Apple WWDC 2014/iOS 8

[brandx]

You can change the demand all you want, those companies are not in the business of giving stuff away for free, they have to monetize it.  The guys that love Netflix and Hulu and say really dumb things like "see, it's only $8.99 a month".  Is it really?  First, it was already monetized prior and how they are just remonetizing it again further down the funnel.  They can do this because they are already getting billions from pay tv subscribers whether they watch it or not.  If that money goes away as you suggest it will (which I suggest, may happen...but there is a big difference...you will pay the piper) there has to be another way for them to monetize it.  This stuff isn't free and it isn't a commodity. 

Why the two sides will never agree!

One side (Chicos) thinks Supply is the only factor. The other thinks it is all about Demand.

Neither side considers that either can alter the equation.

Money does not trump Everything. If it did, large companies would never go out of business, but it happens all the time.

[ChicosBailBonds]

Why the two sides will never agree!

One side (Chicos) thinks Supply is the only factor. The other thinks it is all about Demand.

Neither side considers that either can alter the equation.

Money does not trump Everything. If it did, large companies would never go out of business, but it happens all the time.

I actually would love to go a la carte, so would most tv distributors.  Said this many times.  Our hands are tied.  Talk to the content creators.

Of course, I wish that buying ticket to a Marquette men's basketball game went 100% to the men's basketball team, but instead some of it pays for other MU teams.  I wish that paying my taxes I could have it only go to certain things I care about, but instead it goes to pay for many things that I find faulty and ultimately counter to a productive society.  I wish that when I pay for soda or beer at the story, I could buy it by the can or 12 oz bottle, rather than them forcing me to buy a 12 pack or 24 pack and "forcing" me to drink all of it.

[ChicosBailBonds]

Few things:

#1 You're projecting.

Not once in this thread have I said anything about Netflix or Hulu. I understand that those systems are subsidized by "traditional" content, and without people paying for cable, Netflix wouldn't be what it is.

#2 Look at how technology has changed content delivery and entertainment.
- 20 years ago, Pearl Jam was fighting against Ticketmaster.
- Flash forward to today, and Louis C.K. is distributing his own tickets, booking his own venues, directing his own comedy special, and selling it all through his site. 20 years ago, that was IMPOSSIBLE.
- Radiohead released an album in 2007 that was pay what you want to pay and download it. That idea would have been INSANE just 5 years earlier.
(the list goes on. JayZ's mobile partnership, SNL's Digital shorts, etc.)

#3 Entertainment as a commodity is a whole additional debate, but I'll just say this:

Television isn't in the television business... and if the studios, networks and distributors think they are in the TV business, they are going to get steamrolled.

They are in the content/entertainment business. There are sharks in the water, and any inefficiency in the current studio-network-provider-consumer supply chain will be discovered and exploited. Just like music. Just like books. Just like radio. Hooray free market!

Again, I don't know what this will evolve into... and it probably won't even be free. But, the idea that the content creators and the providers are holding all of the cards is a mistake. Ultimately, consumers hold the cards.

Again, you are talking delivery.  That isn't the issue.  You keep coming back to it. Technology, delivery...NOT THE ISSUE.

The creators want to be paid.  For now, the content creators do hold the cards.....you're projecting, I never said the distributors do, though they are the pipe right now to get it.  The content creators that have deals on sports through 2026 on most major properties....that's a long time to be waiting for much of this stuff. 

And you can count on it....it will not be free.  It will cost people an arm and a leg on a per unit basis, much more than they spend today.  The content creators have no choice on that front.  Instead of 100,000,000 people buying ESPN, you'll have 35,000,000 but ESPN needs the revenue from the 100Million they used to get, which means the 35,000,000 are going to spend a LOT more for it.  Simple math.

[Canned Goods n Ammo]

Again, you are talking delivery.  That isn't the issue.  You keep coming back to it. Technology, delivery...NOT THE ISSUE.

The creators want to be paid.  For now, the content creators do hold the cards.....you're projecting, I never said the distributors do, though they are the pipe right now to get it.  The content creators that have deals on sports through 2026 on most major properties....that's a long time to be waiting for much of this stuff. 

And you can count on it....it will not be free.  It will cost people an arm and a leg on a per unit basis, much more than they spend today.  The content creators have no choice on that front.  Instead of 100,000,000 people buying ESPN, you'll have 35,000,000 but ESPN needs the revenue from the 100Million they used to get, which means the 35,000,000 are going to spend a LOT more for it.  Simple math.

