UBS ups Apple estimates on new product expectations

[AppleInsider]

Analysts for investment bank UBS on Monday raised their estimates and price target on Apple Inc., citing better than expected sales of Macs this holiday season and upcoming product introductions that could include an ultra-portable notebook and pay-per-view movie service.

"Given general concerns about the economy, we are frankly surprised by the ongoing strength of the Mac franchise right now and the prospects (or 'builds') for new products we are hearing about for next year," analyst Ben Reitzes wrote in a research note. "With regard to the near-term, checks show very solid holiday demand, particularly with Macs, outpacing our prior expectations."

Reitzes, who along with his team recently surveyed over 30 Apple retail stores, said the "Mac phenomenon" should have a positive impact not only on the Cupertino-based company's systems hardware revenue, but also peripherals, software and overall company gross margins.

In the near term, the analyst anticipates that Apple chief executive Steve Jobs will use his January 15th keynote at the Macworld Expo in San Francisco to take the wraps off several new products and technologies which could include a "new iPhone model, an ultra portable PC platform, and even possibly a pay-per-view movie service" among other things.

"We first outlined the possibility of ultraportable devices from Apple in June 2006," he told clients. "However, it is important to note that we think these compelling ultra-portable Macs don’t seem to be adequately reflected in analyst models at this time."

As a result, Reitzes believes this new product category could make his estimates conservative over the long-term and help offset any potential slowdown in the iPod market due to market maturation and potential saturation of the digital media players in the US.

"Regarding features in the ultra-portable, we believe Apple would be looking at integrating the 'touch' capability from its iPhone into the ultra-portable device with Leopard obviously as the OS," the analyst wrote. "We believe Apple would only enter this market if its devices could be priced in the $1,500 range."

Meanwhile, Reitzes also speculates that the company's iPhone announcements next year could see a lower priced iPhone 'for the masses' make its debut alongside updated or 3G flagship models.

"Our checks continue to indicate solid demand in the US following the $200 price cut with significant interest into the holidays," he wrote. "Should Apple introduce another lower-priced iPhone in the $200-$250 range, we believe we could see another significant pop in unit sales not unlike what happened to the iPod when the mini was announced in 2004."

If Apple indeed takes this path, the analyst believes iPhone sales could actually be somewhat similar to the initial iPod pattern in terms of the first product only being one of many with demand stimulated later with follow-on releases at lower prices and with compelling designs.

"Perhaps at Macworld or shortly thereafter, we expect Apple to announce a lower-cost (or 'nano-like' option) along with a 3G option potentially coming later in 2008," he wrote.

Finally, Reitzes advised clients that his current iTunes estimates may prove conservative given the possibility that Apple could introduce a new "pay per view" movie service and additional content partners. His checks indicate that such a service using the company's digital rights management software -- with rental fees of around $2.99 to $3.99 -- is possible and could also work in helping entice additional movie content providers to join iTunes.

"In terms of new products, we believe Apple is working on improvements for Apple TV, perhaps adapting the concept a bit with the focus on advanced and increased networked storage for the home -- accessible by your Mac or PC or TV," the analyst added. "We also believe it is possible at some point for Apple to enter the HDTV flatscreen business, with built- in Apple TV’s and hard drives -- but that may be a 2009 or 2010 event."

For the current December quarter -- Apple's fiscal first of 2008 -- Reitzes now expects the company to earn $1.56 per share on sales growth of 32.5 percent to $9.42 billion, still factoring in iPod unit growth of 17 percent year-over-year and 2.1 million iPhones, but now including increased Mac unit growth of 40 percent yearly to 2.24 million units.

The analyst also raised his 12-month price target on Apple to $235 per share, up from $220.

[ View this article at AppleInsider.com ]

[Bageljoey]

If it wasn't for analists, we would have no news...

[Edit:]
Actually, that was sarcastic, because these things never seem to say anything new.
But I just noticed at the bottom the projected iTunes movie rental price of $3-$4. That would be awesome in my book! I hope they know what they are talking about...

[anantksundaram]

Originally Posted by Bageljoey

If it wasn't for analists, we would have no news...

