Citing “three people familiar with the proposal,” Variety says that Apple is floating a proposal to the TV networks to cut the price of shows for sale in the iTunes Store by half, from $1.99 down to 99 cents. Reports Josef Adalian:

But entertainment companies don’t seem to be rushing to embrace the idea. Indeed, the half-price plan may have contributed to NBC’s decision last week not to renew its current deal with Apple (though if NBC had simply let its contract automatically renew, the current price of $1.99 would’ve stayed in place).

Apple’s argument to studios and nets has been that they will end up making more money from digital downloads under the new proposal. Company believes the volume of sales for TV shows will rise dramatically, offsetting the impact of the price cut.

Among the concerns is that at 99¢, iTunes downloads could impact sales of DVD boxed sets, an important revenue source for TV congloms.

They are also a big part of the way the Big Box stores do business. Variety does the math those stores wouldn’t like to see, saying that in theory consumers would be able to buy an entire season of a show more cheaply online than in hard copy.

Unasked—and it’s a sign both of how the entertainment companies still need to be slapped and of how the media sometimes reports on these things from an overly industry-driven perspective—is the question of why we should have to buy a show on iTunes and then on DVD separately. Why should I have to pay twice for the same collection of ones and zeros? The one thing the DVD makers have going for them thus far is that the DVD is a superior product that is sold, for the most part*, at an eminently reasonable price.

But as computer storage space and download speeds increase, the TV and movie industries will be affected the same way the record companies were by illegal downloading. There’s nothing they can do to stop the phenomenon; it might be that the Apple plan is the smartest step they could take.

* Note this look-ahead from the same Variety story:

If cooler heads prevail, it seems possible Apple and the nets will come to a settlement in which shows are sold via tiered pricing, perhaps 99¢ for library titles, $1.99 for current hits and $2.99 for megahits or shows on premium cablers such as HBO or Showtime.

It reminds one that HBO simply mints money from its DVD sales. “Deadwood” and “Sopranos” sets have a list price of $100; my anecdotal impression is that “Sopranos” sets are generally steeply discounted (to the mere “very pricey,” down from “unbelievably high”) but that “Deadwood” rarely is. The profits from the DVDs, of course, are all found money—an unceasing new revenue stream that didn’t exist ten years ago.

The WSJ ($) nails a YouTube sensation named Marié Digby. While she’s been promoting herself as an innocent little singer who accidentally stumbled upon 2.3 million YouTube viewings, she’s actually been signed the whole time to Hollywood Records, who bought her a computer, made a video of her, and guided her through a fake career.

From Ethan Smith and Peter Lattman’s story:

In an Aug. 16 blog posting on her MySpace page, Ms. Digby wrote: “I NEVER in a million years thought that doing my little video of Umbrella in my living room would lead to this . tv shows, itunes, etc !!! [sic]”

Ms. Digby’s MySpace and YouTube pages don’t mention Hollywood Records. Until last week, a box marked “Type of Label” on her MySpace Music page said, “None.” After inquiries from The Wall Street Journal, the entry was changed to “Major,” though the label still is not named.

The paper is relatively kind to the artist and her label:

The fact that a big company supported Ms. Digby’s ruse reflects how dearly media giants want in on the viral revolution that’s changing how young consumers learn about new entertainment — even if it means a tiny bit of sleight-of-hand.

My emphasis. But the accreted examples, er, accrete, and not just the lying-about-her-label status. The company conspired with her to record cover versions of popular songs to increase her chances of getring noticed on YouTube. The label arranged her to visit an LA radio station:

As Ms. Digby’s star rose, other media outlets played along. When Los Angeles adult-contemporary station KYSR-FM, which calls itself “Star 98.7,” interviewed Ms. Digby in July, she and the disc jockey discussed her surprising success. “We kind of found her on YouTube,” the DJ, known as Valentine, said. Playing the lucky nobody, Ms. Digby said: “I’m usually the listener calling in, you know, just hoping that I’m going to be the one to get that last ticket to the Star Lounge with [pop star] John Mayer!” The station’s programming executives now acknowledge they had booked Ms. Digby’s appearance through Hollywood Records…

Then she went on Conan:

“I don’t think we need a television show to find talent in America,” crowed NBC late-night talk show host Carson Daly, introducing a performance by Ms. Digby last month. “We have the Internet.” Mr. Daly’s music booker, Diana Miller, says she booked the singer through Hollywood Records’ public-relations department.

Then she did an online chat for NBC:

“I just did this YouTube video two months ago and never, ever imagined that it would actually get me on TV or radio or anything like that,” she said. “I just did it in my living room and it blew up first on YouTube and then I guess it got to Star 98.7 and then Carson Daly found me so that’s why I’m here.”

Isn’t Digby a big plastic corporate puppet of a fucking liar?

