why is there no price competition in entertainment content?
The computer and entertainment *hardware* sectors have witnessed
tremendous price deflation.
I can buy a topline over-configured desktop for less than 1500 dollars.
I can now buy a consumer DVD-player for less than 100 bucks.

But when it comes to entertainment *content* the prices are relatively high.
A 1975 movie is re-released on DVD for *more* than  25 dollars.
A few episodes of a 1960s TV show is compiled onto a DVD and sold for $25.
Low grade "B" movies that were too poor to last a week in the cinema
are released on DVD in "buy-it-to-own" campaigns and sell for more
than 20 bucks.

Why is there no price deflation or competition from the
entertainment content providers to parallel the hardware business?

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Request for Question Clarification by pafalafa-ga on 07 Mar 2004 16:20 PST

In economics-speak, this phenomenon goes by the wonderfully oxymoronic
phrase of "monopolistic competition" -- there are lots of players in
the market, but each one is making a product that is differentiated in
some important (to the consumer, anyway) fashion.

Put another way, each product is a mini-monopoly.    

In entertainment, this so-called differentiation is probably at it's
peak.  Who could possibly replace the likes of Michael
Jackson....er....never mind.

But if you'd like, I can give you some links and some additional
explanation as an answer here, if that's the sort of academic-ish
thing you're looking for.

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Clarification of Question by grthumongous-ga on 07 Mar 2004 17:23 PST

Pafalafa, "go for it".
I know my question gave movie examples, so here is a music one.
A recent report I read said that when Universal cut CD music prices by
five quatloos in a effort to blunt the incentive to copy music the
other content providers were dismayed that Universal had broken ranks.

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Request for Question Clarification by pafalafa-ga on 08 Mar 2004 16:34 PST

Hello again greatbigperson-ga,

I don't know what it is, but I'm just out of steam this evening, so
instead of an answer, I'm going to throw you a bone (a small bone, to
be sure, but a freebie just the same).

Have a look at this write-up on monopolistic competition:

http://www.business.uiuc.edu/seppala/econ102/lect15.pdf

Ignore the math and the pages of technospeak...it's not all that
relevant to your question.

But the plain-English comments here are on the mark:

--Monopolistic Competition is a market structure in which many
firms sell products that are similar but not identical.

--Examples of monopolistic competition: Books, CDs, movies,
computer software, restaurants, furniture, and so on. [comment from
paf:  anything where brand name or star power can really make a
difference in the minds of the consumer -- note that hardware isn't
included here, as one PC is much like the next, and consumers go more
for price than branding]

--Firms advertise to manipulate people's tastes...Advertising reduces
competition because it increases the perception of product
differentiation.

--This is also the reason why banks (at least used to) have very
fancy oces and men buy expensive (but completely useless) pieces of
rock to their women.

--[product differentiation]...is one reason why Hollywood pays obscene
amounts of money for its action stars.

==========

Hope this is of some use.

--

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Clarification of Question by grthumongous-ga on 09 Mar 2004 20:47 PST

Papa falafa,
hope you are feeling better. If you want to make this the Official
Answer you may claim your fee.

This is just speculation on my part...

Most movies, TV shows, and music collections that are released on
videotape, DVD, and CD are licensed in such a way as to limit
competition. Generally, only one authorized version of a film or a
song is released at a given time (or, if there are multiple versions,
as is the case with "special edition" multi-disk releases, they are
usually all from the same distributor.)

Entertainment hardware, on the other hand, is subject to much more
competitive pressure. When dozens of manufacturers are competing for
the consumer's dollar, prices tend to be driven downward more rapidly
than if a product is available from only one source.

Greed and no competition for the same product.

The RIAA (Record Industry Association of America) has been repeatedly
found guilty of price fixing. It's no secret that music is overpriced.

However, I have personally bought quite a few hundred DVDs over the
past couple of years, on both sides of the Atlantic and almost
entirely at discount rate. I don't believe that the movie industry
suffers from the same pricefixing as the record industry.

Other than bargain bins at Wal*Mart or Walgreens in the States or the
cheap selections at Global Video in England, I also buy online at
places like BestPrices.com and Oldies.com. There are many labels that
are releasing movies at very cheap prices (often around $5 or £5), and
there are many more that are releasing large box sets at discount
price where the films fit two to a disc. I've personally bought most
of the ten film boxes put out by Brentwood that can be bought new
online as low as $11.98 (just over a buck a film).

Even new blockbuster releases can be found at $14.99 at Wal*Mart, as
long as you buy within the first couple of weeks of release, and these
often include a second disc of extras.

It is interesting that a DVD of a film, complete with extras, often
retails at a lower price than the CD of its soundtrack.