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TV companies aren’t learning from the mistakes of the record companies

Looking at the decisions of some of the TV companies, it makes me wonder if they aren’t determined to live up to one of the stereotypes of movies: the smart, doomed character determined to undermine their own success and destroy themselves.

Take, for example, NBC’s decision to dump the iTunes Store in favour of Amazon. This has been described by some as a power struggle, with NBC determined to curb the power of Apple as a distributor. Yet it also reflects unease with what the TV companies see as Apple’s “lax” DRM:

“‘Protecting content’ is a tip of the hat to NBC’s concerns over DRM. Amazon and Apple both use DRM for video, but Apple’s DRM policies are considered to be ‘too lax’ by many players in the TV and movie business. Apple’s terms allow for authorized for playback on as many as five different devices. Furthermore, Apple-approved devices can be authorized to play content purchased from five different accounts.

Compare Unbox: Shows bought from Unbox can be kept on two computers max and can be stored on up to two different (approved) media players. Users cannot ‘mix’ accounts, meaning that a PC cannot have authorized content purchased from two different accounts accessible at the same time. As you can see, Unbox is more restrictive.”

The mistake that NBC is making in this context is two-fold. First, it is making the assumption that the reason for iTunes Music Store’s dominance is down to its compatibility with the iPod. This is a a massive error.

Flexible pricing is attractive to marketing teams at companies, which is one of the reasons why NBC sees it as attractive:

“While Amazon is still working to determine pricing, Unbox typically charges more for newer releases than for older ones. Unbox also gives consumers more options, including whether to rent a movie for $3.99 or buy a download for $14.99. Amazon agreed to offer promotions, including a 30 percent discount when buying full seasons of television shows.”

However, all these things have been offered by music services in competition with Apple – and all of them have failed when compared to iTunes. While iPod compatibility is important, the number of iTunes Music Store songs on each iPod is, on average, very low – Forrester estimated 22 songs last year, and it won’t have gone up too much. While there’s undoubtedly a degree of lock-in between iPod and iTunes, for the majority of users switching would not be a big issue, if other stores offered something compelling.

The prime reason why the iTunes Music Store has been a success is that the DRM system it uses doesn’t get in the way of the consumer. I’ve used both Windows Media DRM-based systems like the PlayForSure-based Napster and Apple’s, and Apple’s is far, far more friendly.

In fact, it’s effectively invisible to the majority of users – the only time you notice it’s there is if you try and use an unsupported platform (ie Linux) or really do want to try giving away your music to someone else (which is a legal no-no.)

Secondly, it is forgetting that the competition includes torrent sites and other which will distribute its content, for free, in higher-resolution and better quality formats than it’s expecting consumers to pay for. These sites offer a greater degree of “friction-free” consumption than any DRM-based store, for less money. Unless your DRM system is as invisible as Apple’s, or better, you will fail.

The video industry is forgetting the lesson which the music industry is only just beginning to learn: treat your customers as friends, no enemies. If you want to sell content online, this should be the first thing on your mission statement.

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