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Oliver Peters
Apple software subscriptions in the future?
on Jun 12, 2015 at 12:17:05 am

Something to consider... Now that Apple has fully embraced the subscription model with Apple Music, could that change their approach to software down the road?

- Oliver

Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com


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David Mathis
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 12:25:18 am

Is it possible that the next OS X will be a start of this? Will this help Linux? I am considering Resolve as an alternative just in case.


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Oliver Peters
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 12:33:04 am

[David Mathis] "Is it possible that the next OS X will be a start of this?"

A different spin on this is that Apple could also seriously add movies into the model. That, rather than applications.

- Oliver

Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com


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Tim Wilson
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 1:00:34 am

[Oliver Peters] "Apple has fully embraced the subscription model with Apple Music"

And they were years late doing so. So late that it was worth $3 billion to buy Beats to accelerate the process.

The absences of monthly subscriptions had undermined the fundamental soundness of their music business. (See what I did there?) They NEEDED to add subscription model or watch their music business fall further and further away from relevance.

I'm not sure that some people get how far behind Spotify iTunes had fallen, and how much that decline was accelerating. If Apple wanted to stay in the music business, they HAD to make this move.

iTunes sales aren't dead any more than CDs are dead -- but the death spiral has been underway for a long time. Apple's not in the "riding the death spiral" business.



[Oliver Peters] " Apple could also seriously add movies into the model."

Yes. They've saddled up on Spotify. Netflix is next.

Why "next," even though Netflix decimated Apple's iTunes movie and TV sales before Spotify torpedoed iTunes music sales?

(I don't know if folks have fully appreciated that Spotify passed iTunes. The Beats purchase was IMPERATIVE unless Apple get this to the finish line more quickly than was happening.)

The issue has historically been that the movie and TV studio side of the same conglomerates with music labels HATE Apple. They phrase I heard many times is "We're not going to let ourselves get iTuned again." Apple TV could have taken off years ago if studios hadn't been burned so badly on the music side.

So maybe "fear" is a better word...but I think "hate" counts. I do think that the hate was more directed at Jobs personally, which is why it's not at all surprising to me that Tim Cook is growing Apple dramatically more quickly than Steve ever could have. You know that Apple's sales have doubled and profits tripled with Tim at the helm, right? The sharpest uptick in Apple history. He's a better business man AND a nicer guy....and nice guys can in fact win.

To get Apple Music across the finish line, though, the OTHER need Apple had wasn't technological, but personal. Yeah, Tim Cook was a step in the right direction away from Jobs, but it took Jimmy Iovine at Beats (producer for Springsteen and Stevie Nicks, head of the most influential and profitable record label of his era) to assuage the fears of studios who'd been burned by Apple once and had no interest in another round.

That's going to be one of the logjams for Apple's take on Netflix. Tim Cook MIGHT be the guy whose relationship with the studios is enough to make them let Apple off the mat...because really, Netflix and even Redbox have been as much an insurance policy for studios against letting themselves get backed into a corner by Apple again. If potential profit was enough to overcome that combination of fear and hatred, it would have happened already. The creation of and "Apple-flix" model may in fact need a Jimmy Iovine.

This is definitely another area where Apple is years behind, and they will either adopt or forever surrender to accelerating, irrevocable irrelevance ....which just doesn't sound likely.



[Oliver Peters] "rather than applications."

Their software model appears to have become the exact opposite of all this. Buy once for next to nothing, and get every upgrade free for....well, for at least for the next four years and counting. I don't see any sign that they're going to ask for a single upgrade payment, much less monthly payments.

For software.


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Andrew Kimery
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 1:54:14 am

[Oliver Peters] "Something to consider... Now that Apple has fully embraced the subscription model with Apple Music, could that change their approach to software down the road?"

I don't see what Apple would have to gain. Users like the ridiculously low prices for the software and it has to run on a Mac so Apple gets it's hardware sale. They already give away their OS...


[Tim Wilson] " Apple TV could have taken off years ago if studios hadn't been burned so badly on the music side."

