KEY POINTS:
The shelves are starting to look bare at the Sounds store in Wellington's Manners Mall, where there's 50 per cent off everything in store as the administrators carry out a fire sale before shutting up shop. The place had an eerie silence to it, despite the piped music playing in the background.
I picked up the DVD of Michael Mann's flawed masterpiece Miami Vice for $20. I was happy with that, but it occurred to me that I'd never have paid $40 for the disc, unless it was a Blu-ray version or something. If Sounds (or perhaps its suppliers) had been a bit more realistic in its pricing to begin with, maybe it would have been better able to compete with the other music retailers.
Late last year Sounds blamed the failure of the chain in part on illegal music downloading. But take a look at this interview on Youtube with Russ Solomon, the founder of Tower Records, a US music retailing institution that met a similar fate to Sounds.
Solomon says the free music revolution that arrived with Napster and KaZaA wasn't what really hurt the industry. Two other things were much more serious - the gradual withdrawal of singles from sale and the steady increase in prices for albums.
Says Solomon: "The general increase in pricing through the years against a market that was slightly slipping just affected the overall industry. But I think the biggest mistake that the industry made was turning its back on the kids. They lost a generation, they didn't look to the future."
Instead the kids, tech-savvy and short of cash, went online or started downloading songs to their mobile phones. There was nothing for them in traditional music stores any more. Then going digital became the default way of getting music for a generation that was going to college, getting jobs, buying computers and home theatre systems. They're gone as far as the retailers are concerned. They might be lured into a store by attractive deals or to browse the shelves to make a mental check of what they should download next. But that's not enough to prop up an industry of music retailers.
So in the context of this, how important is Apple's deal unveiled yesterday with most of Hollywood, to allow movie downloads through the iTunes store?
As PC Word explains: "Apple first introduced movies for sale in 2006, at prices from US$9.99 to US$12.99. Now, movies are available to rent for US$2.99 to US$3.99, or in high-definition for a dollar more. Movies will be available on iTunes 30 days after their release on DVD.
Will it kill DVD sales, which are increasing the mainstay of the music retailers? I think the paragraph above suggests it won't. People still like having a library of DVDs that they can lend to people or take with them on holiday. They're more likely to push the button on a cheaper digital movie rental that they'll watch once before the licence on it expires. But retailers are going to have to get serious about pricing, especially as high-definition discs become the norm $45 - $50 per disc isn't going to cut it.
The iTunes model Apple is steadily refining will eventually become the norm, though I think Apple will have to open the ecosystem to include media boxes in the lounge other than Apple TV to give it the kick it needs. Sony and Microsoft have similar efforts underway, but no one has the killer box and equivalent online services yet. An iTunes download service for New Zealand could be some time away and we've still got sluggish broadband speeds in much of the country and limited data caps to contend with - more from Aardvark on that.
But will downloading increasingly usurp free-to-air and pay TV viewing? Rod Drury seems to think so: "I don't need Sky movies. I'll never set foot in a video store again. If we could get all the US TV programs I'd even question what I need anything but free NZ TV for. Why are we waiting for broadcaster to go HiDef? The content is arriving it's just a delivery issue. That problem just got solved."
I like my trips to Aro Video to browse the impressive collection they've got. Last night a door-to-door salesman representing Video Ezy managed to sell me a $20 card that gives me 2-for-1 movie rentals for the next six months.
I like what TVNZ and company are doing with the Freeview platform but I have to agree with Drury when it comes to pay TV. The value in having a Sky subscription is going to become increasingly marginal as bog-standard free-to-air TV and downloaded or streamed TV shows and movies meet the needs of viewers. The real clincher for Sky is the sports coverage, but even that hegemony is eroding as free-to-air providers (witness TV3's purchase of the rights to broadcast the Rugby Word Cup and) increasingly stump up for sports coverage rights.
This year could well be distinguished in the tech space by efforts to perfect the movie and TV downloading model that everyone's been chipping away on for years as they've waited for broadband and software to catch up. If the industry can get it right (and sort out a deal to allow its striking US writers to go back to work) 2008 could well be the year of the download.
