Apple losing money in new movie deal
Apple drew a lot of attention when it announced that it will offer movie downloads the same day they come out on DVD, but the deal won't mean a windfall for Apple--at least initially.
The reason for that is Apple will lose money on every sale, a source said.
Apple announced on Thursday that it had reached an agreement with a group of film studios, including the six largest. Apple said that starting this week, iTunes customers will be able to purchase newly released movies for $14.99, while most catalog titles are $9.99.
The Wall Street Journal reported that Apple is paying the studios nearly $16 for each sale, but a source close to the negotiations told CNET News.com that Apple is paying closer to $15.50 than it is $16.
It's not uncommon for retailers to sell a new product at a loss. The question is whether Apple will eventually boost the prices or if the company can convince the studios to take less.
The only way a dialogue like that would even begin is if Hollywood sees boffo sales out of Apple.
Greg Sandoval covers media and digital entertainment for CNET News. He is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at http://twitter.com/sandoCNET.
