Movie rentals coming to iTunes Store?

The story seems to originate with the Financial Times, which published a vague and in some cases misleading report suggesting Apple "has been quietly working on a new online film rental service".

What was misleading about that? Probably nothing, but the story went on to assert that "Apple's proprietary digital rights management system means only content downloaded from iTunes can be played on [iPods and iPhones]". That is manifestly untrue. iPods are fully capable of playing content that isn't protected by Apple's FairPlay DRM, and so far there's nothing to suggest that won't also be the case with the iPhone.

It isn't even true that FairPlay-protected content can only be played on iPods and iPhones, as it can also be used on Macs and Windows-based PCs running Apple's iTunes software.

The story also quotes IBB Consulting principal Jonathan Weitz as saying that Apple's iTunes Store "started its life as a way to get people to buy - and keep – their iPods. Now [Apple] knows there’s also this vast market in the living room. iTunes and VOD [video on demand] can get them into the living room in a much bigger way."

Well, maybe. More likely the iTunes Store was set up to make Apple look good in the eyes of the music industry - "see, this isn't all about people copying music, there's a whole new way for you to make money." And as we recently noted, the iPod was profitable for Apple but it seems like the Apple TV isn't. Where's the benefit in setting up a service to encourage people to buy a device that doesn't deliver you much (if any) profit, unless there's plenty of margin in the rentals?

According to the Financial Times article, the studios are already used to getting $US2.50 out of every cable TV VOD transaction. Considering the amount of data involved, it doesn't seem like a moneymaker for Apple.