Apple's biggest problem now is not being able to live up to consumer and investor hype. Remember, in show business you're only as good as your last movie, or in this case... keynote.
Is Apple going to be late with DVR, the same way they were late with CD burning. Do you remember everybody was burning CDs then for 2 or more years, until Apple learned to include CD burners in ther computers.
You need to think about this a little differently. Let me lay it out...
I currently have the following (TV/movie) entertainment monthly costs:
Cable: $14 (+ tax)
Netflix: $17 (+ tax)
TiVO: $13
Total: $45
Now...if Apple provides me with a solution that replaces the true value I get from these three combined for the same (or slightly higher) average monthly cost, I might go for it.
For example, I only watch 3 regular TV programs. Let's say that is 66 episodes a year (monthly breakdowns a little rough here because of the way they do TV shows). At $2/episode we are up to $132/season. This averages out to about $11/month (remember summers are "off"). Plus I don't have to fast forward through commercials or navigate show scheduling conflicts.
Now...suppose we add movies...say they are $3/each...imagine I do 6-7 movies per month...$21/month.
We're up to about $32/month.
Hmmm...I still have room.
Plus I only pay for what I watch (with TiVO and Cable I am paying for everything whether I watch it or not).
Plus I "own" (have access to) everything (as long as I have an Apple "media box").
I think this is where Apple is heading.
They are, plain and simply, planning to reinvent (and "streamline") TV and movie "rentals"/"purchases". Their targets are:
- cable
- TiVO
- Netflix/blockbuster/Hollywood Video
NOTE: I don't assume that the above scenarios works for everyone. But it may just work for enough millions (4-5) to make it worth the try for Apple.
You sound like the customer who watches Channels 2 - 13 solely with the occasional channel 28.
The total choice plus package for DirecTV is > $50 with taxes and more than one receiver.
If I want TiVO it's an add-on, all the way up to their premiere pay service of > $100. Comcast is no different.
I know of no one using NetFlix and there total subscriber numbers aren't surprising: if I want to rent a flick I'll go pick one up. NetFlix reminds me of having my Groceries brought to my doorstep.
I don't care if Microsoft or Apple claims to have the end-to-end solution. Comcast, DISH, Cablevision, DirecTV and the other networks will determine the options by which solution they include with their service. They all want their "own complete solution" and if they can squash NetFlix they'll do it. So unless Microsoft or Apple plans on purchasing NetFlix I don't see this company surviving. Unless Microsoft or Apple are going to offer an end-to-end service to satisfy one's television, dvr and movie subscription options by having their own network I don't see people purchasing a mac mini to be their DVR when they can upgrade their Cable or Satellite service with this for less upfront.
The Media Center concept is still not here. It reminds me of Gates and his SmartAppliances vision that everyone will soon have fully automated homes. Is he subsidizing this for our benefit?
You live in the UK. The Elgato EyeTV 610 does not work in the US. The Elgato EyeTV 500 is the only HDTV model they sell in the US and it only has two coaxial inputs, one for antenna and one for cable. That's it. No other inputs or outputs. They do not sell anything that can accept a CableCARD. They don't seem to have any plans to in the future either.
Oh I didn't know that.. shame! Hopefully they'll expand their product range then.
Oh I didn't know that.. shame! Hopefully they'll expand their product range then.
It is a shame as the EyeTV 610 looks perfect. Just swtich from a CAM module to a CableCARD and sell it in the US. However, even if they did most of the cable companies would refuse to install a CableCARD in a device hooked up to a computer. They don't even like to intall them in DVRs. I had a customer service rep tell me the CableCARD would melt inside my TV. They would rather rent out their own DVRs so the lie like this all the time.
I know of no one using NetFlix and there total subscriber numbers aren't surprising: if I want to rent a flick I'll go pick one up. NetFlix reminds me of having my Groceries brought to my doorstep.
Actually, Netflix is pretty nice. No more going to video store. Able to get movies video stores don't carry (limited shelf space). Can actually be cheaper than movie stores. So far (2 months into it), I like it.
Just because you (or anyone...that you know of) don't do it, doesn't mean it isn't any good.
I'd venture a bet that Apple makes more profit on iTMS than most people think.
They make some on volume, but not on each sale. Going by what is known about how much in royalties there is for the average song, and the content companies take, the estimate is that Apple gets 25 cents per song. 3 to 5 cents is profit.
This is, by the way, why these other music companies want to offer subscriptions. It costs so much to run an online music service vs. the sale price for those songs, thanks to Apple, that they have to sell a lot of them per month to break even. Apple seems to be the only one doing that.
The subscription companies may be in for a shock, if their negotiations with the content providers ever gets finished. MS dropped negotiations late last year, because, as MS said, they wanted between $6.50 and $8.50 per subscriber, per month. that would ruin the pricing models for these companies. They would have to raise their rates appreciatively, and thus lose customers, and have a harder time getting new ones. It isn't moving like gangbusters as it is.
