The utopian dream of ubiquitous media access is on the verge of becoming a reality. Consumers can watch TV on their iPods, download sports highlights to their cell phones, and take vast libraries of music with them wherever they go. You would think that all of these new digital distribution systems would be a boon for consumers, but that isn’t necessarily the case.
There are signs that media companies are using the transition to digital distribution as an opportunity to redefine consumer expectations about the value of media products, while at the same time eliminating much of what is currently considered to be fair use.
When consumers buy digital music, movies, or television programs from iTunes, Amazon, and most other digital content sources, they are ultimately paying more, getting less, and being forced to make platform decisions with long term implications.
Here are nine reasons why most digital media products are a bad deal for consumers:
- Digital media prices are too expensive when compared to traditional media products. iTunes album prices are generally $2 to $3 below the price you would expect to pay for a discounted CD. Amazon Unbox is actually charging the same price for many downloadable movies as they are for the DVD editions. The price differential is negligible when you consider the risks and disadvantages associated with digital media. Given the limitations imposed on digital media products, you would expect digital movies and music to be sold at a more substantial discount.
- Consumers supply their own bandwidth and physical media. If you burn your music to a CD, you provide the blank disks. When you download a movie, you supply the bandwidth. Media and bandwidth are roughly equivalent to what the entertainment industry calls “manufacturing and distribution”. Those are costs that used to be fronted by media companies and built into the price of their products. In the era of digital downloads consumers are now bearing the costs of manufacturing and distribution. Meanwhile media companies are still including those costs in the price of their digital products. You could argue that Apple and Amazon are providing bandwidth as well – and while that’s certainly true, the media companies are still benefiting from the fact that someone else is paying for the transfer of bits. In a future article we’ll take a look at how media companies use digital media products to take advantage of their partners.
- Packaging not included. CD covers, jewel boxes, and liner notes are a thing of the past. When you buy a digital media product physical artifacts are obviously not included. In some instances you may get a PDF download from iTunes, but it’s up to the consumer to foot the bill for printing (color ink isn’t cheap). Where the price of digital media products is lower than physical media products, the corresponding price differential is usually not enough to make up for the fact that the product does not include any of the traditional packaging.
- Product extras are frequently missing. While digital albums may provide bonus tracks, digital movies usually don’t include the DVD extras.
- Platform lock-in. Thanks to proprietary and incompatible DRM systems almost all digital media products released by major studios require consumers to choose a platform and lock-in to the selected platform. If you buy an iPod you’ll be limiting yourself to iTunes. If you buy a Zune, then you’ll be limiting yourself to the Zune Marketplace. Would you buy a DVD player if you could only buy movies from Best Buy? Or a CD player if you could only buy music from Tower Records (if you did, you might be re-thinking your decision right about now). When you buy a CD or DVD you expect it to work across a broad range of devices, and for a very long time. There are no such guarantees in the digital realm. Consumers who bought into Microsoft’s PlaysForSure standard are about to be left behind when Zune is released. Who stands to benefit from these changing standards? Everyone but the consumer.
- Shorter product life-span. Digital media products arguably have a much shorter product life-cycle and will require more frequent replacement than physical media products. You might decide you want to change player platforms, which would require you repurchasing all of your DRM encrypted music, or maybe your hard disk dies and you have no backup. There are all sorts of scenarios that could quickly wipe out your digital media collection. Comparatively speaking it would take a much larger disaster to wipe out a physical CD or DVD collection.
- No returns. Ever try to return a song to iTunes? Can’t be done. Sure, they might let you re-download the track if there was something wrong with the source file, but in general digital products cannot be returned in the same way physical media products can. It should also be noted that media companies have traditionally budgeted for product returns. It is assumed that a certain percentage of any given media product will be returned by retail outlets as unsold merchandise. The costs associated with those returned items are built into the price you pay for CDs and DVDs. You would expect the fact that digital products can’t be returned to be reflected by a lower price.
- No resale value. So you logged onto iTunes in a drunken haze and downloaded the complete works of A Flock of Seagulls. What happens after the hangover has passed an you realize your mistake? In the good old days you could take your used CD’s down to the nearest record store and sell them for cash or credit. When you buy digital media products that’s not an option. The traditional Right of First Sale has been stripped away in the digital age.
- Fair use restrictions. Most digital media products come with a variety of limitations designed to restrict their usage. Depending on the source, you may or may not have the ability to make a copy for personal use. Likewise, DRM restrictions may prevent you from playing your media content on the device of your choice. And don’t even think about sharing with your friends. Despite Microsoft’s attempt to facilitate legal file sharing, digital media products can’t be shared in the same way physical media products can. While it’s perfectly legal to loan a DVD box set to your neighbor, you would likely have to break any number of federal laws to do the same with the digital equivalent of the same content.
When you add it all up digital distribution doesn’t look like such a good deal for consumers. At the very least media companies will need to adjust their pricing to reflect the reduced value of digital media products.