Price Fixing or Not?

I am concerned about a letter I just received, and I am sure some of you did as well, from Hotmovies.com. In the letter they state they are considering raising their prices to the customer by 25% and more in some cases and they are asking for feedback from studios before they do it.

Later in the letter, they state "If we raise our prices, we will ask you to agree in writing that you will also require other VOD/PPM sites to insure that they also offer your movies at the same minimum Pay-Per-Minute amount we charge."

And then they go on to compare this requirement to Rolex setting a minimum price point for their products...

This sort of smacks of price fixing to me.... or am I just reading it wrong?

That certainly does sound like price fixing, which i beleive is illegal.

Regards,

Lee

Its not price fixing.

They can require you to meet a minimum advertised price(MAP). They can require to to not display their pricing at a pricing point lower than they set. Very common practice. (You can always sell for less than an advertised price)

Jimmy

Quote:

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Originally Posted by nicedreams

Its not price fixing.

They can require you to meet a minimum advertised price(MAP). They can require to to not display their pricing at a pricing point lower than they set. Very common practice. (You can always sell for less than an advertised price)

Jimmy

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But it becomes price fixing when they start asking that you guarantee (contractually) that no other VOD provider will sell the same product lower than their price.

Dont forget, the VOD isnt the producer of the content, therefore it isnt their product to set a MAP on.

Regards,

Lee

Ahh, I was thinking hotmovies was the producer.

Jimmy

I thought anytime you tried to influence or control the pricing of your competitors by forcing someone to set a fixed price for their product and guaranteed a price for the product through a competitor, then it was price fixing...

It's very questionable in terms of legality, BUT... they have their heart in the right place, I think. They are looking at the return that they, and studios, are getting on the content they are presenting.

One of the issues that we've had for a while looking at PPV revenues is the money that we get back relative to the value of the content we put out there. Let's say that we might have paid $2000 to $4000 or more to shoot and edit a given scene. The customer can go to Hotmovies or AEBN or wherever, see the 3 minute part of the scene that he wants to see, and pay (at retail) 20 to 30 cents to view it. And we get maybe 6 to 15 cents of that. At that rate, it takes an AWFUL lot of customers to break even. And if VOD is where the market is going, then it should be clear that the existing revenue model won't work. Ultimately, consumers will suffer also, because if the monthly membership and physical product revenue models are slowly decreasing, content producers will have to either curtail the quality of the content they shoot, or shoot less of it.

The Maleflixxx pay-by-the-scene model is much more viable financially, and I would honestly like to see the other VOD providers move in that direction rather than raise the per-minute viewing rate, though anything that increases revenues is beneficial to the industry as a whole.

Definitely a delicate issue.

Thats what I thought when I got the letter too.
I dont know if it is Price fixing or not
But it does sound like they want us to set there standers on there competitors.

Technically price fixing is collusion between competitors. They're trying to do it indirectly through a 3rd party. It's price tampering of some kind, though.

They should consider building a better mouse trap instead. Switch to by-the-scene payments, daily/weekly/monthly rentals, or whatever.

Speaking as a VOD provider.

We will not be increasing our prices to the end user. We feel the current market is sufficiently profitable for both the VOD provider and the studio.

We also feel this is an attempt at price fixing.