#1 Technology is an issue because it's brought down the cost of production and distribution, and has leveled the playing field. I can create a Milwaukee based sitcom in my house and distribute it on youtube. 10 years ago, not possible. 5 years ago, difficult. Today, not that tough. 5 years from now, who knows.

#2 VALUABLE content will always have value. NFL, Breaking Bad, 60 Minutes, etc. I get it. There has been a lot of money paid for that content, it gets ratings, people watch. It obviously has value.

But, do you really think "How I Met Your Father" is really going to be a valuable show? How about "Storage Wars: Alberta"? If that is the content we are receiving, the content creators can save it. I don't want it. unnatural carnal knowledge off.

#3 I know ESPN LIKES to make money (just like the B10 likes to make money), but there is a breaking point where consumers just won't be interested. The price and interest aren't inelastic.

People aren't going to quit watching football, but if google offers funny original sitcoms (for free), and youtube puts out interesting original reality television (like deadliest catch), WTF are CBS and Discovery going to do? Distribution is the biggest advantage they have. They have now been undercut.

[ChicosBailBonds]

Might want to read this....again, technology isn't the issue.  Those guys are still getting paid which is what they are demanding.

http://www.theverge.com/2014/6/4/5778824/tv-everywhere-soaring-in-popularity

[Canned Goods n Ammo]

Might want to read this....again, technology isn't the issue.  Those guys are still getting paid which is what they are demanding.

http://www.theverge.com/2014/6/4/5778824/tv-everywhere-soaring-in-popularity

I know that dude.

But, guess who doesn't want to get paid a lot?

Every struggling actor/writer/comedian in Hollywood.

Guess who could probably put together a pretty good show for not a lot of money?

I know that Charlie Sheen isn't going to do a free youtube sitcom. I GET IT.

But, there are a lot of free podcasts out there... what's to stop those people from putting out free shows on the internet?

[DegenerateDish]

As long as you guys keep buying displays to watch all this content on, I can keep paying my mortgage.

[ChicosBailBonds]

I had an interesting meeting yesterday afternoon before the hockey game with a studio consultant.  We were talking about Netflix and kinds of stuff.  His comment that struck me most "the studios are set in their ways, old school, been around for 100 years many of them.  They are hellbent to make sure they do not succomb to the same stupidity of the recording industry"

It was interesting considering the conversation we had here the last few days. 

[brandx]

I had an interesting meeting yesterday afternoon before the hockey game with a studio consultant.  We were talking about Netflix and kinds of stuff.  His comment that struck me most "the studios are set in their ways, old school, been around for 100 years many of them.  They are hellbent to make sure they do not succomb to the same stupidity of the recording industry"

It was interesting considering the conversation we had here the last few days. 

The thing is - they had to succumb. They had no choice if they wanted to stay profitable.

Napster allowed people to download music for free, but I have always thought that the most important thing Napster did was give options. People quit buying albums because they didn't want to pay a premium for the crap on the album they didn't want. Napster showed it was possible to go "al a carte". Record companies either had to change their business model (make deals with Apple, Rhapsody, Spotify, Amazon, etc. - or go under.

To say that is "stupidity" shows me the studio execs still don't understand what has happened and will continue to happening. Just because they haven't had THEIR Napster moment makes them think they are invincible.

THAT is really the only thing I disagree with you about in all of the conversations we have had about this.

[forgetful]

The thing is - they had to succumb. They had no choice if they wanted to stay profitable.

Napster allowed people to download music for free, but I have always thought that the most important thing Napster did was give options. People quit buying albums because they didn't want to pay a premium for the crap on the album they didn't want. Napster showed it was possible to go "al a carte". Record companies either had to change their business model (make deals with Apple, Rhapsody, Spotify, Amazon, etc. - or go under.

To say that is "stupidity" shows me the studio execs still don't understand what has happened and will continue to happening. Just because they haven't had THEIR Napster moment makes them think they are invincible.

THAT is really the only thing I disagree with you about in all of the conversations we have had about this.

There are Napster type things already.  Many young people use things like projectfreetv to get whatever tv they want.  Technically not legal just like Napster wasn't, but people use it.  They can try to fight these things through litigation and constantly chasing the next "free service" and punishing consumers (legally) who are getting content through illegal means, but ultimately at some point they have to give in and realize that the "old ways" are not sustainable, because of a change in culture.  If they don't adapt, someone will fill in the gap. 

I believe you commented on it earlier, that there are a lot of very good film makers and actors/actresses that are looking for work.  They create sometimes great content that they offer through non-traditional means and the younger generation like/prefer some of this content.  All that needs to happen are a few more of these non-traditional approaches to balk at the big network dollars and the old system will have to be replaced.