Generally true, but his guy actually seems to be sticking his neck out a bit more than the others, on the product side, with some fairly aggressive predictions -- ooops, I mean, speculation -- on likely introductions and time frames......

[11thIndian]

I dunno. I think $3-4 is a bit steep for a virtual rental. That's what people pay for physical movie rentals, and you get all the extras included on the DVD. I think a $1.99 price point would make it an exceedingly attractive proposition for everyone except the most ardent torrent downloaders.

Oh, and they really need to start making movie downloads HD. Even 720 would make most people happy, as probably 80+% of the market are not running 1080 TV's anyways.

[melgross]

Originally Posted by 11thIndian

I dunno. I think $3-4 is a bit steep for a virtual rental. That's what people pay for physical movie rentals, and you get all the extras included on the DVD. I think a $1.99 price point would make it an exceedingly attractive proposition for everyone except the most ardent torrent downloaders.

Oh, and they really need to start making movie downloads HD. Even 720 would make most people happy, as probably 80+% of the market are not running 1080 TV's anyways.

I remember seeing a survey a couple of years ago that showed that most people renting movies didn't view the extras, and that many people who bought movies didn't watch them either.

Besides, people understand the concept of paying a bit more for convenience and speed.

[Frank777]

It's funny that these analysts are going gaga for all the fanboy stuff, like the ultraportable and the movie rental service.

But the updated Mac Pro, which Apple will make real money on, is totally ignored in their 'outlook'.

[melgross]

Originally Posted by Frank777

It's funny that these analysts are going gaga for all the fanboy stuff, like the ultraportable and the movie rental service.

But the updated Mac Pro, which Apple will make real money on, is totally ignored in their 'outlook'.

It isn't necessarily fanboy stuff. Most companies already have ultraportables, and there are many movie rental services online. This is already old news in the industry.

They haven't mentioned the Mac Pro, because it won't be a NEW product, which is mostly what they're talking about, except for the iPhone, which is itself still pretty new, and a fairly hot, and important, new product catagory for Apple.

I think we can all expect that Apple will make announcements for most, if not all, of their machines, at the very least, being upgraded to Penyrn.

[djames42]

Originally Posted by 11thIndian

I dunno. I think $3-4 is a bit steep for a virtual rental. That's what people pay for physical movie rentals, and you get all the extras included on the DVD. I think a $1.99 price point would make it an exceedingly attractive proposition for everyone except the most ardent torrent downloaders.

I'd pay $3-4 to rent a movie that I could watch on my iPod. Given a service like that, I'd very likely add an AppleTV to my setup. Besides, Microsoft is charging $6 for a rental, and that's in addition to the Live subscription. Granted their content is HD, but at that price, convenience is too steep.

[Frank777]

The Mac Pro will be brand new in 2008. It must be. It has not seen a real update to its chassis since 2003.

And Penyrn, FW3200 and new displays will make it a more profitable upgrade than anything in the lineup.

[VertiGoGo]

Originally Posted by 11thIndian

I dunno. I think $3-4 is a bit steep for a virtual rental. That's what people pay for physical movie rentals, and you get all the extras included on the DVD. I think a $1.99 price point would make it an exceedingly attractive proposition for everyone except the most ardent torrent downloaders.

Oh, and they really need to start making movie downloads HD. Even 720 would make most people happy, as probably 80+% of the market are not running 1080 TV's anyways.

I dunno, my digital cable provider (Rogers.com) charges $5.99 for a "virtua rental" when you view through their "Rogers on Demand" service off of Channel 100.

I would be far more likely to consider renting my movie from Apple, via iTunes, if they were charging $3-4...especially considering I already have my Mac Mini connected directly to my flat panel HDTV via HDMI (if Canada gets this service out of the gate - which is doubtful).

Just because there isn't a physical media to hold in your hands doesn't mean that the rental price should drop through the floor. Since movie distributers press as many copies of a DVD as they do, the bulk costs are very small...which translates into very little savings for consumers...even if that cost were to be knocked off the price of a rental.

[Bageljoey]

Originally Posted by melgross

I remember seeing a survey a couple of years ago that showed that most people renting movies didn't view the extras, and that many people who bought movies didn't watch them either.

True

Besides, people understand the concept of paying a bit more for convenience and speed.

