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TK's MORNING BUZZ: Studios Launching Their Own Movie Downloading Sites Should Realize That Consumers Will Demand More Than Any One Company Can Offer

9 Mar, 2001 By: Thomas K. Arnold

Some sage advice can be found in the latest "Research Briefs" newsletter from the National Association of Recording Merchandisers on the eve of the association's annual convention next week in Orlando, Fla.

A summary paragraph of a research study by Jupitor Communications says this: "Four of the five major record companies have announced plans to launch their own music subscription services, but these efforts are destined to fail because consumers will demand more than any one company can offer. To hasten the success of a subscription service and accrue maximum benefits, major labels should license their full range of content to third-party digital music service providers."

Here, here. Studios with ambitious plans for launching their own movie downloading sites should heed these words before they progress too much further. It may be too late for record companies to rethink their investments, since music downloading is several years ahead of movie downloading. But studios have a golden opportunity here, and I sincerely hope they don't blow it.

Sure, the payoff sounds great -- video-on-demand over the Internet cuts out the middleman and allows the studio to sell its content directly to the consumer. But studio executives who subscribe to this mindset -- and, unfortunately, some do -- are missing a key point: Consumers don't shop by studio any more than they shop by label. Consumers only care about the product, and he who can offer them the widest possible selection, particularly in the early stages, is going to win.

Studios should treat movie downloading the same way they treat packaged media. They should produce it, but they should let someone else disseminate it. It is imperative that studios get out of the "Let's do it ourselves" mode and start planning a distribution network, modeled after the one they used to build up the home video market.

They need direct contacts with big retail chains, and distributors to reach the little guys. Most movie download sales will probably take place in the consumer's home or workplace; the idea of putting kiosks into stores, at least to me, doesn't seem practical because why should someone drive to a video store to download a movie when they can buy the finished product? If all they want is a download, they don't have to leave their home.

But I digress. Consumers will download movies from their homes or places of employment, but they're not going to go to studio sites to buy movies. They're going to go to the cyber-arms of retailers they are already familiar with, from big chains with established Web presences like Best Buy and Amazon to the friendly neighborhood video store that needn't be passed by in the drive to download.

Selection will be the key, and the best thing about the Internet is that on a 15-inch computer screen, everyone's on a level playing field.

Comments? Contact TK directly at:TKArnold@aol.com

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