“Discount retailer Target backed off plans to pull in-store promotions of products from Walt Disney after Disney threatened not to ship DVDs of the hit movie ‘Pirates of the Caribbean: Dead Man’s Chest,’ a person familiar with the situation said Friday,” Gary Gentile reports for The Associated Press.

“The companies are at odds over The Walt Disney Co.’s decision to sell movies online through Apple Computer Co.’s iTunes store for less than it charges Target and other retailers,” Gentile reports. “The dispute is part of a feud between a number of major retailers and Hollywood studios over online movie sales.”

“Target Corp. stores had removed signs promoting the DVD of the Disney-Pixar animated film “Cars” and other Disney products, according to a person familiar with the situation who was not authorized to speak for either company,” Gentile reports. “The two sides are discussing their differences after resolving the standoff, the person said.”

“Studios selling digital copies of films for less than the wholesale price of DVDs rankles retailers, who see Internet distribution of films as a threat to their business and have reminded studios that DVD sales provide the majority of profit for most films,” Gentile reports. “Studios counter that digital versions of films should be less expensive because they are lower quality and typically do not contain the kinds of extra features included on DVDs.”

Gentile reports, “Disney so far is the only studio offering films over iTunes, which sets its own price for all titles.”

Full article here.
Since there is nothing physical, no packaging, no shipping, etc., it’s only logical that iTunes Store movie downloads should cost less than physical media sold in places like Target.

Related articles:
Disney sells nearly 500,000 movies via Apple’s iTunes Store in less than two months – November 09, 2006
Fox movies, including ‘Star Wars’ franchise, coming soon to Apple’s iTunes Store? – November 08, 2006
Analyst: two major studios seen joining Apple’s iTunes Store – October 10, 2006
Target complains to studios about iTunes Store movie download prices – October 09, 2006
Report: Apple and Wal-Mart in discussions over iTunes Store alliance – September 29, 2006
Wal-Mart: we’re not fighting iTunes Store movie downloads – September 23, 2006
Wal-Mart threatens retaliation against Hollywood studios if they sell movies via Apple’s iTunes – September 22, 2006
Disney’s remarkable 1st week iTunes movies sales should have studios clambering aboard Apple train – September 20, 2006
Disney sells 125,000 movie downloads via Apple’s iTunes Store in first week – September 19, 2006
Apple debuts iTunes 7 – September 12, 2006
Wal-Mart not happy with looming threat of Apple iTunes movie downloads – August 31, 2006