Exactly. I have netflicks, which is awesome. I love it.
But it still happens sometimes that I am in the mood for something serious and put 2 heavy, subtitled movies at the top of my queue. Two days later, when they arrive, I may be in the mood for a light comedy--what do I do? I can send back the movies I got unwatched and hope I am in the right mood still 3 days later, or I can hold onto the movies and hope my mood changes back.
I would pay more for convenience and speed--no doubt.
(I have no desire ever to enter a Blockbuster again)

[digitalclips]

Originally Posted by 11thIndian

I dunno. I think $3-4 is a bit steep for a virtual rental. That's what people pay for physical movie rentals, and you get all the extras included on the DVD. I think a $1.99 price point would make it an exceedingly attractive proposition for everyone except the most ardent torrent downloaders.

Oh, and they really need to start making movie downloads HD. Even 720 would make most people happy, as probably 80+% of the market are not running 1080 TV's anyways.

I agree and they can always add higher resolution as an option for those willing to wait longer that want it and as some have said, I'd even pay more. Be nice if they didn't expire for a week at least too.

Side bar: I just caught the remake of Vertigo last night. A classic 1954 movie in high definition and full color, it was amazing to see. I realized there are movies I'd love to own too in Hi-Def. As more classics are restored and produced in high definition I think this is a market iTunes could be perfect for.

[11thIndian]

Originally Posted by VertiGoGo

I dunno, my digital cable provider (Rogers.com) charges $5.99 for a "virtua rental" when you view through their "Rogers on Demand" service off of Channel 100.

I would be far more likely to consider renting my movie from Apple, via iTunes, if they were charging $3-4...especially considering I already have my Mac Mini connected directly to my flat panel HDTV via HDMI (if Canada gets this service out of the gate - which is doubtful).

Just because there isn't a physical media to hold in your hands doesn't mean that the rental price should drop through the floor. Since movie distributers press as many copies of a DVD as they do, the bulk costs are very small...which translates into very little savings for consumers...even if that cost were to be knocked off the price of a rental.

I suppose what I say is more true for a sales vs rental market. And I totally agree that 90% of the market is has no interest in special features. Perhaps I'm more interested in Apple undercutting the illegal download market by offering convenience and quality at a great price.

I as well hope this service is day and date launched in Canada, though I share your doubt. Though one hopes that TV shows on iTunes is a hopeful sign of things to come. Without move rentals, I'm in no hurry to purchase an ATV, and probably still not if the rentals aren't available in 720.

[melgross]

Originally Posted by Frank777

The Mac Pro will be brand new in 2008. It must be. It has not seen a real update to its chassis since 2003.

And Penyrn, FW3200 and new displays will make it a more profitable upgrade than anything in the lineup.

I don't think it will be new now, at MacWorld.

What I think is going to happen is that Intel will push Nehalen forward a month or three (their stuff seems to be ahead of schedule as of the past two years), and have it available for the ADC during the summer. THAT'S when I believe Apple will re-design the machine. It makes the most sense. Macworld has evolved into more a consumer event than the pro event it used to be with the ADC becoming such a major event in itself.

Also, Nehalen will require a major re-design of the entire Mobo, which Penyrn doesn't. You know Apple, only make a major change when it's required. I doubt very much that we will see FW3200 as it isn't even scheduled to be approved until sometime first quarter.

[GQB]

The whole idea of 'time-based' rentals is antiquated. That whole model is based on physical media that only one person can have in possession at a time.

Dilger has a good angle on it...
http://www.roughlydrafted.com/2007/1...tunes-rentals/

'Slot-based' rentals where you pay, say, $15/mo for 5 slots that you fill in any way you want. Keep on for a year if you want, turn other slots over daily.

Who knows what pricing policies will evolve to encourage/discourage turnover or selection of lower-demand content.

Think about content on Cable. If you watch 30 movies/day on Cable (assuming 2 premium channels), you're paying about $2 each. The trick for rentals will be to get economies of scale for rentals (i.e. ala Carte) that Cable companies get by pushing 400 channels of crap for the 4-5 channels you really want.

[GQB]

Originally Posted by Frank777

It's funny that these analysts are going gaga for all the fanboy stuff, like the ultraportable and the movie rental service.

