Reportedly, Apple is trying to cut a deal with the major movie studios to sell movie downloads on iTunes. It would only make sense – Apple continues to sell music and video at a rapid pace. But the studios are balking, because Apple is suggesting a list price of $9.99, less than the price at which Wal-Mart sells DVDs. But why shouldn't the price be lower? There are no hard media, packaging or distribution costs, and iTunes markets itself, so the marketing costs should not be as high. So instead of leaping at a new business opportunity that is practically a sure thing, Hollywood is running to Congress for more protection for its old business model, like requiring the broadcast flag scheme and closing the analog hole. Here is my testimony on the latter, which I will be presenting tomorrow before the Senate Judiciary Committee.
I'm curious what the sales numbers are for CinemaNow – the online download service that charges between $20-30 per movie download, which does not include the extras found on DVDs. My guess is that when Hollywood sees that consumers will not pay more for less, they will hop on the iTunes bandwagon and rake the money in.