Still, for the record, this isn’t a digital-age phenomenon. Any time there are distribution methods that traffic in authenticity, there will be labels and artists who try to finagle some indie cred out of nothing. Back in the Pleistocene era, right after the release of “Nevermind,” this sort of thing happened a lot; labels would sign a band, and then arrange to have their first single, or EP (those were the days!), or full-length release put out on one of the hip indie oufits. (Sometimes they had covers on them, too, to get a little easy college-radio airplay. College radio DJ’s loved covers, and so did, ahem, critics.)

Overlooked at the Steve Jobs announcement today is the big new non-touch-screen iPod, dubbed “iPod Classic.” The top model boasts a capacity of 160 gigs; that’s room for a lot of music and video. Pretty soon Apple and the record companies are going to start pitching us the idea of lossless digital music.

Background: The files we listen to on our computers and iPods are, for the most part, mightily compressed versions of the big music files on a typical CD, which amass samples going by at a rate of tens of thousands per second. As a rough rule of thumb, an mp3—I’m using the term generically for any iPod or computer music file—is about a tenth the size of a CD track.

The price we pay for that, however, is poorer sound quality. You can hear a little bit of deadness underneath the music in a typical mp3 file. It doesn’t have to be that way—”Apple lossless,” a compression codec already available in your iTunes program, claims to provide sound indistinguishable from a CD, for example.

But: lossless files, while still compressed, are about five times as big as a typical mp3 file.

But with 160 gigs the new iPod playing lossless files is the equivalent, for a normal music fan, of a 30-gig iPod playing mp3s.

The rock ‘n’ roll audio geek used to be a cliché, but no one talks much about audio quality these days.

The good news for Apple and the music companies is that now they can embark on a new campaign, telling us that all our digital music just isn’t up to audio snuff—but fortunately we can now rectify it by buying from the fabulous new “Lossless Store” on iTunes!

In a few years, mp3s will be the 78s of the digital age. The genius of this is that the music industry has made a big chunk of its money the last few decades reselling us music we already have. But how can they resell us digital tracks? This is one answer. And they might even get some money back from the poor souls who digitized their CD collections into mp3s and sold off their discs; they can be guilt-tripped into buying some of it back once again.

Big Bernard Holland obit in the NYT here. The Times has some mp3s, too.

The BBC’s is here.

Variety has some sophisticated observations to make about the Apple-NBC dustup:

In the background, however, was a development with which [Apple capo] Jobs is likely concerned: Two years after Apple started selling TV shows via iTunes and a year after it added movies, Hollywood is still not fully aboard with his vision and has chafed, in some cases, against Apple’s firm grip on the high-end content download-on-demand biz.

After months of negotiations, insiders say Apple still has only a few studios aboard for its effort to add movie rentals to iTunes. If and when it launches, the service could be a boon to Apple TV, which hasn’t gained much traction with consumers since launching last spring.

So Apple’s vulnerable, right? Not so much. The story says Apple’s decision to pull NBC product right away was hardball:

That could hurt NBC at a time when it needs to convert at least one of its new shows into a hit. NBC execs attributed the staying power of “The Office” last fall to its popularity on iTunes.

[…]

It’s believed NBC would like other nets and studios to follow its lead, but so far, there’s been no movement on that front. ABC and CBS, for example, have strong relationships with Apple, and industry analysts believe it’s unlikely either net will go to war with Apple any time soon.

Days after its public spat with Apple, NBC is taking its “Office” episodes and going to … Amazon, which apparently has a video downloading service called “Unbox.” Who knew?

The agreement with Unbox will offer certain returning NBC shows, including “Heroes,” “The Office” and “30 Rock” for $1.99 an episode, the same price iTunes charges. Unbox also will bundle shows and offer discounts on full seasons, an option Apple wouldn’t provide. Beginning Monday, viewers will be able to download the pilots of NBC’s new shows from Unbox for free before their television premieres.

(Rebecca Dana in the WSJ [$].)

The story subtly clarifies the pricing dispute: Dana says that “Apple said it had refused NBC demands that Apple pay more than double the wholesale price for each NBC television episode on iTunes.” (My emphasis.) That might explain how Apple could say NBC was trying to double the price to consumers (because Apple would raise prices correspondingly) and how NBC could safely deny it.

The NYT in its story adds one crucial bit of information:

While Amazon has solved many of the problems, Unbox is still limited in one important aspect: It is not compatible with Apple’s iPods, which are by far the most popular portable video players.

I just bought the new season of “The Office” on DVD. There are 22 episodes, and it cost me $40-something. It’s available on Amazon for just over $30, so let’s say the average price is $40. That’s less than $2 an episode; throw in a big assortment of extras, notably ten or fifteen minutes of deleted scenes per episode, and the price goes down significantly. In other words, NBC was already making a lot more money per episode of “The Office” online, without all the costs for extras and packaging and so forth, that it is on the DVD–and NBC wanted to jack up the online prices more.