But the updated Mac Pro, which Apple will make real money on, is totally ignored in their 'outlook'.

So now 'fanboy' means not just enthusiastic Mac users, but Mac users who are not enthusiastic about the same models as you.
Can we now just retire this most stupid of ad-hominems?

As for which models will make Apple the most money, as a AAPL stockholder, I think they're making their choices just fine, thank you.

[JeffDM]

Originally Posted by VertiGoGo

Just because there isn't a physical media to hold in your hands doesn't mean that the rental price should drop through the floor. Since movie distributers press as many copies of a DVD as they do, the bulk costs are very small...which translates into very little savings for consumers...even if that cost were to be knocked off the price of a rental.

I really don't see the point in paying more than $2 a rental though. When it comes down to it, I pay less than that. Maybe half of that is packaging, postage and handling.

Given that Apple doesn't have to finance high-square-foot retail facilities in high rent districts to display movies, much of the retailer mark-up isn't necessary. They generally use lower sq-ft facilities to market much more expensive products instead, and the media stuff is web based, which really cuts down on a lot of different expenses. If it's $2/rental through Apple, the studio would probably get about $1.50. I don't think studios get royalties for DVD rentals anymore, so what the studio gets per rental effectively goes down every time a movie is rented.

[Bageljoey]

Originally Posted by JeffDM

I really don't see the point in paying more than $2 a rental though. When it comes down to it, I pay less than that. Maybe half of that is packaging, postage and handling.

Given that Apple doesn't have to finance high-square-foot retail facilities in high rent districts to display movies, much of the retailer mark-up isn't necessary. They generally use lower sq-ft facilities to market much more expensive products instead, and the media stuff is web based, which really cuts down on a lot of different expenses. If it's $2/rental through Apple, the studio would probably get about $1.50. I don't think studios get royalties for DVD rentals anymore, so what the studio gets per rental effectively goes down every time a movie is rented.

I have no idea of the money involved in such things, but I can speculate that an ultra high bandwith distribution center with servers and storage might be more expensive to set up and maintain than a DVD production factory. Sure there is no packaging and shipping, but there would still be costs. You would probably have to carry tech support too--which isn't needed for physical DVDs.
I don't know what a "fair" price would be (I don't even know what that would mean).
I do not know how much it would cost Apple to set up and maintain these facilities.

But I do know that there would be studio participation in the costs. Bearing that in mind, I cannot imagine $2 rentals any time soon, if ever.

[JeffDM]

Originally Posted by Bageljoey

But I do know that there would be studio participation in the costs. Bearing that in mind, I cannot imagine $2 rentals any time soon, if ever.

I that's probably the most pressing barrier. If they push for the $4-$5 rentals like they did with the original DivX format, then it's over for an Apple rental service as far as I'm concerned. But Netflix offers streaming movie rentals at no extra cost above the regular subscription, they just don't have is a set-top box or portable devices.

[zanshin]

Originally Posted by GQB

Think about content on Cable. If you watch 30 movies/day on Cable (assuming 2 premium channels), you're paying about $2 each. The trick for rentals will be to get economies of scale for rentals (i.e. ala Carte) that Cable companies get by pushing 400 channels of crap for the 4-5 channels you really want.

If you have 2 premium channels ($10-$15/month each where I live) you're not going to get close to 30 movies a day; at best, 5 or 6, since they repeat the same films multiple times in a day.

Even at 3 movies a day x 2 channels = 6 movies x 30 days/month (avg) = 180 movies a month for maximum cost of $30/month (2 x $15 each channel) = about $0.17 per movie.

And that doesn't take into account the 15 or 20 other channels of the 400 they provide that I like regardless of the other crap.

I've done the math in my area, and I can't rent the volume of movies (even from RedBox at $1 per DVD) for lower cost than the selection I can get from my cable provider.

Unfortunately, the selection seems to get worse and worse. Thankfully, the premium channels do manage to provide some other content (series and specials) that I enjoy to take up the slack.

[melgross]

Originally Posted by GQB

The whole idea of 'time-based' rentals is antiquated. That whole model is based on physical media that only one person can have in possession at a time.