Not saying it will happen soon, but the current system is unsustainable. 

[ChicosBailBonds]

The thing is - they had to succumb. They had no choice if they wanted to stay profitable.

Napster allowed people to download music for free, but I have always thought that the most important thing Napster did was give options. People quit buying albums because they didn't want to pay a premium for the crap on the album they didn't want. Napster showed it was possible to go "al a carte". Record companies either had to change their business model (make deals with Apple, Rhapsody, Spotify, Amazon, etc. - or go under.

To say that is "stupidity" shows me the studio execs still don't understand what has happened and will continue to happening. Just because they haven't had THEIR Napster moment makes them think they are invincible.

THAT is really the only thing I disagree with you about in all of the conversations we have had about this.

My problem with you guys on this stuff is you keep arguing with me about delivery and technology.  That's not the argument, it already exists.

Whether they have their "Napster" moment also depends on how much the US Gov't will let them.  Considering liberals own Hollywood and the tv business and considering who is in charge of the govt right now, they don't want those dollars not going into their reelection coffers.  A ton is being done right now on piracy and it's going to be very ugly for a lot of people, all the way down to the college level when all is said and done.  I work on an initiative with HBO and universities right now.  A very big hammer is coming and a lot of parents of college students that will be paying the fines are going to be unhappy campers.  Is what it is...stealing is stealing, but some people think it isn't if they are cute and use a laptop rather than a crowbar.

[ChicosBailBonds]

Chicks is still under the impression that nothing changes till the rich and powerful say it will change. History would beg to differ with him.

On another topic discussed here, I see Seattle passed new minimum wage law going up to $15/hr. So in 3 years we may have definitive evidence whether it helps or hurts economy.

Seattle min wage.... pure hilarity

http://www.ijreview.com/2014/06/144019-results-seattles-minimum-wage-hike-deserve-big-fat-told/

[brandx]

My problem with you guys on this stuff is you keep arguing with me about delivery and technology.  That's not the argument, it already exists.

Not at all. I don't think you are getting my point.

Not to steal from Malcolm Gladwell, but there will be a tipping point. It may be next year or it may not be for 10 years, but it will happen. Once that is reached, whatever it will end up being, changes will happen fast. If and when people start leaving the cable companies in droves (as they quit buying CDs in droves), the cable companies and studios will team up and will take steps to maintain their revenue stream just as the record companies were forced to do. The contracts won't matter. Keeping the revenue flowing will.

Record companies said they couldn't change because they already were locked into contracts. But once the tipping point was reached (when people changed their CD buying habits because of what they learned from Napster), the old line about contracts didn't matter.

[reinko]

Seattle min wage.... pure hilarity

http://www.ijreview.com/2014/06/144019-results-seattles-minimum-wage-hike-deserve-big-fat-told/

Not an attack, but this essentially a blog, with zero sources.  How can you take this seriously?  C'mon man, you know you are better than this CBB.  Now read this.  http://seattletimes.com/html/localnews/2022905775_seatacprop1xml.html

Surprise surprise, both positive and negative impacts.  Not everything is black and white.

[mu03eng]

"the studios are set in their ways, old school, been around for 100 years many of them.  They are hellbent to make sure they do not succomb to the same stupidity of the recording industry"

I think this quote is very telling and so is your interpretation of it.  As I said, the stupidity of the record industry was not that A deal was made, the stupidity was the terms of the deal reached.  The record industry greatly undervalued the model Apple was proposing.  As a consequence Apple got the lion share of the profit, not the content providers.

The studios are aware of this and will not make the same mistake, and they also have the benefit of time as the pressures to change aren't as significant as the music industries.  However, the other part of the quote is something I tried to point out earlier.  The studios have been around a long time and are bloated/inefficient.  They have been doing things the same way for 30 years.  There are plenty of ways to reduce to the cost of content development but the studios don't want to do it, which leaves them vulnerable to someone being able to create content at a lower cost and sell it into a different delivery model.  Or one of the studios will break from the heard because they see an opportunity in the short term to get a leg up on the other studios.

You hear that being said and think it means the studios are fighting tooth and nail to resist the delivery change...I hear them looking for the right opportunity to potentially switch.

Think about it, you said yourself the only way to fight the content creators largesse is scale and that's what is driving the M&A activities with ATT, DTV, Comcast, etc.  So if the delivery folks get a bigger stick, that might be something that forces the studios to look at things fresh.  DTV/ATT merger may actually be the catalyst that forces a revolutionary change.  Not saying it will, but to think the studios will continue to do things as they've done them for the last 30 years is just folly.