As I said below, I don’t know why, in strictly financial terms, Apple cares what content providers charge for their wares in the iTunes Store. But given the relative pricing of DVDs and the online downloads, I think there is evidence here that, instead of viewing the remunerative digital sales as gravy (”The Office” episodes were among the iTunes Store’s biggest sellers), NBC was greedily trying to figure out how to jack up the price even more.

In today’s fabulous corporate culture, such attention to detail to squeezing every last dime out of your customer base is laudable. But in today’s fabulous digital culture, most of NBC’s products will be available, inevitably, online, for free. If you’re an iPod owner used to downloading “Office” episodes, will you buy a new video player so you can patronize this new Amazon store? Or will you get the shows bootlegged from a friend?

The pre-release publicity on this would seem to have been overstated. (In the film Haynes has various actors as disparate as an 11-year-old African American boy to Cate Blanchett play the singer as he moves though his variegated career.) Variety’s Todd McCarthy is not impressed:

A densely idiosyncratic, cubist-like cinematic portrait of a man who often calls to mind Bob Dylan, Todd Haynes’ “I’m Not There” resembles a film a precocious grad student in musicology might make about a creative hero. Stylistically audacious in the way it employs six different actors and assorted visual styles to depict various aspects of the troubadour’s life and career, the film nevertheless lacks a narrative and a center, much like the “ghost” at its core. Dylan fans and ’60s-era pop-culture mavens will constitute pic’s most reliable audience, as mainstream interest will remain unstirred.

Boing Boing’s Cory Doctorow explains it all for you, lucidly:

[I]t can never work for movies, TV shows or music, because in the case of “copy protection” the receiver is also the person that the system is meant to guard itself against.

Say I sell you an encrypted DVD: the encryption on the DVD is supposed to stop you (the DVD’s owner) from copying it. In order to do that, it tries to stop you from decrypting the DVD.

Except it has to let you decrypt the DVD some of the time. If you can’t decrypt the DVD, you can’t watch it. If you can’t watch it, you won’t buy it. So your DVD player is entrusted with the keys necessary to decrypt the DVD, and the film’s creator must trust that your DVD player is so well-designed that no one will ever be able to work out the key.

This is a fool’s errand. Because the DVD player has the key, it’s always possible that it can be extracted by academics, hardened hackers – or just kids who are in it for the glory.

And the punchline:

This means that ultimately, DRM only effects people who buy media honestly, rather those who nick, borrow or cheat their way to it. In turn that means that the people who ultimately bear the inconvenience, cost and insult of DRM are the paying customers, not the pirates.

A judge in Chicago has abruptly delayed the scheduled Sept. 17 jury selection in the R. Kelly child-pornography trial this a.m., and didn’t offer a new date. The Chicago Sun-Times said he didn’t give a reason, but the Daily Herald, a suburban Chicago paper, said this:

Kelly, who has pleaded not guilty to the charge [sic; there are 14 charges], appeared in Judge Vincent Michael Gaughan’s courtroom today in what was expected to be a hearing in preparation for the pending trial. Instead, Gaughan announced the trial would be delayed for reasons that were “personal.”

A statement from the court later in the morning said, “Under doctor’s orders the lead prosecutor, who has recently given birth, is not able to proceed at this time. ”

The Herald story mentions in passing why Kelly has been running around free for five years:

The case has undergone repeated delays - some of them for bizarre reasons. The singer waived his right to a speedy trial, a move that allowed his high-priced defense team to file more than 30 pretrial motions.

That’s not that bizarre, is it? A rich defendant using the legal system to stay out of jail? The story also details Kelly’s artistic activity over the last five years, but neglects to mention that Kelly was arrested in Florida on more child-sex charges after the now-notorious Chicago sex tape was revealed. Isn’t that more relevant to this story than details of Kelly’s tour with Jay-Z?

As I have written earlier, daily newspaper folks are very busy these days, and sometimes they don’t have the time to construct the background material that puts new developments in an ongoing story into context. So here, again, are Hitsville’s helpful backgrounder grafs on Kelly, which overtaxed daily newspaper scribes are welcome to use for free:

Kelly, now 40, has a long and lurid history of sexual involvements with young girls. In 1995 he was said to have married a 15-year-old girl, the singer Aaliyah. Kelly denied it, but it was found to be true, and the marriage was duly annulled. Kelly did not face charges.

In 2002, a tape came to light showing what appeared to be Kelly and a young girl engaged in a variety of sex acts; one involved Kelly urinating on the girl. After five years of delays, he is to go on trial for 14 counts of child pornography in Chicago soon; charges involving having sex with a minor were dropped because the videotape did not show the two having intercourse; urination didn’t count. Kelley has denied the charges and said he is not the man in the video.

Kelly was arrested in Florida in 2003 for 12 more counts of child pornography stemming from photos in a digital camera found in a house he was renting that showed him having sex with an underage girl. These charges were later dropped after the search warrant used to raid the house was ruled unjustified.

