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Amazon considers DVD download service

E-tailer talks with Hollywood about allowing consumers to pay to download movies, TV shows and burn them onto DVDs.

Amazon.com is in talks with three Hollywood studios about starting a service that would allow consumers to download movies and TV shows for a fee and burn them onto DVDs, according to three people briefed on the discussions.

If the advanced negotiations are successfully concluded, Amazon's service would position itself in the media world alongside rivals like Apple Computer's iTunes as a place where people go not just to order goods to be sent by mail, but to instantly enjoy digital wares as well.

So far, Paramount Pictures, Universal Studios and Warner Brothers are engaged in the talks, said one person close to the talks who, like the others, asked not to be identified because the negotiations are continuing.

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Although it is not clear when it might begin, an Amazon downloading service would be sure to send waves through both the media and retail worlds. Players in both industries are racing to offer new ways to give technology-savvy audiences instant access to their favorite shows and songs, in a field crowded with potential rivals using Internet and on-demand technologies.

Amazon, which was created as an online bookstore and now sells a wide range of goods, is already among the largest sellers of DVDs and VHS tapes. Other retailers, like Wal-Mart Stores and Target, are also working with the studios on new ways to distribute programming in digital formats.

Keen to maintain as much control over their product as possible, the studios have also invested in new video-on-demand movie rental services like MovieBeam, which is backed by Walt Disney, and Movielink, which counts several other studios including Paramount, Universal and Warner among its backers.

Warner is also involved in IN2TV, a service on America Online that offers a library of free vintage TV shows, and also plans to begin selling downloads of other programming this year. Both companies are divisions of Time Warner.

None of these services so far plans to offer a way to let people buy, burn and keep DVDs--or stream them at a lower price--as the contemplated Amazon service does. Other retailers, however, are working to develop similar businesses.

One advantage Amazon would hope to have over competitors is its ownership of the Web site Imdb.com, which stands for Internet Movie Database. The site was acquired by Amazon in 1998 and is a repository for all manner of movie information for professionals and fans alike. One person involved in the deal said that as more people use search engines like Yahoo and Google to find their favorite videos, imdb.com would be a valuable asset because it appears, with increasing prominence, in the results of online searches.

For example, when entering the name George Clooney on Google, the actor's page on imdb.com is the first of 17.1 million results that are cited. According to comScore Media Metrix, imdb.com is the most-visited movie Web site, having posted a 41 percent increase in unique visitors between February 2005 and February 2006.

Last month the site had 15.1 million unique visitors, surpassing Yahoo Movies, whose tally of unique visitors declined 17 percent year over year, to 12.1 million.

As previously reported, Amazon is also working on a digital download service for music and an Amazon-branded portable MP3 player to compete with Apple's market-leading iPod.

Patty Smith, an Amazon spokeswoman, declined comment.

Depending on the pricing of downloaded movies and the agreed split between the studios and Amazon, electronically selling DVDs to consumers could represent a way to increase profit margins, as the overall growth of DVDs has cooled. But the studios also face a delicate balancing act in ensuring that physical retailers like Wal-Mart, which account for the bulk of their existing sales, do not feel left in the lurch by the new digital endeavors.

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