With TV shows already online, Apple is looking to feature films.
The computer company is in active negotiations with most major studios to add movies to its iTunes Music Store, most likely by the end of the year, numerous sources confirm.
The main sticking point is price.
Apple CEO Steve Jobs, who has been personally involved in the talks, initially proposed selling all films at a flat price of $9.99 — an offer the studios flatly rejected.
“We can’t be put in a position where we lose the ability to price our most popular content higher than less popular stuff,” said a studio exec close to the negotiations.
Apple has traditionally sold digital content at a single price: 99¢ for songs, $1.99 for TV shows and musicvideos. It has recently experimented with some longer video content, however, selling the Disney Channel telepic “High School Musical” for $9.99 and the “Battlestar Galactica” miniseries for $14.99.
Apple gives TV and music companies a 70% wholesale rate and is offering the same to film providers.
When it came to songs and TV shows, Apple was largely defining a new market, as they hadn’t been sold individually before. But feature films already are sold on DVD at varying wholesale prices depending on whether they’re new releases or library titles.
While the homevideo market is slumping — leading many studios to focus on the Internet as the next growth market — it still generated $23 billion in the U.S. last year, and studios don’t want to risk angering major retailers like Wal-Mart or Best Buy by giving better terms to Apple.
Online retailers Movielink and CinemaNow are paying DVD wholesale prices to get digital copies.