By Greg Sandoval
Monday, May 05 2008 11:00 AM
URL: http://www.zdnetasia.com/news/software/0,39044164,62040955,00.htm

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.