It’s uncool in the rock world to say stuff like this, but I don’t think it’s prudish to think Kelly should be in jail. I don’t even understand how he’s out on bail or is allowed to tour, as he has been three times since this legal circus began: There are at least three documented instances now of his having had sex with girls far under the age of consent, and he has the money and the means to keep doing it. And the court lets him roam around the country playing shows in front of … adoring underage girls. I think the judge is being naive. What does he think happens after a typical rock show? Isn’t the U.S. supposed to be in the middle of a frenzy about kid sex predators? Why is R. Kelly running around free?

Alfred Peet died last week ad word got out over the weekend; he was the founder of Peet’s Coffee and, to Berkeleyans in the late 1970s and early 1980s, one of the culinary cultural touchstones of the era, his reputation rivaled only by Alice Waters’. I don’t know anything about food, but people who do have always said Peet set a standard for deeply redolent, very dark roasted coffees. I find them a lot more palatable than the overly hot metallic taste you get in Starbucks, and the aroma to this day (the company has an efficient and classy delivery operation of just-roasted beans) puts me back at the original store at Vine and Walnut. Starbucks is the national coffee phenomenon of the last twenty years, of course, but few knew how Starbucks stores were inspired by Peet’s, or that Peet had trained Starbucks’ founders. (One of them, having departed Starbucks, eventually bought Peet out; in a way, Peet’s was the Apple to Starbucks’ Microsoft. Ha.)

LA Times obit here.

NY Times obit here,

SF Chronicle’s is here.

The company’s own memorial is here, and some of the comments are touching. Here’s my favorite:

I first met him in 1974 when I was 6. He lived next door to my friend, and one day he came over to her house with a huge cake. On the way to meet the adults, he saw us playing, and he pulled us aside and put the cake on a table. He said, “Quick, run your fingers through the icing!” Of course, that is exactly the kind of thing 6 year olds always want to do but are never allowed. Still, we were hesitant, so we only took a couple of small tastes, but he insisted; “no, no, really, go crazy!” So we did, we ran our fingers all through the frosting and messed it up completely. We licked our fingers and he grinned and then brought the wrecked cake in to the grownups. I found out years later that it was his own birthday cake. What a sweetheart! That made a huge impression on me.

Around 10 years ago, I sent him a letter telling him how much that one memory meant to me. He wrote back and said he didn’t remember the incident, but that it sounded like the proper thing to do for young girls and boys who were being trained too hard to be ladies and gentlemen.

Jon Fine, at Business Week Online, has a well-reported backgrounder on some big news:

The signal stat for the music industry right now is not the one you’ve already heard. That one shows total album sales down about 15% this year. (You may recall the music biz was not exactly going gangbusters last year, either. Or the year before.) The signal stat shows country music album sales down almost 30% so far this year.

Fine explores a lot of different explanations, but the drop is a mystery. Country music isn’t going digital, radio’s still going strong, and the fans remain as loyal as ever to … the people they liked last year. There’s no trend: Last year country sales dropped hardly at all.

His conclusion:

It may well end up country fans were only waiting for late-year hits to open their wallets. Or it may end up that country, like other genres that have undergone commercial renaissances, has a bum year and then recovers. But if neither scenario occurs, the outlook for the music industry just got grimmer. If such a thing is still possible.

p.s.: On a web note, is Fine well served by the placement of his photo, which, below one ad and to the right of another, is entirely disconnected from the story? One of the ways sites need to attract and retain readers is by smoothing out story presentation and making the content the attraction. On that page, the actual text on my screen occupies … about one-eighth of the page. I don’t mind the ads; I might all the other Business Week crap that occupies the lion’s share of the layout.

Tom O’Neill, who does the Gold Derby blog in the LAT, notes that both Variety and the Hollywood Reporter harsh on Woody Allen’s new film, “Cassandra’s Dream.” The Variety writer is so upset he mixes his metaphors: “Like a tragic overture played at the wrong tempo and slightly off-key, Woody Allen’s London-set ‘Cassandra’s Dream’ sends out more mixed signals than an inebriated telegraphist.”

Variety review is here.

Hollywood Reporter review is here.

The latest sacrificial lamb potential challenger to Apple’s hegemony over online media distribution is Sony. In the tongue bath of a story you would expect when the subject has given you a scoop, the WSJ ($) reports exclusively that Howard Stringer, the head of Sony, is rallying the troops to try to put together a combination iPod and iTunes killer.

Two years after taking the helm of Sony Corp., Chief Executive Howard Stringer is quietly preparing a big move to expand the company and challenge rival Apple Inc. in an area that has thus far promised more than it has delivered: video-downloading services.