Dilger has a good angle on it...
http://www.roughlydrafted.com/2007/1...tunes-rentals/

'Slot-based' rentals where you pay, say, $15/mo for 5 slots that you fill in any way you want. Keep on for a year if you want, turn other slots over daily.

Who knows what pricing policies will evolve to encourage/discourage turnover or selection of lower-demand content.

Think about content on Cable. If you watch 30 movies/day on Cable (assuming 2 premium channels), you're paying about $2 each. The trick for rentals will be to get economies of scale for rentals (i.e. ala Carte) that Cable companies get by pushing 400 channels of crap for the 4-5 channels you really want.

Well, I mean, really! Who is going to watch 30 movies a day, even if they were available? That's 60 hours of programming a day!

Even the most rabid of movie addicts can't watch much more than 3 movies a day. unless they're unemployed, and living in their parents home, who has the time?

At least use realistic numbers.

Otherwise, your argument makes sense.

[Bageljoey]

Originally Posted by melgross

At least use realistic numbers.

Otherwise, your argument makes sense.

[Bageljoey]

Originally Posted by JeffDM

Netflix offers streaming movie rentals at no extra cost above the regular subscription, they just don't have is a set-top box or portable devices.

Or Mac support of any kind...

[SpamSandwich]

Originally Posted by Bageljoey

If it wasn't for analists, we would have no news...

[Edit:]
Actually, that was sarcastic, because these things never seem to say anything new.
But I just noticed at the bottom the projected iTunes movie rental price of $3-$4. That would be awesome in my book! I hope they know what they are talking about...

$3-4 dollars each is a bit much. If you're an avid Netflix user like me, you can view about 15 titles a month for around $18... which works out to about $1.20 per title.

[Bageljoey]

Originally Posted by SpamSandwich

$3-4 dollars each is a bit much. If you're an avid Netflix user like me, you can view about 15 titles a month for around $18... which works out to about $1.20 per title.

Yeah, I could do that.
10 years ago, no problem.

But now I like to watch the movies with my wife, and she doesn't watch just any movie. It has to be the "right" movie. This, for her, depends on a great many factors--many of which I do not understand. Suffice it to say, we might have 2 movies at any given time that are not the "right" movie.
The third disk I keep in rotation for TV shows that she has no interest in--I motor through Deadwood, Weeds, Alias, the Sopranos and such on my own.
Add in a relatively new kid (and another on the way) and we do not come close to using Netflix to full capacity anymore. It would be more cost effective for us to download the movies we want as we want them--and we would be getting greater satisfaction because there would not be days where we did not have access to the movies we wanted.
I would be willing to pay for that.

If only Apple (or should I say the movie companies) would give us the chance

[melgross]

It's true. I know people with Netflix who don't watch nearly as many movies from them as they are entitled to.

[bsenka]

3-4 dollars each for download rentals? As if. One reason physical media has more value, even as a rental, is you can use it anywhere. Any DVD player, any computer, most video game units, even a lot of car decks. The limitations on iTunes videos that you BUY are already far too restrictive, rentals are going to be one step short of useless.

Besides, a digital file has no value. That's why people are unremorseful about bittorrent downloading, there is no physical product, it's just a file, it's worth nothing. It's that physical product that people actually pay money for, not the content on it. If you don't get to own it, keep it, and hold it in your hands, even $1 is pushing it.

[Bageljoey]

Originally Posted by bsenka

3-4 dollars each for download rentals? As if. One reason physical media has more value, even as a rental, is you can use it anywhere. Any DVD player, any computer, most video game units, even a lot of car decks. The limitations on iTunes videos that you BUY are already far too restrictive, rentals are going to be one step short of useless.

Besides, a digital file has no value. That's why people are unremorseful about bittorrent downloading, there is no physical product, it's just a file, it's worth nothing. It's that physical product that people actually pay money for, not the content on it. If you don't get to own it, keep it, and hold it in your hands, even $1 is pushing it.

What you say makes no sense.

By extension, then, I guess you don't pay for music downloads--there is nothing physical there either. I suppose you can sneek into movie theatres and watch movies for free too, because there is no physical product to pay for. I suppose you don't pay for advice from a lawyer either--I mean, there is nothing physical there.

