"The executive went so far as to dub the ongoing Writer's Guild of America strike "stupid," saying that digital distribution will not become profitable for three more years ..."

Durr ... From what I understand, this is exactly the argument the studios used to limit writers' DVD residuals back when the technology was young, the market was small, and profits were offset by high entry costs.

The fact that DVD sales went all the way to their peak while the writers were still stuck with the same tiny percentage is one of the main reasons they're striking now, and why they're trying to prevent the same thing happening with digital downloads.

(Disclaimer: I don't think unions are pure and innocent. But I've worked under enough studio executives to trust them even less.)

Some of your reasons are valid, but I doubt they will hire accountants just to keep track of the iTunes profits. It's a small addition to their daily number crunching. Just like most overhead costs. They have various departments (legal, financial etc) to do the additional work.

Not only that, but I'm sure it's handled in software. It's just another form a distribution.

There is overhead - digitizing isn't free, but it's small compared to physical media. It is also offset by lack of advertising dollars. However, I don't believe for a second that it isn't profitable. Eisner is just grandstanding. Fox, ABC, and CBS have all said they are happy with the arrangement with Apple.

"Maybe you forgot, but there's royalties to pay, overhead charges (you think all those accountants who keep track of every penny and know who gets what percentage all work for free?), etc."

The first point would be true if the labels/studios actually paid the royalties due. There are so many stories of multi-million selling CDs where the artist gets basically nothing, because the label's accounting shows no profit. (I think one example that I remember is Alanis Morissette's first album).

Eisner ran Disney into the ground. I'm not surprised he doesn't realize the importance of writers to a movie's success. He should have learned that lousy writing makes lousy movies, but he had too big an ego for that.

call the WAAAAAAAAAHMBULANCE for Eisner. What a douche. Since he's crying, maybe it's because Jobs made a good deal for Apple and Eisner's envious.

BTW are you on the Disney board, b****?

smart, they would have thought of a way to effectively distribute their content without Apple. They didn't so Apple did it for them.

Suck it up Eisner. f****** douche.

profits is:

when someone is making boatloads of money which you wish you were making.

That's capitalism, Eisner. Now please help yourself to a nice, steaming cup of STFU!

Idiots. They're both fairly bad at what they did (do) and will eventually pay for their bad management styles.....you can whine, point and stomp around all you want, but the real managers go out and DO something about their perceived "problems".

DVD's have almost the same price as the iTunes media, even cheaper these day's. There is much more overhead with DVD's and reatailers/distribution take an even bigger piece of the pie. Studio's must be really losing big money on there DVD sales then, NOT.

...I believe Apple undertakes the process of digitising material sold through iTunes, the makers only have to provide a Digibeta or HDCAM master.

Also, if web distribution is not profitable for the foreseeable future, which did Eisner establish his own web-dist company called v**** or whatever? Eisner is poison, like the guys running NBC Universal.

I suppose Eisner thinks it's okay that studios have accepted nearly half a billion dollars in bribes from the technology industry to exclusively promote HD-DVD over Blu-Ray, rather than allowing the consumer to decide through freedom of choice and the free market. There's anti-competitive and why? Because the technological foundations of HD-DVD are supported by guess who? Microsoft!

People should look even further back to Eisner's relationship with Katzenberg, a case of stabbing your friend in the back, to figure how this guy thinks the world should be run! The picture at the top of this article is singularly appropriate, Eisner's a pig, maybe him and Steve Ballmer should share the same sty, they sure want to gobble everything from the same trough!

Payback is a b****, ain't it? =D

I'm fully enjoying Apple's success. Way to give the middle finger to all the naysayers that were saying that Apple was going to go out of business back in 2000.

---"In March 2007, Eisner's investment firm, The Tornante Company, launched a studio, Vuguru, that will produce and distribute videos for the Internet, portable media devices and cell phones. "The entire concept here is content is king," Eisner said in an interview. "What will drive traffic is interest in the subject matter."

What an a******. He dreams that he could have made Disney into what Pixar became.

Doofuses.

Eisner talking about apple taking all the money? Is this the same Eisner that could not earn much for Disney and then stole the rest of earnings in his 3 figure millions golden parachute??? Well Eise boy, Apple took an initiative, set up the platform for user friendly digital distribution and made deals with the music companies(dont think they signed the contracts without reading them). But yes, Apple earns some money now... Lets be sure we destroy that and just make forced monthly subscriptions the music industry... Well, based on Microsoft (open standards!!!) technology...

Sigh... Go play golf Eis....

@ testudo

"Um, that's not the only cost. Maybe you forgot, but there's royalties to pay, overhead charges (you think all those accountants who keep track of every penny and know who gets what percentage all work for free?), etc."

Keeping track of all those pennies is a part time job for one person. It is all automated.

And for the movies and TV, I doubt there are lots of royalties to pay, unlike with music where they are all "independent" artists.

Eisner and the rest of the gang are just sour that Apple is doing well with the iPod.

DVD's have almost the same price as the iTunes media, even cheaper these day's. There is much more overhead with DVD's and reatailers/distribution take an even bigger piece of the pie. Studio's must be really losing big money on there DVD sales then, NOT.

