Apple Losing Money on New Movie Sales?
The Wall Street Journal claims that Apple is actually losing money with each new-release movie sold on iTunes. Apple announced yesterday that they would now be offering many movies for sale on iTunes on the same day as their DVD release.
These new movies cost $14.99, but according to "a person familiar with the matter", Apple is actually paying the studios close to $16 per sale for these new releases. While this price may be less than what the studio might charge for traditional retail sales, the actual profit margin on the digital distribution is much larger.
This approach is consistent with Apple's insistence that the iTunes Store has always intended to run at just above break-even in order to drive hardware sales.