People that grew up with the Internet (I'm guessing that you are in your 20's or younger) got the impression that anythig you can "get" on the internet is free and should always be free.
People have to make those movies--not just rich actors and directors but thousands of grips and animators and wranglers and caterers and editors and so on. I would like to see you tell some grip to his face that you shouldn't have to pay to see the movie he worked 5 months on because there is nothing "physical" there.

Sorry, but I find your "logic" idiotic.

[digitalclips]

Originally Posted by Bageljoey

What you say makes no sense.

By extension, then, I guess you don't pay for music downloads--there is nothing physical there either. I suppose you can sneek into movie theatres and watch movies for free too, because there is no physical product to pay for. I suppose you don't pay for advice from a lawyer either--I mean, there is nothing physical there.

People that grew up with the Internet (I'm guessing that you are in your 20's or younger) got the impression that anythig you can "get" on the internet is free and should always be free.
People have to make those movies--not just rich actors and directors but thousands of grips and animators and wranglers and caterers and editors and so on. I would like to see you tell some grip to his face that you shouldn't have to pay to see the movie he worked 5 months on because there is nothing "physical" there.

Sorry, but I find your "logic" idiotic.

You are totally correct. Well explained too.

[melgross]

Originally Posted by Bageljoey

What you say makes no sense.

By extension, then, I guess you don't pay for music downloads--there is nothing physical there either. I suppose you can sneek into movie theatres and watch movies for free too, because there is no physical product to pay for. I suppose you don't pay for advice from a lawyer either--I mean, there is nothing physical there.

People that grew up with the Internet (I'm guessing that you are in your 20's or younger) got the impression that anythig you can "get" on the internet is free and should always be free.
People have to make those movies--not just rich actors and directors but thousands of grips and animators and wranglers and caterers and editors and so on. I would like to see you tell some grip to his face that you shouldn't have to pay to see the movie he worked 5 months on because there is nothing "physical" there.

Sorry, but I find your "logic" idiotic.

The culture we're seeing grow up because of the internet, is that of people thinking if they can steal "it" without much risk attached, then it isn't really stealing at all, it's their "right" to have it.

They then build up a philosophy that copyright, licenses, royalties and such aren't something that they have to think about. They have no ability to think this through to the logical end, because they don't WANT to.

Part of this is the illogical idea of stating that the record companies are "ripping" off the artists (sometimes, but no more so than anything else), therefore they can steal (not a term they will use, of course) it off the internet, because they won't pay those record companies. They conveniently forget that by doing so, they assure that the artists (and others) get nothing at all. But, they don't want to think about that, because it interferes with their "If it's good for me, then nothing else matters." culture, and thought process, they've built up for themselves.

They are just as bad as the Chinese (and other) counterfeiters who deprive everyone who made these products of their proper income.

[bsenka]

Originally Posted by Bageljoey

What you say makes no sense.

By extension, then, I guess you don't pay for music downloads--there is nothing physical there either. I suppose you can sneek into movie theatres and watch movies for free too, because there is no physical product to pay for. I suppose you don't pay for advice from a lawyer either--I mean, there is nothing physical there.

People that grew up with the Internet (I'm guessing that you are in your 20's or younger) got the impression that anythig you can "get" on the internet is free and should always be free.
People have to make those movies--not just rich actors and directors but thousands of grips and animators and wranglers and caterers and editors and so on. I would like to see you tell some grip to his face that you shouldn't have to pay to see the movie he worked 5 months on because there is nothing "physical" there.

Sorry, but I find your "logic" idiotic.

Music downloads... No I would not pay for them either. At least not the price itms charges for a full album. The value just is not there. I did pay $5 each to Radiohead and Saul Williams to download their new albums. In that case, the money at least actually went to the artists, and the full album was priced rationally.

Services are different, because the performance of the service can have value in certain circumstances. The presentation of a movie at a theatre does, because you get the huge screen, the big sound, the atmosphere, the snack bar, the night out with friends, etc. The DVD of that movie though, only has value in its physical form. An electronic file of a movie? Essentially no value. An electronic file doesn't provide an adaptable personal service. Same with music. A concert performance has value, a physical CD has value, an electronic file does not. A photocopy of a newspaper article has no value either, it's the same thing really.

