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Apple losing money on iTunes movie download service

By: Daniel Chubb | May 5, 2008 | 1 Comment


It’s common knowledge that superstores sell many products at a loss to get you into the store, once your there, they hope you will buy many other products to make them a profit in total. Selling products at a loss also builds their brand and business by word of mouth. When it comes to online stores and Apple iTunes things are no different, they would sell certain services and products at cost or even make a loss to build the brand and hope for repeat business from you.

Today we are hearing that Apple may be losing money on the new iTunes movie download service, the hype surrounding this new service is the fact that the movie downloads are being made available on the same day as the DVD release. This has been setup with an agreement between Apple and film studios (this includes the six largest movie studios).

From this week you will be able to buy new movies for $14.99 on iTunes, but it has been reported that Apple are paying around $15.50 for each movie, that may only be a $0.51 loss but over millions of downloads (that’s a big loss). Now Apple must have a plan here, and I am guessing that if millions of movie downloads do happen, Apple will be in a position to demand a better price from the movie studios.

Would you buy a movie download from Apple iTunes?

Source: Read

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