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What they're not telling you about Apple's 'same day as DVD' deal

I first wrote about this last week in WinInfo Short Takes, but an article by David Carr in today's New York Times once again blurs the lines of reality when it comes to Apple's recent deal with movie companies. In this deal, Apple gets the right to sell movies digitally via iTunes on the same day that the DVD versions appear in the market. Depending on who you talk to, this is "the death of Netflix" at the very least or "the death of the DVD" if you're really out there.

Not so fast.

Curiously, most people who write about this event seem to be missing the fine points of the Apple deal, which in reality doesn't change much at all. As excerpted from Short Takes, these are:

Apple's movies are too expensive. At $14.99 for a new digital download, Apple's movies are still far too expensive, especially when you consider that they don't include any DVD-style special features or, usually, even basic features like closed captioning support. A typical example: "Juno" is $14.99 at iTunes and cannot be rented. You get just the movie, in English, tied to your iTunes account and whatever Apple devices you've authorized. At, the Juno DVD is $15.99 but it includes features not found on the iTunes file, including compatibility with all DVD players, PCs, and Macs sold in the US and Canada, three spoken languages (English, French, Spanish), two subtitles (English, Spanish), and a number of special features, including deleted scenes, a gag reel, a gag take, cast & crew jam, screen tests, and a director's commentary track. A 2-disc version of the movie ($22.99) includes more special features on a second disc. Unlike digital tracks, DVD movies can also be resold.

It's for purchases only, not rentals. The deal doesn't affect rentals, only purchases, so presumably we'll still have to wait 30 days or more to rent new movies at iTunes. This is one of the things the NYT article cited above neatly skipped over, and I feel it's important, as I'll elaborate below.

It's not exclusive, and Apple wasn't even first to market. Apple's deal isn't unique, and it certainly isn't first in any way: PC-oriented movie services like CinemaNow and Movielink have offered same-day movie sales as new DVDs for years. In fact, these services even offer same-day-as-DVD-release rentals, a feature not offered on iTunes. The aforementioned Juno, coincidentally, can now be rented on Movielink for $3.95. It cannot be rented on iTunes.

Apple's losing money on the deal. Because the wholesale price of the movies being sold to Apple is about $16, according to the Wall Street Journal, Apple is losing money on every single movie it sells, continuing the iTunes Store's role as a loss-leader designed almost solely to pimp iPod sales. What this all adds up to, really, is Apple catching up with the rest of the market, while the movie industry continues to sell digital content to consumers at exorbitant prices. Granted, this is iTunes we're talking about, so Apple will likely see bigger success than other services. But even that "success" has been limited so far: Apple sold just 7 million digital movies last year, well below the company's expectations.

There are some other side issues here that bear exploring, but I'll save that for another time. As a teaser, I'd point out two things: That the ongoing migration from physical media (VHS, DVD) in the entertainment world mirrors a similar migration in software delivery, from physical media (floppy, CD, DVD) to subscription services and cloud computing. More pertinent to this story however, is the notion that anyone who is buying digital movies from iTunes (or any other service) is simply wasting their money. The future is anywhere, anytime on-demand delivery of content, delivered as subscription service. The very notion that someone needs to "own" a movie is outdated, especially when that movie is an intangible and demonstrably inflexible DRM-encoded digital file.

Food for thought.

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