People familiar with the situation say Mr. Stringer is planning to use Sony’s technology-packed PlayStation 3 and PlayStation Portable videogame machines, along with its Bravia high-definition televisions, to develop products and services to let users download television shows and movies, similar to the way they download music and videos using Apple’s iTunes store and iPods. A Sony spokesman declined to comment on the company’s strategy.

(Note how the WSJ calls Stringer “Mr.” The NYT calls Stringer “Sir Howard”; my understanding is that NYT style is to allow such illustrious personages to use the honorifics if they wish; so if they are used, it means that the person in question has requested it. Whenever I see things like that I think of the David Letterman riff on Al Sharpton: “I call him ‘reverend’ and he calls me “admiral.’”)

There are a couple of interesting things in the story. One, is it true that video downloads “have promised more than they have delivered”? The few times I’ve bought video from the iTunes Store it’s taken about 30 seconds. The problem isn’t a hardware or software one or anything that Sony is going to solve; it’s that the studios haven’t yet had the vision to serve their customers in an easy and understandable way. More on that below.

Second, there’s this part of the Sony strategy, a so-called “module” for its TVs:

Earlier this year, Sony introduced a module for its U.S. television models that can download Internet content. It will roll out a similar device in Japan this fall that will let consumers download videos from a number of Internet services. Meanwhile, Sony’s PlayStation unit last month launched new features for the PS3 and PSP in Europe that let consumers use their game machines to record television shows onto their PS3s and transfer them onto their PSPs.

As a consumer, here’s the “module” I wouldn’t like: Something that can hook me up with a single proprietary video download service. It might not have the content I want, and it might not be around in six months. Here’s one I would like: a simple expandable hard drive with a clear interface that will let me play whatever digital video I have or get anywhere simply and easily. “Expandable” is key because hard drives these days become obsolete much faster than TVs. I wouldn’t want to get a HD plasma set with, say, a 500GB hard drive welded shut inside, because that won’t seem like very much room in a year or two. But I would like one with an extra slot or two for expansion, that in a year or two I could toss a couple of cheap terabyte drives in. Sony could get the Bravia and Vaio folks to work together, right? Funny you should mention teamwork:

It is also a test of whether Mr. Stringer has succeeded in taming Sony’s fiercely independent corporate culture. In the past, the company has struggled to get its various units to cooperate with each other. An area like video downloading would require extremely close teamwork among the electronics, movie and videogame units.

Mr. Stringer has recently appointed executives with a track record of cooperation. One is Kazuo Hirai, the new head of the PlayStation group, who in June succeeded Ken Kutaragi, the headstrong creator of the PlayStation. Mr. Stringer also expanded the role of an electronics executive, Katsumi Ihara, who Sony officials say understands the importance of integrating compelling software with good hardware.

[…]

The people privy to Sony’s plans also say Mr. Stringer, over the protests of some executives, personally enforced a decision to adopt certain digital rights management software that will eventually be used in all of Sony’s products. That is an indication of how serious he is about making sure the company’s various units come together to make this strategy a success, they say.

Emphasis added. Companies like Sony have a different road to navigate, and one shouldn’t be glib. But it’s hard to see how yet another sally into the DRM rabbit hole is going to help the company. (And harder still to see how “personally enforcing” such an initiative is evidence of Stringer’s seriousness. Isn’t it instead an example of how he is resisting change?) The problem Sony will have is that un-DRM’ed material is going to be available, for free, on the internets and the sneakernets. The company, like many a media outfit before it, is going to be again in the position of offering consumers an inferior product … for more money.

This initiative is not, incidentally, going to be called “Hulu.” Hulu is the joint Fox ‘n Warners iTunes killer that says it will be going into “private beta” in October. You can go to hulu.com, by the way, and sign up to participate in the beta testing.

It is also not Amazon.com’s as-yet-unnamed music download service, which is supposed to offer DRM-free music.

MacUser has this update on the breakdown between Apple and NBC. Apple is continuing to play, heavily, the “NBC wants to jack up prices” card:

“We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase,” said Eddy Cue, Apple’s vice president of iTunes. “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”

The network does its best to counter this lucid explanation, but doesn’t do a very good job of it

NBC denied that it had asked for twice as much money. In his statement Cory Shields, EVP Communications at NBC, said that the talks with Apple centred on NBC’s demand for more flexible pricing “in ways that could make our content even more attractive for consumers”.

“It is clear that Apple’s retail pricing strategy for its iTunes service is designed to drive sales of Apple devices, at the expense of those who create the content that make these devices worth buying,” he said.

You have to admire a flack who describes raising prices as making content “even more attractive for consumers.” Apple is surely exaggerating or distorting NBC’s concerns, which are said also to include piracy. But it’s also apparent the company and others are chafing under Steve Job’s strictures. That, as I argue below, there are some pretty good reasons for the intransigence, doesn’t seem to matter. Indeed, again, it’s not clear that letting the network jack up prices and try to screw over their customers will affect Apple negatively at all. The computer company will presumably continue to get a percentage of each sale (higher prices translating into higher income); Apple’s iPod will continue to be able to play any content, including illegally downloaded video, the prevalence of which will undoubtedly increase as prices in official channels—and consumer cynicism—go up.