Obviously, a lawyer's advice depending on the circumstances COULD have very serious immediate value.

Internet content absolutely should always be free, but I'm 40, not 20.

The people who work on movies do get paid very well. Once they get paid for the work they did, what anyone else does with that work is none of their concern. Work that I do ends up on torrents a lot. It doesn't bother me, because not only has the client already paid me for the work, the distribution is free promotion of my work. I have picked up new clients who found my work soley due to the torrents they were downloading.

The logic is solid. Millions of people use torrents everyday. A lot more people agree with me than agree with you.

[JeffDM]

Originally Posted by bsenka

Work that I do ends up on torrents a lot. It doesn't bother me, because not only has the client already paid me for the work, the distribution is free promotion of my work. I have picked up new clients who found my work soley due to the torrents they were downloading.

The issue comes down to the end game - when everything is basically on the Internet, the sole outlet for pretty much all creative work. When it comes to that, who will invest in your work when they're not going to get a return on that investment?

[mzaslove]

Originally Posted by JeffDM

The issue comes down to the end game - when everything is basically on the Internet, the sole outlet for pretty much all creative work. When it comes to that, who will invest in your work when they're not going to get a return on that investment?

Gotta agree. It's what the WGA is on strike about, what the DGA is going to negotiate about, and come summer, what SAG is going to deal with. When the majority of distribution goes from physical to digital, how do the initial investors get their money back, and if they can't because everyone has stolen the product, why should they invest... which means there will be much less product than what we are used to.

[melgross]

Work that I do ends up on torrents a lot. It doesn't bother me, because not only has the client already paid me for the work, the distribution is free promotion of my work. I have picked up new clients who found my work soley due to the torrents they were downloading.

But you're just one person in the equation. How do your clients feel about it, assuming that they need to sell it to make money?

[Bageljoey]

Originally Posted by bsenka

Music downloads... No I would not pay for them either. At least not the price itms charges for a full album. The value just is not there.

So let me get this straight. If you think the price of something is too high, you are entitled to steal it. No, you are wrong. If you don't agree that the convenience of legal downloading has enough "value" for you then you should buy the album on CD.

I did pay $5 each to Radiohead and Saul Williams to download their new albums. In that case, the money at least actually went to the artists, and the full album was priced rationally.

Well, good for you.

Services are different, because the performance of the service can have value in certain circumstances. The presentation of a movie at a theatre does, because you get the huge screen, the big sound, the atmosphere, the snack bar, the night out with friends, etc. The DVD of that movie though, only has value in its physical form. An electronic file of a movie? Essentially no value. An electronic file doesn't provide an adaptable personal service. Same with music. A concert performance has value, a physical CD has value, an electronic file does not. A photocopy of a newspaper article has no value either, it's the same thing really.

Huh? This is the well thought out version of your "logic?"
If you want something, it has value to you.

CASE #1
The movie at the theatre has value because you want to see it enough to pay +/- $10 to have that privilege.
If a friend of yours had free passes to the theatre, you would continue to go even if you didn't have to pay--it still has value, just someone else is paying.

Case #2

A DVD of a movie has value to you because it enables you to see a movie you want to see. Prices vary wildly but have almost nothing to do with the "physical form" you are so fixated on. The DVD itself is worth less than a dollar. Packaging may cost a few bucks depending on the bells and whistles. What gives the DVD enough value to charge 2-3 times the theatre price for some people is this:

1. you can watch the movie whenever you want
2. you can share the movie with friends
3. it may include extras
4. you can sell it when you are done with it

Case #3

Physical rentals (ala Blockbuster or Netflix) have value because they enable you to see a movie you want to see. The value is much less than buying the DVD because of the fact you are renting, not owning. You cannot keep it indefinitely (without paying more in fees that buying) and you have nothing left at the end. You end up with nothing, but that doesn't mean it had no value.

Case #4

Digital downloading has value because it enables you to see a movie you want to see.

Whether you are downloading to own (current iTunes movies) or using a downloading rental model (suspected iTunes future option or current Netflix for Windows users option) you are getting the value of seeing a movie in the convienence of your own home or work or iPod--without even having to leave the house to get it. Just because bittorrent allows you to get it for free does not make it right.