The other wrinkle here is that music distribution is much less of a rats nest than movie/TV distribution and the iTMS was basically a natural progression of music distribution to a new medium. Apple is a middle man (like Walmart or Target) selling music but the medium is a digital file as opposed to a CD, cassette tape, record or 8-track. With TV you have a lot more players in the mix (the networks, local TV stations, cable/sat companies, etc.,) and the business is ad based. The music labels want to sell songs to consumers but the networks want to sell an audience to advertisers. AFAIK Nielsen still hasn't hammered out a comprehensive rating system for streaming yet and until that happens I don't think we are going to see any great leaps and bounds in live TV going to IPTV.


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Bill Davis
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 2:06:08 am
Last Edited By Bill Davis on Jun 12, 2015 at 2:31:24 am

[Tim Wilson] "but it took Jimmy Iovine at Beats (producer for Springsteen and Stevie Nicks, head of the most influential and profitable record label of his era) to assuage the fears of studios who'd been burned by Apple once and had no interest in another round."

Burned? BURNED?

IIRC at that time, the record labels were getting DESTROYED by Napster et al. And they didn't have the brains to do anything but file a small flurry of lawsuits against teenagers to stop the hemorrhaging.

Jobs, (like him or not) figured out that ONLY by offering the music lovers of the world the opportunity to get LEGAL at a sensible price ($.99 a price that nobody could bitch much about) was there any hope of turning the corner and creating a new market for music.

Those same recored company execs had created a model of $12 to $15 for an LP containing, at best, 1 or 2 good songs, and had then proceeded to push the price higher and higher and higher over the years..

I agree the music industry hated Jobs - largely because he showed how utterly lame their bloated and rigged industry had become. Remember when after iTunes had proved the new model, the record label guys forced Jobs to push iTunes prices up to the the ridiculous single song price of $1:29 simply because they couldn't get their brains around the fact that they they weren't selling RECORDS anymore. $1.29 is a classic "rack jobbers" price. (the old retail model from back when records were put on racks in record stores.)

The record industry was the most corrupt cesspool in retail back in the day.

All power execs and lawyers. Thats why you ended up with Michael Jackson owning the Betatles catalog and guys like John Fogerty not being able to perform for decades because all the money would go to the record company toads rather to the performers.

I'm sure they FELT that Apple had "burned" them. If they had any brains, they'd erect a statue to him for saving the whole damn modern music business.

And not with the technology. But with the concept that if you treat customers with RESPECT, (something no record company had EVER even considered, IMO) they will buy more stuff from you.

My 2 cents.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Andrew Kimery
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 2:34:34 am

[Bill Davis] "Burned? BURNED? "

Yeah, burned. Apple turned into an 800lb guerrilla retailer that no competitor could match (not even Walmart) which is why Amazon was able to sign a deal with the labels to sell DRM free music before Apple could. The labels were trying to get another player into the game. Obviously the labels were looking out for themselves, but as a customer I was glad to see Amazon get in on the action because they are one of the few companies that can be a legit competitor with Apple.


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Bill Davis
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 2:38:33 am

Sure, remember back in the old days when competition pushed prices down?

These days, sometimes it seems the function of competition is to make arbitrary price increases feel "normal" because everyone is doing it.

See gas prices.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Andrew Kimery
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 3:04:18 am
Last Edited By Andrew Kimery on Jun 12, 2015 at 3:11:39 am

[Bill Davis] "These days, sometimes it seems the function of competition is to make arbitrary price increases feel "normal" because everyone is doing it. "

Why compete when colluding is much easier and more profitable? ;)

But on a somewhat serious note, I wonder how lack of physical inventory plays into pricing and competition. By that I mean, a store (especially a brick and mortar store) selling physical goods is motivated to move those goods because they are taking up space (which is finite and costs money). Even if that means eventually selling something at a break even point (or a loss) they'll do it just to get rid of it. Files sitting on a server though is a totally different ball game. A file on a server can be 'distributed' an unlimited amount of times and if the hosting company is running out of space they just add more storage.

