Fox, Warner Deals Pivot on iTunes' Controls

Consumers may soon rent movies at iTunes.

(Courtesy of Apple Inc.)

Two new breakthroughs in downloading entertainment, while seemingly independent, are closely related. They both swirl around the Apple iTunes store, the early leader in selling media across the Internet, which is desperately trying to maintain its hold.

Warner Music Group caved to market demands and said it will sell protection-free music for downloading from Amazon's new MP3 store, which is fast becoming a serious competitor to Apple's iTunes. But iTunes stands to get its own victory with reports that 20th Century Fox will rent its movies through the Apple store.

No other studio has agreed to rentals at iTunes, which has struggled to build a library of flicks to buy or rent. iTunes now has only about 500 movies for sale. Consumers prefer cheaper rentals for movies, which they usually watch only once. The lack of rentals has helped slow adoption of Apple TV, which links Internet entertainment to televisions. iTunes also fears being left out of the upcoming market for downloaded movies.

Hollywood seems more resistant to making deals with Steve Jobs, who has wanted to set terms for films much as he has maintained tight controls over prices for music at iTunes. Reports suggest that Fox is winning looser terms from Apple, which may announce details of the deal at its MacWorld conference in January.

Apple also needs video because it's beginning to lose its grip over music. The company's tight controls over music pricing have record labels looking for other outlets. But to join Amazon's fast-growing store, Warner had to agree to sell music without copy protection. Amazon already sells more than 2 million songs from other labels without the restrictions. As late as February, Warner execs had said they would maintain copy protections on downloadable music. But a continued slide in music sales has the industry willing to try new things, especially if they're outside iTunes.