A puzzling story in the NYT on Hollywood’s record summer. If I understand the premise of the story aright, the movie industry just had a record, $4 billion box office for the summer season, which concluded Labor Day weekend. “But the movie studios are not quite popping the Champagne — at least publicly,” writes Brooks Barnes:

Studio executives were quick to point out that the blockbuster hit “Spider-Man 3” was among the most expensive films ever made.

Indeed, to hear many studio executives talk, the movie business is closer to the edge of a cliff than ever. The 18-week summer season ending today looks great on paper, with 16 movies selling at least $100 million in tickets. But executives quickly point out that $4 billion is not a record when ticket sales are adjusted for inflation. Attendance was also lighter than in years past.

In other words: A fake record was set. Why aren’t the studios celebrating the fake record? Paging Nikki Finke.

Here’s another line from Lynn Hirshberg’s profile of Rick Rubin in the NYT Magazine:

One problem with iTunes is that, with some exceptions, all the songs are priced equally — a Justin Timberlake smash costs the same as an Al Jolson classic. Since a listener would, ideally, pay more for a Top 10 hit, that egalitarian system costs record companies potential millions of dollars.

Why doesn’t Apple allow record companies to set their own iTunes rates? Why does Steve Jobs even care? His argument at the first was that ease of use and consistency was needed to train a skeptical audience to use a new medium. Does that rationale still work? Here’s the argument for the 99 cent model:

1) Aesthetics. Apple is all about clean surfaces and simplicity. Ninety-nine cents for songs, $1.99 for TV shows, $9.99 for movies … What’s not to understand?

2) Business philosophy. Apple is a refutation of all the scams that prevail in the computer market, from all the crapware you get on your computer when you buy it to the many cheesy little ways companies from AOL to HP to Best Buy work at scrabbling a few extra bucks out of their customers’ pockets. Now, of course if consumers didn’t like it on some level they wouldn’t put up with it; it’s the price we pay for the ever-lowering costs of computing. But: it also means that the companies are always going to flirt with the line of what they can get away with, from quality control to customer support. Eventually the companies that go too far will pay a price, and, again, the upside is ever-cheaper computers in general. The down side, though, is the small but real chance that you the customer will get hosed in particular. Jobs knows that opening the door this way will soon create a mass of fake “deals,” customer complaints, and price gouging on his site.

3) History. It’s not entirely the cause of the current crisis, but at least some of the record business’s problem is based on the financial and legal corruption that permeates the industry. Raise prices whenever possible; pay off radio stations to play songs no one wants to hear; and screw artists out of royalties. Those are three key pillars of the music industry, and over time this created a big public reservoir of ill will. Jobs is trying to prevent that from happening again. Why? Well…

4) Reality. Because the companies don’t control the music any more. In reality, the music is available for free. And not just on the file-sharing networks. Mp3 blogs, mp3 discs, memory sticks … there are myriad ways for folks to move data—I mean, music—around at an extraordinary rate and it’s only going to get worse. Folks don’t have to use the iTunes Store. It might be that the best thing the industry can do is start being as nice as possible to consumers lest they just forget the companies exist entirely.

Which is probably the future right there, and not even Rick Rubin can stop it from happening.

As the music industry’s business plan continues to be torn to shreds, the big question—the only question—is what comes next. Is a subscription model the answer? Should the industry just throw in the towel and say hey, let’s try to get people to voluntarily give us some money every month, so at least we all won’t starve?

That’s what the new head of Columbia Records thinks. His name is Rick Rubin:

Rubin has a bigger idea. To combat the devastating impact of file sharing, he, like others in the music business (Doug Morris and Jimmy Iovine at Universal, for instance), says that the future of the industry is a subscription model, much like paid cable on a television set. “You would subscribe to music,” Rubin explained, as he settled on the velvet couch in his library. “You’d pay, say, $19.95 a month, and the music will come anywhere you’d like. In this new world, there will be a virtual library that will be accessible from your car, from your cellphone, from your computer, from your television. Anywhere. The iPod will be obsolete, but there would be a Walkman-like device you could plug into speakers at home. You’ll say, ‘Today I want to listen to … Simon and Garfunkel,’ and there they are. The service can have demos, bootlegs, concerts, whatever context the artist wants to put out. And once that model is put into place, the industry will grow 10 times the size it is now.”

From Napster to the iPod, the music business has been wrong about how much it can dictate to its audience. “Steve Jobs understood Napster better than the record business did,” David Geffen told me. “IPods made it easy for people to share music, and Apple took a big percentage of the business that once belonged to the record companies. The subscription model is the only way to save the music business. If music is easily available at a price of five or six dollars a month, then nobody will steal it.”