Sure, if you want you can still have sales to try and steal customers from the competition, but the inherent pressure of 'we have to move this inventory NOW because new inventory is arriving soon and we don't have room for everything' is gone. If you are dealing in downloads only you also don't have to worry about the 2nd hand market because, at least right now in the US, you can't transfer ownership of file-based media like you can physical media. That's one of the things at the forefront of console gaming right now. While downloading a game is more convenient than buying the disc, gamers are afraid of the long term consequences of seceding even more power to game developers/publishers and console makers.


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James Culbertson
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 2:07:37 am

[Tim Wilson] "Their software model appears to have become the exact opposite of all this. Buy once for next to nothing, and get every upgrade free for....well, for at least for the next four years and counting. I don't see any sign that they're going to ask for a single upgrade payment, much less monthly payments."

There will be no software subscriptions until they are no longer making good "subscription" money off their hardware... how often have you purchased a new mac or laptop in the last 10 years?


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Walter Soyka
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 2:13:15 am

[James Culbertson] "There will be no software subscriptions until they are no longer making good "subscription" money off their hardware... how often have you purchased a new mac or laptop in the last 10 years?"

This, plus phones and iPads and now headphones.

Walter Soyka
Designer & Mad Scientist at Keen Live [link]
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
@keenlive [twitter]   |   RenderBreak [blog]   |   Profile [LinkedIn]


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Jim Wiseman
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 4:21:47 am
Last Edited By Jim Wiseman on Jun 12, 2015 at 4:24:27 am

And those OSX updates are not free for the same reason. Once a year, way too often, we have a new OSX and the hardware and software needs to be replaced or updated. Getting a "frozen" system for a couple of years is a real achievement. Pressure on developers and the user base. One reason I bought the 2012 Mac Pro Tower. Four and probably five different boots on it soon. Who needs to pursue a software rental model when hardware is so profitable? Works for Apple, and Blackmagic is copying. All this, and I'm still an Apple fan.

Jim Wiseman
Sony PMW-EX1, Pana AJ-D810 DVCPro, DVX-100, Nikon D7000, Final Cut Pro X 10.2.1, Final Cut Studio 2 and 3, Media 100 Suite 2.1.6, Premiere Pro CS 5.5 and 6.0, AJA ioHD, AJA Kona LHi, Blackmagic Ultrastudio 4K, Blackmagic Teranex, Avid MC, 2013 Mac Pro Hexacore, 1 TB SSD, 64GB RAM, 2-D500: 2012 Hexacore MacPro 3.33 Ghz 24Gb RAM GTX-680 960GB SSD: Macbook Pro 17" 2011 2.2 Ghz Quadcore i7 16GB RAM 250GB SSD


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David Mathis
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 4:05:08 pm

After thinking about this, there is a downside to the approach Apple and Blackmagic is using. You want to use Resolve? Want to use this awesome editing software from Apple? Your hardware options are somewhat, to some extent, much more narrow, the proprietary variety. Of course, this extends into other industries to be sure.

For example, just talked to an elevator guy and companies like Otis are heading in that direction as well. Car industry might be next. Adobe does not make or sell hardware which is one reason subscription only came about. Might not agree with their business model but that is the way the ball bounces. No hardware that you are being tied to or a platform as is the situation with Motion.

That along with the fact that many or a few, based on your frame of reference is why there is an increase in software going rental only. Avid, in my opinion, takes a more sensible approach. Adobe, it is pay your rent or forget about it approach. Not something I am comfortable with. Carry on!


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Oliver Peters
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 5:24:38 pm

Even the printer companies - who developed the model of hooking you on cheap gear and then making it up in the ink - are adding subscription. HP offers an ink cartridge subscription plan.

- Oliver

Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com


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Bill Davis
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 5:36:35 pm

[David Mathis] "Adobe does not make or sell hardware which is one reason subscription only came about. "

I honestly doubt that's the reason subscription came about.

Part one, electronic banking changed everything. The ability to do ACH hookups changed everything. It fundamentally changed the relationship between consumer, bank, and service vendor. The bank is no longer a party. You can't tell them to stop a payment because you aren't a party to the transaction any longer. The contract between the vendor and the customer with no middleman anymore. Sounds efficient, but the result is to limit customer protection, big time.