Internet content absolutely should always be free, but I'm 40, not 20.

I guess you want to live in a world where no one makes a living off of creating anything. Physical media is on its way out. In your dream world, current YouTube amateur content will be the epitome of art and entertainment.

The people who work on movies do get paid very well. Once they get paid for the work they did, what anyone else does with that work is none of their concern.

Because people like you are the minority right now. Other people are paying them while you are freeloading. If people stop buying or renting movies because they know they can get them for free, the earning power of future movies will go down and that WILL affect peoples jobs. Sure the thousands of people who worked on Harry Potter 5 got paid before a single ticket was sold. but investors and studios may not put as much $$ into Harry Potter 7 if they see that people are not paying to watch it. That would cost jobs. (I don't knot that it could happen that fast, but you get the idea.

Work that I do ends up on torrents a lot. It doesn't bother me, because not only has the client already paid me for the work, the distribution is free promotion of my work. I have picked up new clients who found my work soley due to the torrents they were downloading.

This works for some models. If you have a single client who pays for your work, then this can work out fine. Especially if the work is specific such that other people can look at it to get an idea of your talent, but would still need you to create something to work the best for them. But it depends on your work. If future clients don't come to you because what you put out for free worked fine for them, you would not be so cavalier. Imagine if somebody is about to sign a contract with you and then sees they can use some of your work on the internet for free. Or imagine if a client paid you $10K to create something for them and then saw that their competitors are getting to use it for free. Are they going to want to pay you next time to create something for them and for their rivals? I do not know what your work is, but I assume you want to get paid for it.

The logic is solid. Millions of people use torrents everyday. A lot more people agree with me than agree with you.

This is the logic of a freeloader. Many millions more do not use torrents. Most of the people who buy music on iTunes have the ability to get it for free, but they would rather do what is right.
That doesn't mean that I think the system is working. I think that some people go to torrents out of frustration because the DRMs being used are clunky, because the prices are out of kilter and whatnot. I am not saying I would never use them either--I just would not delude myself into thinking I was not stealing. Heck, I have switched to a second movie in a multiplex many a time. Even when I was 20 I knew I was stealing.
Now that you are 40 what is your excuse?

[Bageljoey]

Originally Posted by mzaslove

... which means there will be much less product than what we are used to.

Or it will be done much more cheaply--not to the standards we now enjoy!

[mzaslove]

Originally Posted by Bageljoey

Or it will be done much more cheaply--not to the standards we now enjoy!

Absolutely. Lately when I'm raising money for a movie, digital distribution has become a real factor. And investors ask a lot of questions about that. Piracy does come up in the conversation, and that has to be taken into account in the business plan. Everyone is worried about getting their money back, as they always have, but in the past they never worried about it being stolen from them.

People who download the stuff for free when they should be paying are thieves, plain and simple. If they want to get the laws changed, I'm all for it. But right now it's illegal, and it will effect the bottom line.

[bsenka]

Originally Posted by mzaslove

People who download the stuff for free when they should be paying are thieves, plain and simple. If they want to get the laws changed, I'm all for it. But right now it's illegal, and it will effect the bottom line.

It's not theft. Theft requires a loss. The original product is still there for anyone who wants to buy it, and nobody paid to produce a product that cannot be sold.

Perhaps it's illegal where you live, but downloading for personal use is perfectly legal here.

[melgross]

Originally Posted by bsenka

It's not theft. Theft requires a loss. The original product is still there for anyone who wants to buy it, and nobody paid to produce a product that cannot be sold.

Perhaps it's illegal where you live, but downloading for personal use is perfectly legal here.

Unless you live in Russia, or some other place where the rule of law doesn't hold, then it is illegal to download copyrighted works without paying for the use.

[bsenka]

Originally Posted by melgross

Unless you live in Russia, or some other place where the rule of law doesn't hold, then it is illegal to download copyrighted works without paying for the use.

Courts in Canada have repeatedly upheld an individual's right to copy and/or download for personal use. The Canadian copyright act specifically states that copies made for private use are not an infringement of the copyright.

http://www.news.com/2100-1027_3-5182641.html