Which just goes to show you how OVERPRICED the iTMS video content really is. But the question isn't about cost, but how much goes back to the studio. If Apple keeps $1.50 of a video sale, that doesn't leave much pure profit, does it?

Keeping track of all those pennies is a part time job for one person. It is all automated.

And for the movies and TV, I doubt there are lots of royalties to pay, unlike with music where they are all "independent" artists.

There's a lot more royalties to pay. They're called 'residuals' (that's what the writer's are striking for, afterall). Directors, producers, writers, actors. They all get a piece. And the piece depends on their contract, union contracts, age, etc.

Keep in mind that all this is done on the gross profits, not net. Apparently (and this will be hard for a lot of you to believe), but the studios learned how to be really good at never making a profit on anything, regardless of the amount of revenue generated (Jack Klugman reportedly got a piece of the net of "Quincy", and claims the studio has earned $3 billion over the course of the years, and yet have yet to break even on it).

Hes talking about iPod sales. All this content that gets sold goes on iPods. Apple makes a ton of money selling iPods and the content providers want a slice of that. Complete bullshit if you ask me.

thanks for bringing that up, testudo. After reading about this, (not that I didn't know this, but hearing a specific example really drives it home) I can think of several creative ways for Eisner to go f*** himself with his 'Apple hogs digital profits' comments:

http://transcripts.cnn.com/TRANSCRIPTS/0103/23/lkl.00.html

CALLER: Hi, Jack, I just want to say I am the hugest fan of you. I grew up watching you. were the most likable man on television. I want to ask a quick question. The show runs so many times during the day. How do you guys do on residuals? You guys should be collecting, I hope, because it's such a brilliant show.

KING: You are multizillionaires, right?

KLUGMAN: Let me tell you something. I own 28 percent of the net profits of "Quincy." It has grossed over a billion dollars. I have never seen a penny, nor will I see a penny. Somebody said, "You remember the good old days when there were only two sets of books?" They kill you. They showed me with the 90 million in the hole, still, and they've grossed over a billion dollars. They invented stealing.

yep, BS argument. I suppose GM should demand a cut of ExxonMobil's gasoline sales since it's their cars that make the market for gasoline.

Of course, GM could use the help these days...

"ain't nothing sweeter than the taste of sour grapes"

Here's the guy that was forced out of his little power empire by Steve Jobs, and now he has nothing better to do than act like a 5 year old who had his toy taken aay.

Sad thing is, he actually believes the bullshit he spews, though I doubt much of his audience does. Regarding the claim that there is zero profit in the digital market - as another commenter pointed out -- if there are no profits, then it should be easy giving the writers any percentage they want, and then some -- zero profits, means zero shared $$$ - so, a win-win for the studios.

Them claiming they make no money, but at the same time refusing to negotiate fairly pretty much spells out that someone has something to hide - and it ain't the writers.

The studio's probably get the 70% as on Music, 25% is way to low. iTMS video content is overpriced and thats why Apple wants to cut the price in half but the studio's obviously don't want this.

Studio's never make a profit accounting wise, always turning out a loss. Them actually making a profit on iTunes sales is maybe the biggest problem, iTunes is per individual sale more profitable than DVD's so this whining is all bull.

…Disney made a h*** of a lot of money from monopolizing on the cutsy cartoon genre. Ask Don Bluth.

Keeping track of all those pennies is a part time job for one person. It is all automated.

Obviously you've never had to manage a SAP implementation (which is, no doubt, the system that Apple uses in all it's business units).. There's nothing "part-time" about it.. You can bet Apple has accounting staff dedicated to managing these payments through this system.

Very well-paid accounting staff.

Mike Eisner is EX-chief and an EX-executive of Disney_

He's now throwing a temper-tantrum because he was ousted by the Board_ He's grabbing at strwas on the Apple/Jobs comments_

He was correct about one thing the "Entertainment Companies" he referred to are probably going to s*** bricks in the next few years if they don't stay on board with the online downloads_

He throws the whole thing one sided at Apple by saying they make all their money from the stuff they sell around the Music from the iTMS_

He fails to mention that people spend 8-15 dollars per person [depending on market] to walk into a movie theater and that doesn't include popcorn and soda_

He fails to mention that the online profits for a downloaded movie is greater than a physical hard copy_ Seeing as how they can eliminate things like printed material [covers - booklets etc..] - plastic casings - shipping - other packaging and so on_

Example - on the iTMS "Ratatouille" is $12.99 to download a video file_

On Amazon it runs $14.99 to have the hard copy shipped to you_ So even if we are genrous and say that the $3 differentce covers shipping - at $12.99 ecah - for the download they eliminate ALL of the physical constraints of putting the final product into the consumers hands and that becomes pure profit above and beyond the DVD sale from Amazon_

Boo-Hoo - poor f****** Entertainment Industry bitching over nothing - let's all feel sad for them since they aren't making an extra $15million this quarter_

insignificant, unworthy of attention, a loser.

Steve Jobs (rightfully) kicked that crooked old fat to the curb a long time ago.