[Canned Goods n Ammo]

What about from a mirco level?

Right now, studios and networks are HUGE businesses that take advantages of economies of scale (infrastructure, staff, marketing, etc.).

But, what if you had talented people writing, directing and producing their own content? Now, ultimately, they are in control of their entire program.

Here is a specific example:
http://youtu.be/uSDR3w6-Kzw?t=4m18s

The guys from It's Always Sunny wrote, directed, and produced their own pilot.

Now, obviously, being on FX has helped them tremendously, but how long before another group of talented people figure out a way to create their own show and distribute it on the internet and it legitimately becomes popular? How long before a major player (google, apple, virgin, whatever) starts a mini-network of this type of content?

The barriers for entry have gotten a lot lower as the technology has gotten better.

In theory, talented people could just cut out the studio and network all together. It's what Louis CK has done with his stand-up, it's what Seinfeld has done with his web show. It's what Adam Carolla has done with his podcast.

You don't need huge ratings if your costs of production are 1/100 of what the other studios are doing. Plus, if the marketers can monetize that content, then you'll have something.

[Skatastrophy]

Not everything is black and white.

You take that back you son of a bitch.

[Lennys Tap]

What about from a mirco level?

Right now, studios and networks are HUGE businesses that take advantages of economies of scale (infrastructure, staff, marketing, etc.).

But, what if you had talented people writing, directing and producing their own content? Now, ultimately, they are in control of their entire program.

Here is a specific example:
http://youtu.be/uSDR3w6-Kzw?t=4m18s

The guys from It's Always Sunny wrote, directed, and produced their own pilot.

Now, obviously, being on FX has helped them tremendously, but how long before another group of talented people figure out a way to create their own show and distribute it on the internet and it legitimately becomes popular? How long before a major player (google, apple, virgin, whatever) starts a mini-network of this type of content?

The barriers for entry have gotten a lot lower as the technology has gotten better.

In theory, talented people could just cut out the studio and network all together. It's what Louis CK has done with his stand-up, it's what Seinfeld has done with his web show. It's what Adam Carolla has done with his podcast.

You don't need huge ratings if your costs of production are 1/100 of what the other studios are doing. Plus, if the marketers can monetize that content, then you'll have something.

You are so right. When ABC, CBS, NBC and the local movie theatre were the only entertainment options available the bean counters were in control. Talent today can have their fanbase (enthusiastically) pay to produce their next record, movie etc. or produce it no frills themselves. Young people are comfortable searching for and sharing information on content. Lots of waste, redundancies, etc., in the corporations that produce content. Not saying NBC, HBO or AMC is going the way of the dinosaur but in the future we'll see downsized, streamlined versions of them. As competition comes from new sources people will demand lower costs.

[mu03eng]

You are so right. When ABC, CBS, NBC and the local movie theatre were the only entertainment options available the bean counters were in control. Talent today can have their fanbase (enthusiastically) pay to produce their next record, movie etc. or produce it no frills themselves. Young people are comfortable searching for and sharing information on content. Lots of waste, redundancies, etc., in the corporations that produce content. Not saying NBC, HBO or AMC is going the way of the dinosaur but in the future we'll see downsized, streamlined versions of them. As competition comes from new sources people will demand lower costs.

Maybe I'm wrong but I think that's the point we're all making that Chico's misses.  Yes content development right now is very expensive and therefore the alternative delivery streams can't support it from a revenue standpoint.....however, there will be a time when the content will become cheaper and the alternative delivery methods will support, the same, if not better the content developers.

[brandx]

Maybe I'm wrong but I think that's the point we're all making that Chico's misses.  Yes content development right now is very expensive and therefore the alternative delivery streams can't support it from a revenue standpoint.....however, there will be a time when the content will become cheaper and the alternative delivery methods will support, the same, if not better the content developers.

If you go back and look at his posts, Chicos always sides with the rich and powerful. Not making a judgement, but that is just his viewpoint.

So he sees this issue in that context. The people in charge with money say they won't change, so it's not going to happen. But the technology has opened so may other options. I honestly believe the whole cable/studio influence would be blown up already if not for Sports programming. That is the one area, so far, that cannot be overcome by new technology. It is the ONLY reason I have cable and I would suspect that is also the case for millions of others.

With the online providers, there is no reason to spend $2000 a year on cable just to watch a few shows you like. Just wait a few months and use the cheaper options. But it doesn't work with Sports.