As to the other reason, my suspicion is that a few bigwigs were drinking in the locker room after a round of golf, trading "My business model is a LOT more profitable than yours" stories.

And the insurance industry guy mentioned that with ACH billing, they had huge numbers of people paying monthly, in FEAR of being dropped, but month after month not actually getting anything except a few pieces of paper in exchange for the river of cash flowing in. He likely bragged that when their was a claim, they had whole teams of experts who could figure out how to deny them and rivers of 6pt type in their contracts to provide them with legal outs. And if you got old and finally in class where you were likely to actually have insurance claims - they'd raise rates so high that you'd be forced to shop around, with the result that they'd lose a large percentage of their older customers without ever having to pay out anything! BIG SCORE!

The software company guys knew that they'd actually have to deliver a functional product that their customers could use, but the idea of an income stream that was divorced from any actual product use or even functionality was just way too tempting to ignore.

This does not imply that honorable software companies won't deliver quality products to encourage subscription. They most certainly will. This is just the money part of the deal.

"Make subscribing easy - make unsubscribing difficult - decouple from the customer if at all possible - and we'll be a little bit more like Bob the insurance company exec who just bought his 3rd yacht."

It's all about money. That's how business is setup to work in the modern era. Automate income. Limit loss. That we're given good products is often an accident and more a reflection of pride than economic motivation - because this is the era where if you can legally decouple yourself from any and all risk of not making a buck, or from pesky customer service, it pays to do so.

Sad, but HUGELY profitable.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Andrew Kimery
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 6:35:59 pm

[Bill Davis] "I honestly doubt that's the reason subscription came about."

The reason is multifaceted, but companies like Apple or Blackmagic driving down the cost (perceived value?) of software certainly plays a roll. Do you think Apple's $1199 FCS suite (or more recently a one-time fee of $400 for X) had no ripple effect in the NLE market? If Resolve wasn't tied to BM hardware do you think a nearly fully functioning version of it would be given away for free? What about Microsoft's new approach with Windows 10? I'm sure it had something to do with Apple giving away OS X for years. When the iTunes store first launched Jobs said in an interview that he didn't fear competing online stores because competing stores didn't have the iPod. iTMS was a break even/loss leader service designed to move Apple hardware.

A hardware race to the bottom gutted the computer industry in the '00's and now we are seeing a software race to the bottom.


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Bill Davis
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 6:56:09 pm

Not sure Andrew. I'm still of the opinion that after Apple proved the fully electronic software distribution model with the iTunes Store, they likely have more profit from a sale of X than they ever did with FCP Studio. Packaging, transporting, warehousing and flooring boxes of physical product likely are up a huge part of the Studio $1200 price tag. Trading a click for $$299 ($399 with add ons!) is a different profit generating ballgame entirely. It wasn't any 'race to the bottom for Apple. It was leveraging smart investment in an all electronic distribution system and knowing what the new game was before their competitors.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Oliver Peters
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 7:32:33 pm

[Bill Davis] " Packaging, transporting, warehousing and flooring boxes of physical product likely are up a huge part of the Studio $1200 price tag. Trading a click for $$299 ($399 with add ons!) is a different profit generating ballgame entirely."

True but operating the entire App Store or iTunes Store operation with the e-commerce aspects isn't zero cost either.

- Oliver

Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com


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Herb Sevush
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 7:43:08 pm

[Bill Davis] ". Packaging, transporting, warehousing and flooring boxes of physical product likely are up a huge part of the Studio $1200 price tag."

I'm sorry Bill, but those costs at that volume don't equal $800 per unit, closer to $80 per unit, if not $8 per unit, with $800 being the price difference between a unit of FCPS and FCPX.

FCPS was clearly more profitable per unit than X, but the difference is no more than a rounding error considering Apple's overall budget.

Herb Sevush
Zebra Productions
---------------------------
nothin' attached to nothin'
"Deciding the spine is the process of editing" F. Bieberkopf


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Andrew Kimery
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 8:06:50 pm

[Bill Davis] "Packaging, transporting, warehousing and flooring boxes of physical product likely are up a huge part of the Studio $1200 price tag. "

Physical distribution is not that expensive and Apple's MO long predates X.

