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Movie download services quietly working on licensing

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In two years since the launch of iTunes, some 500 million songs have been bought using iTunes, and at a dollar each that is more money than Screen Digest is predicting for movies. That’s can’t be right. Not when for each song the record labels want something like $.65 for each track sold, while the movie industry would want more like $8 for each film sold, perhaps $1.99 for each film rented, in line with Apple’s video pricing.

That $8 isn’t pulled out of a hat by the way. It is understood that this is what Sony will be asking when it finally releases its top 500 films, next year, triggering the take off in legally downloading films. There was one hope that Apple would unblock the log-jam earlier, when it launched its video iPod, but it looks like the Movie Studios have learned from the disillusion of the Record Labels and are refusing to let iTunes call the shots on pricing, delivery timescales and tying the films to a single, first to market device like the iPod. Instead it looks like Apple will get these films at the same time as everyone else, and probably around the end of March Sony will deliver on its promises to release these films in digital online format and the rest of the studios will follow.

While film licensing is far more complex than music licensing, and it took iTunes almost a year to cross the Atlantic due to licensing negotiations, it is likely that US only or Japan only or both countries will see film services launched by the Spring and the others would gradually follow.

We know that such negotiations have been going on at Bertelsmann subsidiary Arvato and also that Tiscali has been attempting to build European licenses for CinemaNow content, for over a year, so Europe may not be quite so far behind the US this time.

The result will be multiple commercial outlets in almost every country by the middle of next year, and while Apple will not be left out it will have its work cut out trying to climb to the top of the pile in films, without the head start it had in music.

Screen Digest says that every broadband household in the UK will have downloaded at least one movie from a legitimate Internet movie service by 2010 citing 18.5m broadband homes in the UK by 2010, consuming over 20m movies a year via Internet platforms.

We say that the market will be that big next year, rising in a parallel development that music experienced with iTunes, thereafter, until it becomes 10 per cent of the global movie market. Let’s see who’s right.

Copyright © 2005, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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