The interesting thing about movies though is that movies are in a very different place than music was. When we introduced the iTunes Music Store there were only two ways to listen to music: One was the radio station and the other was you go out and buy the CD.
Let’s look at how many ways are there to watch movies. I can go to the theater and pay my 10 bucks. I can buy my DVD for 20 bucks. I can get Netflix to rent my DVD to me for a buck or two and deliver it to my doorstep. I can go to Blockbuster and rent my DVD. I can watch my DVD on pay-per-view. I can wait a little longer and watch it on cable. I can wait a little longer and watch it on free TV. I can maybe watch it on an airplane. There are a lot of ways to watch movies, some for as cheap as a buck or two.
And I don’t want to watch my favorite movie a thousand times in my life; I want to watch it five times in my life. But I do want to listen to my favorite song a thousand times in my life.
So they’re really different animals and the movie industry is far more mature in its distribution strategies than the music industry was. So they’re really in very different places.
The other thing is that people are much more attuned to visual quality than audio quality. What was the successor to the CD format? MP3, a lower-quality format but one that provided a convenience of being able to transmit music over the Internet that no other format had.
But that’s not going to be the case with video. With video, people have ratcheted up to the DVD format and no one is going to go back to VHS quality just because they can download it faster over the Internet. It ain’t going to happen. So to download a DVD-quality movie takes hours over most people’s broadband connections.
And therefore the threats to Hollywood are very different than the threats to the music industry, and actually the biggest threat to Hollywood isn’t the Internet. The biggest threat to Hollywood is DVD burners. And likewise the Internet might not be as big of an opportunity.