For example, with their old Pro Apps they routinely acquired expensive apps and then released them for a fraction of the price. Shake and Color were probably the most extreme examples. Shake used to be cross platform and cost about $10,000. After Apple bought it the Windows version got axed, the Linux version remained full price and the Mac version got a 50% price cut. Eventually the Mac price was $500 and the Linux price was $5000. Color, in a former life, was a $25,000 application that got rolled into the FC Suite at no additional charge.


[Bill Davis] " It wasn't any 'race to the bottom for Apple. "

Sure it was. They set the bar unprofitably low. What else would you call that?

From the Jobs interview:
"We would like to break even/make a little bit of money but it's not a money maker," he said, candidly.

So now we have it on record: the music store is a loss leader. Jobs said Apple would pay its dues to the RIAA, then seek to make money where it could, from its line of hardware accessories. When the conversation turned to rivals such as eTunes and Napster, Jobs said: "They don't make iPods, so they don't have a related business where they do [make money]".

http://www.theregister.co.uk/2003/11/07/your_99c_belong/

Is Apple the only company doing this? Of course not, but to say Apple is not a player in this game is unreal.


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Bill Davis
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 8:20:01 pm

"Distribution is not that expensive and Apple's MO long predates X."

As someone who has done multiple whole videos on supply chain and distribution networks for a major national retailer, we'll just have to disagree about this. I stand by my contention that an Apple X sale today likely drives more profit to the bottom line than a box sale of Legacy did back in the day.

You KNOW someone did an analysis on the opportunity cost of all the free updates of X. And I suspect the decision was reasonably easy looking at what the software has generated verses what the entire X initiative has cost.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Andrew Kimery
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 9:03:40 pm

[Bill Davis] "You KNOW someone did an analysis on the opportunity cost of all the free updates of X. And I suspect the decision was reasonably easy looking at what the software has generated verses what the entire X initiative has cost."

Considering you have to buy a Mac to use the software (and Apple has very healthy margins on its hardware) I'm sure the decisions are reasonably easy.

The analysis probably goes something like this:
Will charging a low, one-time fee for X help us sell more Macs? Especially higher end Macs?
Yes.
Do it!
Will giving away OS X help us sell more Macs?
Yes.
Do it!
Will charging break-even prices on music help sell iPods?
Yes.
Do it!
Will allowing users to run Windows on a Mac help sell Macs?
Yes.
Do it!
Will allowing Psystar to sell 'Hackintosh' computers help sell Macs?
No.
DESTROY THEM!!!

;)


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Herb Sevush
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 1:49:28 pm

[Tim Wilson] "but it took Jimmy Iovine at Beats (producer for Springsteen and Stevie Nicks, head of the most influential and profitable record label of his era)"

Not to get too petty, (who me?) but since when was anyone other than John Landau considered Springsteen's producer? Not to disparage Iovine, who is a music industry giant.

Herb Sevush
Zebra Productions
---------------------------
nothin' attached to nothin'
"Deciding the spine is the process of editing" F. Bieberkopf


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Claude Lyneis
Re: Apple software subscriptions in the future?
on Jun 12, 2015 at 9:54:30 pm

With Aperture fading away, I keep thinking about Adobe Lightroom, but a paranoid voice in my head says, after you use Photoshop and Lightroom, you are a slave to that monthly bill, otherwise a lot of work could be down the drain.
So here is hoping Apple doesn't go all subscription on us.


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Oliver Peters
Re: Apple software subscriptions in the future?
on Jun 13, 2015 at 12:47:10 am

[Claude Lyneis] "With Aperture fading away, I keep thinking about Adobe Lightroom, but a paranoid voice in my head says"

Lightroom can still be purchased outright. Photoshop Elements (a very capable "light" version) can also be purchased via the App Store. So in those two cases, you are not locked into the subscription. However, if you are a power user of Photoshop and none of the alternatives fit the bill, then yes, you are tied to the subscription. In spite of that, Photoshop files with merged layers (vector objects, smart objects and layer effects are merged and/or rasterized) are compatible with Pixelmator and Affinity Photo.

- Oliver

Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com


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