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Apple Denied $9.99 Movies at iTunes

by June 18, 2006

Apple Computer is currently negotiating with most major studios to add movies to its iTunes Music Store, possibly in time for Christmas - according to Variety (who claims numerous, though unnamed, sources).

It seems the problem is centering around the exact price. Apple wants a flat $9.99 fee and the movie studios, who have never truly understood the concepts of volume, supply, demand or common sense, are absolutely opposed.

In case you ever bought into the idea of "hard costs" making up the majority of the CD or DVD retail pricing - this should nail that coffin shut once and for all. With zero production costs, $9.99 should offer more than enough profit for everyone involved (70% in fact, if Apple sticks to its current business model) - but we never accused the studio execs of having any sense before - so why start now.

"We can't be put in a position where we lose the ability to price our most popular content higher than less popular stuff," said a clueless (my embellishment) studio exec close to the negotiations.

Apple has traditionally sold digital content at a single price: $0.99 for songs, $1.99 for TV shows and music videos. This has, so far, kept everything simple and economical - not to mention easy-to-understand for consumers. Apple has recently experimented with some extended video content, however, selling the Disney Channel telepic "High School Musical" for $9.99 and the "Battlestar Galactica" miniseries for $14.99.

In an apparent act of cowardice coupled with corporate suicide, the studios are afraid of upsetting such retail partners as Wal-mart and Circuit City by making such a lucrative deal with Apple. Heaven forbid they actually explain that this is an entirely different market and medium. No, it's far better to avoid setting the trend and keep bringing up the rear after cable TV and sateillete providers take over the marketshare.

According to Variety there are indications (OK, leaks within the company) that Apple (re: Steve Jobs) may negotiate and allow price points ranging from $9.99 to $19.99 in order to differentiate older titles from new releases. Yes, watch everyone RUN to download a movie over broadband when they can pay 25% less and pick up a new release hard copy at Walmart or Target. We're carefully noting that as of yet there has been no mention of HD content downloads or next generation formats.

TV shows were added to iTunes last year, and while this started with just ABC/Disney, now MTV, NBC Universal, and others are joining the fray or at least talking with Apple to get on board.

Two online stores: Movielink and CinemaNow sell film downloads - so the market exists, but has yet to take off. Apple's existing marketshare (millions of video-enabled iPods) could provide more exposure for downloadable movies than currently exists today. Amazon.com will also begin selling downloadable movies if all goes well. We'll know it has really arrived once you can get a subscription at Cracker Barrel.

If Apple's history is any indication, there will be some kind of hardware release coupled with an announcement of new movie download services and studio partnerships at one of the upcoming Apple events... We'll wait and see, not necessarily out of interest in Apple's corporate ventures, but for what it may mean to the industry as a whole.

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About the author:

Tony is our resident expert for lifestyle and wireless products including soundbars. He does most of the reviews for wireless and streaming loudspeakers and often compares soundbars in round ups and helps us cover the trade shows.

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