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 would not 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 US$14.99, while most catalog titles are US$9.99.
The Wall Street Journal reported that Apple is paying the studios nearly US$16 for each sale, but a source close to the negotiations told CNET News.com that Apple is paying closer to US$15.50 than it is US$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.
This article was originally a blog post on CNET News.com.
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