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For Apple (Nasdaq: AAPL) fans, the keynote speech at Macworld is like a movie they've been waiting to see for months. Then the media comes in and gives away the supposed ending. What, doesn't anyone like surprises?
First, the Financial Times reported that Apple has been in deals with Twentieth Century Fox to bring the film studio's movies to iTunes and offer them as rentals, a partnership that may figure in Jan. 15's keynote.
Then Business Week reported Apple is trying to strike similar deals with other major studios. Not all those deals may be finalized in time for a Macworld announcement, though.
Renting movie downloads isn't exactly brand new. Services for doing so already exist, but none take full advantage of the concept's potential. They're too limited, too clunky, too inflexible. That's not to say they'll never get better, but it might take a download vendor as big as iTunes to raise the bar.
Doing It Right
iTunes is the undisputed leader in online music sales 
because it gets a lot of things right.
First, of course, is its marriage with the iPod. All of those tens of millions of people who use iPods need to have iTunes installed on their computers. If it's the program you use to manage your iPod, why not use it to buy music? To those not concerned with DRM issues, going anywhere else is like driving across town for groceries when there's a store just down the block.
Also, iTunes makes it very easy for buyers to give it their money and walk away with its songs. Songs are a buck, albums are $10 -- easy. The service and the player are bundled together. Once your account is set up, one click buys the music, another makes it play once it's downloaded.
Finally, there's Apple's success in wrangling so many music labels, creating for itself a critical mass of content. Enough iPod-armed users believe that iTunes has whatever song they're looking for -- and in a lot of cases, they're right -- so iTunes is the first place they look. Its dominant position makes labels think twice before jumping ship (so far, anyway).
From Music to Video
iTunes has already succeeded in taking its approach to music sales into video sales. iTunes manages iPod content for video as well as music, and importing TV shows, as well as its limited selection of ownable movies, from the computer to the player is nearly identical to the way music is imported. Paying, downloading and playing are the same as well.
Unlike during its early music store days, though, iTunes' less-developed video service now has competing vendors that are more difficult to contend with. Amazon Unbox offers a lot of the same TV content, as well as some not found on iTunes, though its system is a little less intuitive to use, and its content can't be moved to an iPod.
What Amazon and Movielink do have over iTunes is the ability to rent, rather than sell, movies.
Owning, Renting, Subscribing
Despite a lot of complaints from music labels that want it to offer a subscription model, Apple has stuck firmly to its ownership-only sales strategy . Once you download something from iTunes, you keep it. For a while it appeared that it might continue to insist on the same model for movies, though now reports indicate it's ready to jump into a rental model with both feet.
Some movie buffs will always want to own copies of their favorite films, but at the prices iTunes and others charge to own a movie, those viewers are almost better off buying a physical DVD and taking good care of it. For the rest of us, who are just looking for an evening's worth of entertainment, renting is what we want.
Renting through online services could be a much better experience for the viewer than going to a video store, if only somebody would do it right.
iTunes' Potential
Online renting beats a brick-and-mortar video store with availability and quality. Trying to find a newly released title at a Blockbuster or a Hollywood Video is an exercise in frustration. Renting downloads rather than physical discs eliminates that problem. Scratched DVDs are also a non-issue.
So far, this is nothing that services like Movielink and Amazon haven't solved. What iTunes can bring to the table is a heavyweight competitor that forces everyone in the field to fix their common problems.
Selection, for one, is often a total roll of the dice when dealing with downloads. Even if you score a find, there's a good chance it will not be available as a low-priced rental. Instead, you'll have to pay nearly the same amount you'd pay to buy a physical DVD -- not attractive to someone who's browsing for a single evening's worth of watching. Also, existing rental services, particularly Amazon's, aren't as swift and simple as the idiot-proof checkout system iTunes has mastered.
If Business Week's and the Times' sources are right, we'll soon see announcements that Apple has made deals with Twentieth Century Fox, Warner Bros., Paramount and Lions Gate to rent their titles.
The resulting user experience could turn out to be much like what's available from everyone else: a frustrating grab-bag of titles with random modes of availability, albeit with iTunes' checkout system and iPod/iPhone support.
My hope, though, is that iTunes will raise the bar, throw its weight around the way it's done with music, put iTunes' gravity to work, and convince studios to give it more titles and more flexible renting possibilities. Competitors would have to step up their own offerings, and consumers would gain more options.
Click here to e-mail Paul Hartsock.
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