of income for media companies that
are stepping up efforts to distribute video content on the Internet,
in part to counteract the growing volumes of pirated movies,
television shows and other programs being traded online.
So far, commercial movie-download services haven't widely caught on,
nor have devices from Creative Technology Ltd., Samsung Electronics
Co. and others that have hard disk drives onto which users can
transfer video files from their PCs. Apple Chief Executive Steve
Jobs, in fact, has derided the consumer appeal of watching
feature-length movies on portable devices with small screens.
Yet Mr. Jobs has made a practice of criticizing product categories
that Apple later adopts; he dismissed music players that use a form
of storage hardware called flash memory rather than hard drives, for
example, until Apple began offering the iPod Shuffle based on the
technology. What's more, some analysts consider it telling that Mr.
Jobs hasn't spoken out against all forms of video on portable
devices, such as television programs, clips from personal camcorders
and other short-form content.
Music videos, too, make sense because of the iPod's ready-made
audience of music lovers. Apple in recent months has started bundling
a limited number of music videos when iTunes customers purchase an
entire album on the site. Users who pay $9.99 for the latest album by
the White Stripes, for example, get a video for a song by the rock
duo called Blue Orchid that can be downloaded to a computer.
Building on that effort, Apple has approached the four major music
companies, Warner Music Group Corp., EMI Group PLC, Vivendi Universal
SA's Universal Music Group and Sony BMG, a joint venture between Sony
Corp. and Bertelsmann AG, to license music videos for sale through
iTunes, according to people in the media industry. The videos, which
could go on sale as early as September, would likely be sold for
$1.99 each, with the possibility of a discount if consumers buy a
music video and a song at the same time, these people say.
For music companies, a deal with Apple would represent another
attempt to generate income for the music videos they sometimes spend
hundreds of thousands of dollars creating. Music companies are still
smarting from their two-decade-old strategic blunder of letting cable
network MTV air video content for next to nothing, a decision that
gave them little participation in the creation of what has become a
hugely successful business for Viacom Inc.
Global music companies recently reached arrangements to charge online
services like Yahoo Inc. and Time Warner Inc.'s AOL to broadcast
music videos over the Internet.
Apple has also approached some media companies with
television-production arms about licensing shows, one media executive
said, though securing rights to sell television shows over the
Internet is highly complex and is likely to take longer than other
forms of video.
If Apple succeeds in creating a video-distribution service, analysts
expect the company to follow up with a portable hardware device
capable of playing the content, just as it has used iTunes Music
Store -- which makes little money as a separate business -- to help
promote sales of the highly profitable iPods. The three-year-old iPod
line has led a renaissance at Apple, accounting for about a third, or
$1.1 billion, of the company's $3.52 billion in total revenue last
quarter.
Speculation about Apple's product moves is rampant, and frequently
wide of the mark. Yet many analysts consider a video iPod a virtual
certainty, in part because of Apple's strength in video software,
including the Quicktime movie format and Macintosh video-editing
software such as Final Cut Pro and iMovie.
In one potential clue about the company's plans, Apple recently
licensed a chip from a subsidiary of Broadcom Corp. that could be
used to display video on portable devices, though it can also be used
to power more sophisticated graphics, a person familiar with the
matter said.
"I believe it's inevitable," Richard Doherty, an analyst with
Envisioneering Group, a research and consulting firm in Seaford,
N.Y., says of a video iPod.
By adding video to iPods, Apple could help maintain the popularity of
the devices, which have nabbed more than 90% of the market for
hard-disk based music players. One threat may come from cellular
phones as handset makers add increasingly sophisticated entertainment
functions to the devices, including the ability to download music and
video. Verizon Communications Inc., for instance, recently added a
limited number of music clips to its mobile video service, which
users access for a fee; other carriers are expected to follow soon.
<<Nikkei English News -- 07/19/05>>
<< Copyright ©2005 Nihon Keizai Shimbun America, Inc. >>
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at
FreeLists.org
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word
unsubscribe in the subject line.
Other related posts:
- » [opendtv] News: Apple Looks To Sell Videos And Ipods To Play Them