That’s from a profile of Rubin by Lynn Hirshberg in the New York Times magazine as he settles into his new job at Columbia. This is an easy issue to make fun of, starting with the vast differences in the rates envisioned by Mssrs. Rubin and Geffen. But I can’t imagine this ever happening because of the restrictions that companies would put on it. The whole package would be DRM’ed within an inch of its life, and the industry would have to continue to sue downloaders and anyone who even thought about hacking the subscription service. (Indeed, I would envision the RIAA getting a law passed making it illegal to make any sort of copy of the music you subscribe to.) And, as is the case with Rhapsody-style services, you would presumably lose all the music and your playlists when you let your subscription lapse.

Distributing the funds would be very hard as well. The sensible way to do it would be simply to monitor what songs consumers actually play or listen to, but that raises obvious privacy issues. (And logistical ones; I’m sure I’m not the only person who leaves his iTunes playing music on the computer all day long, whether I’m at the computer or not. )

How the numbers would crunch is hard to get your mind around, even if all the logistical and legal and technical deals could be finessed. Split the difference between Geffen and Rubin’s numbers, say $12 a month. If the U.S. CD-selling biz is in very crude terms a $5 billion annual affair, you’d need a good chunk of the country, 35 million people, shelling out $144 a year. I don’t see how that works, particularly since we’re really talking about households, not individual people.

The NYT’s Caryn James profiles the amazing actor, whose most potent performance, I think, was in last year’s “Children of Men,” Alfonso Cuarón’s cinematic tour de force:

His two upcoming films:

“Shoot ’Em Up” (opening Friday) begins with an image found in several of his movies, as well as the Lancôme spot: an extreme close-up of his eyes, shrewdly hinting at surprises to come. Here the camera pulls back and reveals him to be a rumpled guy sitting on a bench munching a carrot, which he soon uses as a lethal weapon, stabbing a villain through the throat. And if a cartoonish action movie can find a way to exploit his looks, how much easier for “Elizabeth: The Golden Age” (opening Oct. 12), in which he plays a seductive Walter Raleigh opposite Cate Blanchett as the middle-aged Elizabeth I. Wrenching a line furiously out of context, the film’s trailer has her take one look at him and say, “Well, well” in a way suggesting that it’s Elizabethan for “Ooh-la-la.”

Here’s what the story says about “Children of Men”:

“I usually have a very strong instinct when I read a script,” he said. “I really wasn’t sure about doing that film because the character is so apathetic. You’re playing somebody who’s depressed and cynical and so reluctant.” He continued, “I just wasn’t sure I saw my way into that.” Even now he can only say, “I felt very strongly that there just had to be an overwhelming sadness about the guy.”

He is clearly better at acting than at dissecting how he does it, and Mr. Cuarón laughed knowingly when told that his star was vague when talking about their process. “The thing you have to know about Clive is that he’s not an intellectual in the way he approaches his character,” he said by phone. “He’s completely instinctual. He may analyze the thing later and say, ‘I understand why he does that.’ ”

Mr. Cuarón can describe the subtlety of the performance, though. “He knew there was a physical heaviness to the character reflecting the spiritual heaviness,” he said. At the start, “his shoulders are completely dropped, and every single muscle of his face is as if it were absolutely without gravity. As he’s recovering his faith, the muscles in his face get stronger.”

“Children of Men” was disastrous at the box office, but Mr. Owen shrugs off flops as well as fame….

I didn’t remember “COM” being such a flop, but I checked Box Office Mojo and it’s true: A $76 million film that made $35 million.

Without citing sources, a recent story from Think Secret published on the PC Magazine site had this to say:

Another near-lock for the September 5 event is the availability of the Beatles’ catalog on iTunes. Following years of litigation that ended in Apple’s favor between Apple and the Beatles’ record label, Apple Corps, concerning trademark infringement, the Beatles catalog—the most coveted catalog not yet available in digital form—is expected to at last be made available. Some have gone so far as to speculate Apple will mark the momentous event with the release of a special Beatle-themed iPod, although evidence of this has yet to manifest itself.

PC Magazine says that Apple will announce that Beatles songs will be available on the iTunes store.

I’d like to predict that this will get press coverage far out of keeping with its import, but whatever. The interesting question: Was Beatles Inc.’s slow movement on digital sales was a smart idea or not? It’s a difficult calculation.

A good part of the decline in pop-music sales the last five or six years is the tapping-out of the oldies CD market. The guys who had bought the Eagles’ One of These Nights on LP, 8-track and cassette over the years had their chance to slip the record biz en masse (WEA, Don Henley & Co., and Sam Goody) another fast $15 when the album came out on CD. This process was duplicated many many times (millions of times, perhaps billions of times) over the 1990s as music-loving teens grew up, got a little disposable income and felt the need to relive a few high-school memories on the digital tip.

