Wednesday, January 18, 2006

The deals behind the deals

Three sources close to the matter said Wal-Mart Stores Inc., the world's largest DVD retailer, had expressed concern to Disney that iTunes downloads might take a bite out of its sales.


If that quote's not enough incentive to make their concern a reality, I don't know what is. More to the point, though is the article it came from, which discusses a developing tiff over royalties and other pieces of the pie for online distribution. Production companies, actors, writers, etc. are growing increasingly concerned at the unilateral deals that networks are making with iTunes, Google, etc.

As this becomes a viable market, there's no question that these players are going to want in on the action, and that they'll fight for it to the bitter end. The studios got the last word in the video/dvd market, and it resulted in enormous profits for them. The unions aren't going to make the same mistake - they'll either get a big stake, or they'll die trying.

Assuming the unions are successful, that means that the incentive for the studios to use the internet as an ancillary market for television and film content will decrease - which means that original content takes on more importance from a profit perspective.

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