Apple videos hint at film ambitions

iTunes is already bulking up with music videos. Is a movie store and movie device in the works?

Apple Computer CEO Steve Jobs is famously secretive when it comes to sharing plans for his company's future.

To find clues, however, you need only look as far as the latest versions of the iTunes Music Store. You can't help noticing support for podcasting, or "radio reborn," as Apple puts it.

Look beyond that, and you'll notice that since May, the iTunes software has allowed you to play videos, movie trailers or even home movies. The store itself has begun selling a handful of music videos, with more being added each week.

Record label sources say Apple has been in talks to sell a much wider range of music videos through the store, probably as soon as this fall. The company also has indicated to media executives that an iPod that plays video could be unveiled as early as September. That leads some industry insiders to believe that Apple is working on an online movie store and a video playback device that does for movies what iTunes and the iPod have already done for music.

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What's new:
Apple may be working on an online movie store and a movie playback device that does for movies what iTunes and the iPod have already done for music.

Bottom line:
Industry observers caution that the iTunes phenomenon will be a tough act to follow, and they figure Apple will take incremental steps later this year and next rather than diving headfirst into video overnight.

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"Apple was a pioneer in digital music downloads, and Macs are great for audio and video," said Mike Homer, a longtime Silicon Valley executive and well-connected Apple alumnus. "This makes them well-positioned to introduce video on a grand scale."

Homer and others caution, however, that the iTunes phenomenon will be a tough act to follow, and they figure Jobs & Co. will take incremental steps later this year and next rather than diving headfirst into video overnight.

The biggest challenges are on the business side, not in technology.

Apple must strike a deal with Hollywood executives, who worry about copyright protection on the Internet and don't want to jeopardize DVD sales, which outpace sales at the box office. Apple also must compete with cable television giants such as Comcast in the movie download business.

Beyond that, Apple must come up with a plan to make a profit from video, just as it did with music. Apple makes almost all of its music business money selling iPods, not from the iTunes Music Store.

But if anybody can succeed, it will be Jobs, according to many industry executives and analysts. They cite Jobs' leadership in digital music as well as his Hollywood contacts and experience as chief executive of Pixar Animation Studios.

"He's the greatest entertainer and showman in the business," said one prominent Silicon Valley venture capitalist.

"Anything else you can give to a consumer that they don't get on a CD is really cool."
--Chris Sims, music video editor, Timecode Entertainment

Some Hollywood filmmakers agreed that, with help from Jobs, legal Internet sales of their movies could transform their business.

"The business is going to go down, down, down before they finally realize what Steve Jobs and a few others have already realized--that there is a way to make a business model out of this and then people won't steal it quite so readily," George Lucas, director of "Star Wars," said last month on CNBC.

Apple executives declined to discuss their plans. When asked at a conference last month whether the company would sell video via an iTunes-like store, Jobs said Apple's "actions of the future" would answer that question, adding that it is working on "great things" in its labs.

Poker-faced Apple already is showing some of its cards, however:

• Besides providing video support on iTunes, Apple's latest version of QuickTime comes with the H.264 codec, which lets consumers view high-definition video with less bandwidth and storage space than its predecessors. H.264 shipped with Apple's latest operating system, called Tiger, and a preview version of the software is available for Microsoft's Windows.

• The computer maker has been rolling out new products such as the Mac Mini and Airport Express, which costs $129 and is designed to wirelessly stream music to a stereo. Future versions could be designed to handle movie and television, as well. Apple's agreement to use Intel chips starting next year also will make it easier to build a low-cost home media player, many experts argue.

• Apple is getting more serious about embracing the entertainment business' biggest concern: protecting the intellectual property rights of movies and music. Jobs' experience as a moviemaker provides added credibility.

Apple is making its biggest strides in software. When iTunes launched in May, four bands provided music videos: Gorillaz, Morcheeba, Dave Matthews Band and Thievery Corporation. The total has since expanded to more than 16.

In most cases, the bonus videos are bundled with albums, often at a $1 premium. Examples include Billy Corgan's "TheFutureEmbrace," Coldplay's "X and Y" and Missy Elliot's "The Cookbook," each priced at $11.99.

"Anything else you can give to a consumer that they don't get on a CD is really cool," said Chris Sims, a music video editor at Timecode Entertainment in Los Angeles. "A bunch of artists see this as an option."

The iTunes store also does a better job of promoting movie trailers, which Apple has shown for years on its QuickTime site. The iTunes

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