(I’m not being condescending, here: I’d be very embarrassed to share the names of some of the albums I re-bought on CD on just these grounds. I’ll see your Fragile and raise you a Captain Fantastic.)

But by the end of the 90s this income stream had tapped out, and none of the industry’s other attempts at a new format (DAT, minidisk etc. etc.) caught on.

Then comes iTunes, and I’d bet that a lot of the downloading comes from people who already had the CDs of the songs in question. This is free money for the Eagles and the record companies, without the need to make the damn record, store it, ship it somewhere, or pay the dullish kid behind the register to sell it to you.

The issue: when was the best time is for the Beatles to strike in this market? The argument that the time is long past is that millions of its original albums are being digitized and passed around amongst friends. I don’t even listen to the Beatles anymore, just on the grounds of overfamiliarity. Still, I just took a quick look on my iPod and discovered … nearly 100 Beatles songs on it. I would bet a lot of people are like me, digitizing their own albums (in my case, almost absent-mindedly) or getting them from friends, and absorbing the Beatles into their digital library almost by osmosis. Isn’t the band losing an enormous, unrecoverable, income stream?

You’d think that the Beatles’ organization making a calculated decision on this. Perhaps, in old-school negotiation style, they were trying to drive a harder bargain, or build up demand, but that would seem to be senseless when on every passing day people are digitizing their own CDs and adding them to their iPod collections—and then passing the discs on to friends, who have no other way to get the music onto their iPods.

The band’s sales veer widely—the 1 collection sold 10 million in 2000 and 2001, but in a typical year the group has a sales base of 1M or 2M. Two years ago, the group sold 2.4 million, according to SoundScan, and last year 1.6, and are on track for about that this year.

Assume the band makes three bucks from each record sold, and so might gross $6M a year just from album sales royalties. Assume the band and the label split the 65 cents they would presumably get from each iTunes sale, and that would translate to a little more than $3—or about the same as for the hard copy—for each album equivalent sold over the web.

In the face of such numbers the main argument I can see mitigating against iTunes sales is that they might in the long run hamper the group’s ability to finagle new generations of repackaging. The success of 1 is a very strong argument for this. There are for some reason millions of people who will buy a Beatles greatest hits set, like 1, even though it has nothing but the same songs they’ve bought again and again, notably in the massive-selling blue and red double CD sets. By contrast, online, once you’ve bought the digital version of “Hello Goodbye,” why would you ever pay for it again, absent some added value?

In the end, though, whatever sales records are bruited about by Apple after the inevitable event occurs, I think in the end the band will have lost untold millions over the last five years by not having benefited from being in the first wave of digitization by allowing, in effect, their fans to do the digitizing for themselves.

Apple snapped back at NBC today. Late Thursday the network said it would pull its shows from the iTunes Store when its contract with Apple expired in December. Yesterday, according to the LA Times, Apple said it would stop adding any NBC shows to the service immediately. Dawn C. Chmielewski:

Apple Inc. said Friday that it wouldn’t sell future seasons of “The Office” or any other NBC Universal TV shows through its iTunes video store after a contract dispute between the two companies erupted into the open.

Apple’s decision not to sell new episodes of “Heroes,” “30 Rock” and other NBC series marked the latest salvo in the tug of war between the technology giant and the entertainment industry, which is increasingly unsettled by Apple’s growing clout.

NBC Universal notified Apple late Thursday that it would not renew its contract to sell digital downloads of its television shows through iTunes when the agreement expires in December. Apple retaliated by saying Friday that it wouldn’t sell any shows from the fall season.

The Financial Times had this interesting tidbit:

However, as part of any new pact, NBC is demanding greater power to price its programmes on iTunes, including the ability to bundle episodes at special rates – something it is now doing on Amazon.com. NBC also wants Apple to install stronger filters on the iPod to block it from playing pirated materials.

My emphasis. As far as I can tell, this requirement is insane; the only way to stop the iPod from playing pirated materials is to limit it to playing only NBC-approved DRM’ed materials, which will not happen. It’s hard to believe NBC wanted that prescription precisely; it’s possible it’s a leak from Apple designed to embarrass NBC.

However, says the LAT:

Piracy concerns are looming larger as Apple considers starting a movie rental service to complement iTunes. The company has been seeking licensing deals with movie studios, according to people familiar with the talks.

Maybe NBC just isn’t happy with whatever protections Apple is offering for the service.

Apple’s Steve Jobs is hosting an event Wednesday for what the Apple rumor sites are saying will be some iPod upgrades and other potential bits of big news, including the possibility of Beatles songs on the iTunes Store or the movie-rental service.

The big problem seems to be pricing. Apple is saying that NBC was threatening to raise the price on some episodes to $4.99, but it’s not clear if that is true; if nothing else, NBC seems to want to be able to price hot shows at a higher price.