I agree with MS that those rates would be too high for a subscription service. Right now, and it's been this way from the beginning, there is NO contract between the subscription services and the content providers. These services have been putting an unknown sum per month into an escrow account pending the end of negotiations. But the amount they've been contributing has been estimated to be between $2.50 and $4 a month, well below what's being demanded. Considering how long this has been going on, they could owe a big bundle when it's over.
How many will stay in business after that? What will happen to the subscriptions of the people who were on those services that might fold?
This is, by the way, a major reason why I feel Apple has not offered this kind of service. I doubt they would want to offer something if they didn't know how much they would be paying themselves. Smart move. If this ever gets straightened out, and the price is right, Apple might break down and offer it.
Going by what is known about how much in royalties there is for the average song, and the content companies take, the estimate is that Apple gets 25 cents per song.
I have heard (from a source I consider to be reliable) that the $0.65 - $0.75 per song to the record companies (that we most consistently read in the press) is more than what Apple is actually paying.
I have heard (from a source I consider to be reliable) that the $0.65 - $0.75 per song to the record companies (that we most consistently read in the press) is more than what Apple is actually paying.
I don't know who the reliable source may be, but the industry seems to agree on that pricing. I have no other reason not to believe it.
So we're back to not really knowing what Apple's true costs and profits on iTMS (or anything else for that matter) are beyond some "educated" guesses. But guesses they are.
So we're back to not really knowing what Apple's true costs and profits on iTMS (or anything else for that matter) are beyond some "educated" guesses. But guesses they are.
Royalty expenses are easy to find. I'll see if I have the time. My cousins are pretty well known song writers. We used to talk about that all of the time.
Comments
copeland
Originally posted by Chris Cuilla
You need to think about this a little differently. Let me lay it out...
I currently have the following (TV/movie) entertainment monthly costs:
Cable: $14 (+ tax)
Netflix: $17 (+ tax)
TiVO: $13
Total: $45
Now...if Apple provides me with a solution that replaces the true value I get from these three combined for the same (or slightly higher) average monthly cost, I might go for it.
For example, I only watch 3 regular TV programs. Let's say that is 66 episodes a year (monthly breakdowns a little rough here because of the way they do TV shows). At $2/episode we are up to $132/season. This averages out to about $11/month (remember summers are "off"). Plus I don't have to fast forward through commercials or navigate show scheduling conflicts.
Now...suppose we add movies...say they are $3/each...imagine I do 6-7 movies per month...$21/month.
We're up to about $32/month.
Hmmm...I still have room.
Plus I only pay for what I watch (with TiVO and Cable I am paying for everything whether I watch it or not).
Plus I "own" (have access to) everything (as long as I have an Apple "media box").
I think this is where Apple is heading.
They are, plain and simply, planning to reinvent (and "streamline") TV and movie "rentals"/"purchases". Their targets are:
- cable
- TiVO
- Netflix/blockbuster/Hollywood Video
NOTE: I don't assume that the above scenarios works for everyone. But it may just work for enough millions (4-5) to make it worth the try for Apple.
You sound like the customer who watches Channels 2 - 13 solely with the occasional channel 28.
The total choice plus package for DirecTV is > $50 with taxes and more than one receiver.
If I want TiVO it's an add-on, all the way up to their premiere pay service of > $100. Comcast is no different.
I know of no one using NetFlix and there total subscriber numbers aren't surprising: if I want to rent a flick I'll go pick one up. NetFlix reminds me of having my Groceries brought to my doorstep.
I don't care if Microsoft or Apple claims to have the end-to-end solution. Comcast, DISH, Cablevision, DirecTV and the other networks will determine the options by which solution they include with their service. They all want their "own complete solution" and if they can squash NetFlix they'll do it. So unless Microsoft or Apple plans on purchasing NetFlix I don't see this company surviving. Unless Microsoft or Apple are going to offer an end-to-end service to satisfy one's television, dvr and movie subscription options by having their own network I don't see people purchasing a mac mini to be their DVR when they can upgrade their Cable or Satellite service with this for less upfront.
The Media Center concept is still not here. It reminds me of Gates and his SmartAppliances vision that everyone will soon have fully automated homes. Is he subsidizing this for our benefit?
Originally posted by 1984
You live in the UK. The Elgato EyeTV 610 does not work in the US. The Elgato EyeTV 500 is the only HDTV model they sell in the US and it only has two coaxial inputs, one for antenna and one for cable. That's it. No other inputs or outputs. They do not sell anything that can accept a CableCARD. They don't seem to have any plans to in the future either.
Oh I didn't know that.. shame! Hopefully they'll expand their product range then.
Originally posted by Aquatic
uuuuh...do they make profit from iTMS? No.
Lets do a little math, yah? 1,000,000,000 songs sold. Apple makes what... 11¢ per song (I believe)? What is 0.11 multiplied by 1,000,000,000?
Tell me $110 million isn't enough to keep an online service with no manufacture costs afloat for 3 years with some cash left over.
