“Water coolers from Cupertino to Hollywood are abuzz over the prospect that Apple Computer is plotting a frontal assault on the movie business. Indeed, Apple has held serious negotiations with movie studios about adding a movies section to its famous iTunes Music Store, sources confirm,” Peter Burrows and Ron Grover report for BusinessWeek.

“Apple has hoped to get the store up and running within weeks, Hollywood sources say. But the deal isn’t yet done—and there’s a chance it won’t be any time soon,” Burrows and Grover report. “That’s because Apple and studios remain at loggerheads on a range of issues, from how much movie downloads should cost, to the degree of piracy protections they should carry. ‘This will take months and months to figure it out,’ says one source involved in the talks. ‘It may even be a 2007 kind of thing.’”

“Many analysts believe Apple’s big play for Tinseltown will arrive only should it come out with a new kind of consumer device designed specifically with movies in mind, rather than the iPod and its tiny screen. Little wonder both sides may be content to play a waiting game. Apple Chief Executive Steve Jobs seems determined to approach the movie business with a similar formula to the one that enabled Apple to create a $1 billion-a-year market for legal music sales. The recipe includes a low, uniform 99-cent per-song price,” Burrows and Grover report.

“To the studios, Apple’s version of “consumer-friendly” looks more than a bit self-serving—and unnecessarily tough on them. Jobs is said to want to sell movies at a flat $9.99 apiece. That’s far below the $19.99 that studios want for downloads of their newer films and major hits, and that they now get for selling DVDs through Wal-Mart and other retailers,” Burrows and Grover report. ‘No doubt Jobs does hold a wild card if he wants to get iTunes movie sales started: He could convince fellow Disney directors to take the first step by making some of its movies—say, the new Pixar (PIXR) film Cars—available for his $9.99 price. If sales take off, other studios may follow suit—just as they did soon after Disney became the first to make some of its TV shows available on iTunes.”

Much more in the full article here.

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Report: Movie studios flatly reject Apples’ proposed $9.99 pricing for feature films via iTunes – June 19, 2006
Report: Apple in negotiations with movie studios; $9.99 feature films coming to iTunes soon? – June 19, 2006