 

[mu03eng]

With the online providers, there is no reason to spend $2000 a year on cable just to watch a few shows you like. Just wait a few months and use the cheaper options. But it doesn't work with Sports.

I would caution you here.  Chicos is correct, the Netflix content, especially tv, is "pre-monitized" when it gets to Netflix.  Take Big Bang Theory, a very popular show both on tv and streaming services.  If CBS did not buy BBT and put it on air, the show wouldn't exist.  So if everyone cuts the cable to wait a couple of months for it to come to Netflix, one of two things happen:
-Show never exists in the first place
-The cost to Netflix goes up, therefore Netflix has to charge subscribers more to sustain itself.

Now, of course this is a MAD situation, content creators aren't going to want kill the viewers...they need them and obviously the viewers want the content.  So the delivery mechanisms are going to change from the model we have now, but they will also be different than the Netflix "alternative" model we have right now as well.

[Canned Goods n Ammo]

Maybe I'm wrong but I think that's the point we're all making that Chico's misses.  Yes content development right now is very expensive and therefore the alternative delivery streams can't support it from a revenue standpoint.....however, there will be a time when the content will become cheaper and the alternative delivery methods will support, the same, if not better the content developers.

Bingo.

I know that (insert big TV star) isn't going to start doing a show on the internet. Got it. I also know Sony Pictures isn't going to start giving away it's content for free. Got it.

But, could a talented young actor, write, direct and produce his own content that is really good? Could that content eventually be monetized online without a network?

Another example:
Andy Samburg and the Lonely Island guys were putting out video content before SNL ever picked them up. Now, obviously SNL is a tremendous opportunity for exposure, so they had to take that step.

But, maybe the next "Lonely Island" figures out a way to monetize their own online content and they make a good living before they are ever even on TV. They simply don't need SNL. They don't need NBC.

How about "Android TV", where the content you subscribe to is automatically downloaded to your personal device each week? It's just like podcasting, but it's video content.

[Canned Goods n Ammo]

If you go back and look at his posts, Chicos always sides with the rich and powerful. Not making a judgement, but that is just his viewpoint.

So he sees this issue in that context. The people in charge with money say they won't change, so it's not going to happen. But the technology has opened so may other options. I honestly believe the whole cable/studio influence would be blown up already if not for Sports programming. That is the one area, so far, that cannot be overcome by new technology. It is the ONLY reason I have cable and I would suspect that is also the case for millions of others.

With the online providers, there is no reason to spend $2000 a year on cable just to watch a few shows you like. Just wait a few months and use the cheaper options. But it doesn't work with Sports.

I think it's tough to think big picture when you are involved in execution (in any industry).

Ask the an automotive plant manager how you should redesign a vehicle, and he will start talking about the logistics involved, not what the vehicle should be. It's the manager's point of view. It's hard to think big when you are the one actually doing the work.

[brandx]

I would caution you here.  Chicos is correct, the Netflix content, especially tv, is "pre-monitized" when it gets to Netflix.  Take Big Bang Theory, a very popular show both on tv and streaming services.  If CBS did not buy BBT and put it on air, the show wouldn't exist.  So if everyone cuts the cable to wait a couple of months for it to come to Netflix, one of two things happen:
-Show never exists in the first place
-The cost to Netflix goes up, therefore Netflix has to charge subscribers more to sustain itself.

I agree with what you say.

I probably wasn't clear enough in my last post since I had made a couple points earlier as well. I stated in several of my posts that they would find other ways to monetize. I would expect the cost of a Netflix subscription to go up when the model changes. They have already raised prices for new users. And I would expect that trend to continue as they fund and develop more and more of their own shows or when producers create content that they would sell direct to Netflix, Amazon, Apple, etc.

Record companies used to make almost all of their money off of record/CD sales. They limited users as to what they could buy individually. Certain songs were released on 45's or single CDs, but otherwise you had to buy the entire album even if half the songs were crap.

Now there are options. I actually have spent more on music over the last 3 or 4 years than I have since I was young. For years I quit buying albums/CDs - until I had the chance to listen to whatever I wanted online and could choose individually what tracks to buy.

[brandx]

Bingo.

I know that (insert big TV star) isn't going to start doing a show on the internet. Got it. I also know Sony Pictures isn't going to start giving away it's content for free. Got it.

But, could a talented young actor, write, direct and produce his own content that is really good? Could that content eventually be monetized online without a network?

Many, many musicians are making a very good living providing content online and bypassing record companies as well.

While they lack the advertising/promotional arm of the record companies, they obviously receive much more than the pennies on the dollar that almost all artists get from the record companies.