- Xidius
Originally posted by >_>
Tell me $110 million isn't enough to keep an online service with no manufacture costs afloat for 3 years with some cash left over.
Let's be honest: Most of that $110 million was probably spent on bandwidth, maintenance, and other related costs.
Originally posted by >_>
Lets do a little math, yah? 1,000,000,000 songs sold. Apple makes what... 11¢ per song (I believe)? What is 0.11 multiplied by 1,000,000,000?
Tell me $110 million isn't enough to keep an online service with no manufacture costs afloat for 3 years with some cash left over.
- Xidius
Apple makes a profit of between 3 and 5 cents a song, a bit more than twice that for videos.
They do have to maintain their own servers, do the encoding, pay for staff and advertising, etc.
Originally posted by Tommo_UK
Oh I didn't know that.. shame! Hopefully they'll expand their product range then.
It is a shame as the EyeTV 610 looks perfect. Just swtich from a CAM module to a CableCARD and sell it in the US. However, even if they did most of the cable companies would refuse to install a CableCARD in a device hooked up to a computer. They don't even like to intall them in DVRs. I had a customer service rep tell me the CableCARD would melt inside my TV. They would rather rent out their own DVRs so the lie like this all the time.
Originally posted by mdriftmeyer
I know of no one using NetFlix and there total subscriber numbers aren't surprising: if I want to rent a flick I'll go pick one up. NetFlix reminds me of having my Groceries brought to my doorstep.
Actually, Netflix is pretty nice. No more going to video store. Able to get movies video stores don't carry (limited shelf space). Can actually be cheaper than movie stores. So far (2 months into it), I like it.
Just because you (or anyone...that you know of) don't do it, doesn't mean it isn't any good.
Originally posted by Chris Cuilla
I'd venture a bet that Apple makes more profit on iTMS than most people think.
They make some on volume, but not on each sale. Going by what is known about how much in royalties there is for the average song, and the content companies take, the estimate is that Apple gets 25 cents per song. 3 to 5 cents is profit.
This is, by the way, why these other music companies want to offer subscriptions. It costs so much to run an online music service vs. the sale price for those songs, thanks to Apple, that they have to sell a lot of them per month to break even. Apple seems to be the only one doing that.
The subscription companies may be in for a shock, if their negotiations with the content providers ever gets finished. MS dropped negotiations late last year, because, as MS said, they wanted between $6.50 and $8.50 per subscriber, per month. that would ruin the pricing models for these companies. They would have to raise their rates appreciatively, and thus lose customers, and have a harder time getting new ones. It isn't moving like gangbusters as it is.
I agree with MS that those rates would be too high for a subscription service. Right now, and it's been this way from the beginning, there is NO contract between the subscription services and the content providers. These services have been putting an unknown sum per month into an escrow account pending the end of negotiations. But the amount they've been contributing has been estimated to be between $2.50 and $4 a month, well below what's being demanded. Considering how long this has been going on, they could owe a big bundle when it's over.
How many will stay in business after that? What will happen to the subscriptions of the people who were on those services that might fold?
This is, by the way, a major reason why I feel Apple has not offered this kind of service. I doubt they would want to offer something if they didn't know how much they would be paying themselves. Smart move. If this ever gets straightened out, and the price is right, Apple might break down and offer it.
Originally posted by melgross
Going by what is known about how much in royalties there is for the average song, and the content companies take, the estimate is that Apple gets 25 cents per song.
I have heard (from a source I consider to be reliable) that the $0.65 - $0.75 per song to the record companies (that we most consistently read in the press) is more than what Apple is actually paying.
Originally posted by Chris Cuilla
I have heard (from a source I consider to be reliable) that the $0.65 - $0.75 per song to the record companies (that we most consistently read in the press) is more than what Apple is actually paying.
I don't know who the reliable source may be, but the industry seems to agree on that pricing. I have no other reason not to believe it.
Originally posted by melgross
but the industry seems to agree on that pricing.
Doesn't mean they are right.
Originally posted by melgross
Apple makes a profit of between 3 and 5 cents a song, a bit more than twice that for videos.
They do have to maintain their own servers, do the encoding, pay for staff and advertising, etc.
$30,000,000 - $50,000,000 is a damn nice amount of pocket change for 3 years work.
- Xidius
Originally posted by Chris Cuilla
Doesn't mean they are right.
Doesn't mean they are wrong either.
Originally posted by >_>
$30,000,000 - $50,000,000 is a damn nice amount of pocket change for 3 years work.
- Xidius
No argument there.
Originally posted by melgross
Doesn't mean they are wrong either.
True.
So we're back to not really knowing what Apple's true costs and profits on iTMS (or anything else for that matter) are beyond some "educated" guesses. But guesses they are.
Originally posted by Chris Cuilla
True.
So we're back to not really knowing what Apple's true costs and profits on iTMS (or anything else for that matter) are beyond some "educated" guesses. But guesses they are.
Royalty expenses are easy to find. I'll see if I have the time. My cousins are pretty well known song writers. We used to talk about that all of the time.