Apple in talks with Hollywood over film downloads for iTunes

Apple's chairman Steve Jobs is heading for another showdown with the media industry over plans to start selling film downloads at the company's iTunes online store.

The big Hollywood studios are resisting Mr Jobs' plan to sell feature-length films at a flat rate of $9.99 (£5.40) and are refusing to license any content to iTunes unless he agrees to flexible pricing. The studios want consumers to pay twice that amount for new releases fresh out the cinema.

Apple is gearing up for the launch of a new generation of video iPods in the autumn, according to rumours swirling through the industry, and Mr Jobs is said to want to launch films on iTunes at the same time.

Apple shares rose yesterday on reports that negotiations with the studios were moving to a serious phase and that many of the technical difficulties of film downloads - which take much more memory than simple songs or pop videos - can be overcome.

The latest confrontation over iTunes prices mirrors a similar battle waged by Mr Jobs against the major record labels earlier this year. They had wanted iTunes to raise the price of some songs from the flat-rate 99 cents at which they retail at the US store. The labels eventually capitulated in the face of iTunes' dominance of the digital music industry.

Hollywood studios - including Universal and Fox - are determined to prevent Apple becoming such a dominant force in films, however, and some industry moguls are pressing for the introduction instead of digital rental services, rather than buy-to-own downloads.

Analysts say that Mr Jobs may have to compromise. "It is my sense that, while Steve got away with 99 cents with songs, it is not clear he can get away with $9.99 for films," said Charlie Wolf, technology analyst at Needham & Co.

Last month, iTunes signed new supply deals with the four major record labels which allow the store to continue selling songs for 99 cents apiece. Apple controls more than three-quarters of the music download industry because of the cross-marketing between the store and its ubiquitous iPod portable music player.

But Mr Jobs is in a less powerful position in the hard-nosed negotiations with the big film studios, not least because customers may prefer to watch films on their PC than on the small screen of an iPod.

Although Hollywood fears losing sales to online film piracy, this is not yet seen as a significant phenomenon and moguls are telling Apple that they have time to experiment with other download services.

Netflix, which takes online orders for DVD rentals which it sends through the post, is set to be a major competitor to Apple, and studios such as Universal have launched their own download websites.

Independent Comment
blog comments powered by Disqus
Career Services

Day In a Page

How an abortion divided America

How an abortion divided America

Single mother who took a pill to end her pregnancy is now fighting a landmark prosecution in a conservative state
Can you master a language in a weekend?

Can you master a language in a weekend?

Ed Cooke insists he can use his techniques as a memory expert to help novices learn even the hardest tongues.
The 10 best heaters

The 10 best heaters

From the DeLonghi Retro Fan Heater to the Dimplex MicroFire
Coming soon to a shelf near you: The publishing industry has gone mad for film-style trailers

Coming soon to a shelf near you

The publishing industry has gone mad for film-style trailers
Mad, bad and delightful to know: How Lord Byron became a cultural superstar

How Lord Byron became a cultural superstar

As the poet takes centre stage in the West End, Boyd Tonkin looks into the life of the outspoken champion of the poor
Did they all live happily ever after? That's up to you...

Did they all live happily ever after? That's up to you...

New digital novel will overturn centuries of literary tradition by allowing readers to choose how they would like story to end
How to look good for less – Primark in copycat row

How to look good for less – Primark in copycat row

With London Fashion Week starting tomorrow, designers are closeted in studios putting finishing touches to their collections
James Lawton: Arsène and Arsenal are living in the past

James Lawton

Arsène and Arsenal are living in the past
How Docherty's resurgent Reds beat Dutch greats

How Docherty's resurgent Reds beat Dutch greats

United have met Ajax only once before in Europe, in 1976. The key performers recall an electric occasion
Civil war at Ajax

Civil war at Ajax

A rift between two club legends has torn the Dutch giants apart
Lewis Moody: For an idea of where England are headed, look at Wales now

Lewis Moody column

For an idea of where England are headed, look at Wales now
Geoff Toovey: Little gem with huge incentive to become king of the world

Geoff Toovey interview

Little gem with huge incentive to become king of the world
Picture preview: Portrait of London

Portrait of London

Picture preview
No secularism please, we're British

No secularism please, we're British

Arguments about the role of religion in national life have recently acquired a new urgency
Harold Tillman: 'Chinese tourists can save the high street – if we let them'

Harold Tillman interview

'Chinese tourists can save the high street – if we let them'