Boy, these guys really don’t have a clue. I’m talking about the content producers, the movie studios specifically this time, who have decided to sell movies online. You download the movies to watch them on your computer. Hmm. Sounds reasonable–the best way to fight pirated movies would be to sell them to people in the same medium so they’ll have a choice to do it legally within that medium. Apple showed that it’s possible with music, and then with TV shows. Cool! Let’s do it!

One problem: these studios, it seems, are incredibly stupid. And/or, they believe their customers are ever more stupid.

The movies will be sold at prices and with restrictions that make no sense whatsoever. They will charge from $10 for “classic” movies from their libraries, up to between $20 to $30 for new releases. The movies are the same ones available on DVD, which sell for the same price or lower. The online versions will not have the special features, like commentaries, alternate endings, deleted scenes, etc. They will be full quality–that is, they’ll be no worse quality than you see on your TV (file sizes will be about 1.4 GB). You can make copies to watch on up to two other computers. But–you can only see them if you are using Windows XP, with Internet Explorer 6.0 or higher, and Windows Media Player 10. They say that maybe you can use Windows Me, maybe WMP 9, but no guarantees. What’s more, you can’t burn it on a DVD and you can’t get or make an iPod version. You can watch on your TV, but only if your computer can connect via S-Video or RCA, which most desktop computers can’t.

So here’s the question: why download a movie?

That’s what makes no sense. Buy the DVD, and you can play it on any computer, with any media player that can play DVDs. You can play it on your TV with your computer or DVD player. You can download free software from the Internet to rip the movie and make it viewable as a computer file or watch it on your iPod or PSP. You can get all the special features. For less money!

The copy-protect and limitations on which OS, browser, and media players can be used are stupid as hell. We’re talking about movies that have already been ripped and are available for full-quality download over the Internet. So what is the copy-protect protecting? Not a damned thing. People downloading it for free from the Internet can do anything they want with the movie, watch it on any player, in any format. But paying customers hit all these restrictions. Stupid!

The reason why the iTunes Music Store (iTMS) worked is because it was a good deal, and the Digital Rights Management (DRM) restrictions were nearly invisible to the user. You buy a song off of the iTMS, you can play it on your computer, burn it onto as many CDs as you want, play it on your iPod, your CD Player in your home, your car, your office, whatever. You have to try really hard to hit any of the DRM restrictions. (Okay, so you can only play it on iTunes or your iPod, unless you burn it on a CD. The iPod restriction may suck, but iTunes is universal and the CD option is always there.) What’s more, it’s cheaper than buying CDs. At the store, you pay maybe $15 for a CD, you can get the same thing on the iTMS for ten bucks, and if you want, you can usually buy one song at a time for a buck a pop, which is what most people have always wanted anyway.

That’s a good model–cheaper, faster, customizable, and restrictions most people don’t even notice.

Now, when Apple started selling TV shows–which is probably the breakthrough event that prompted these new movie sales–they did it as well as they could. Yes, the TV shows are of not-so-good quality; yes, they lack the special features on DVDs; yes, taken together, they cost more than DVDs do. But we’re talking TV shows, which will not be released on DVD for another year. And while the cumulative price for a season of TV shows from Apple will cost more than the whole season on DVD, the per-episode price is a manageable chunk, something many people are willing to spend. And they can watch on their iPod or their computer. Not as good a deal as the music, but at least a deal which is tolerable to many (not to me, but to many). So it works, and that’s the bottom line.

But this new movie paradigm simply sucks. If they sell any movies, it’ll be a novelty thing and won’t last. Not unless they change it. First off, get rid of the stupid restrictions on the OS, browser, and media player. Have it be a regular AVI file, or even better, a DVD-format file set (with a VIDEO_TS folder) as an option, so people can save to a DVD. But wait, the studios protest, that means people can buy it from us and then put it on the Internet! So what? It’s already on the Internet, you idiots! You’ve got to enable the paying customer, not cut them off at the knees for no good reason! The thing is, like with the iTMS customers (who could easily download the same songs for free, but instead choose to buy them!), you’ve got to offer at least the same or better than what pirates offer, and for a reasonable price.

Okay, maybe the studios can’t give a good price because they would alienate the DVD retailers, their current cash cow. But if you’re going to charge more and give less, at least get rid of the playing and copying restrictions, because they do nothing to protect, and everything to inconvenience.

(Yes, I know–Apple’s iTMS restricts the song files to the iTunes media player and iPod digital devices. I agree, it’s a restriction that sucks. But at least it’s being done for a logical reason–Apple wants you to buy their goods. Not a reason that helps you, but at least it’s a reason that makes sense. It’d be great if Apple allowed the songs to be played on any media player and on any digital device. But–and this is what it comes down to–they don’t, and yet they make the business model work, and most people are happy with it.)

My guess is that after this abortive attempt at selling downloadable movies flops, they’re going to try to tone things down bit by bit until they make a safe (they imagine), soft landing where they sell enough to make money and keep their little restrictions. But Steve Jobs may take advantage, and after the initial attempt fails, Apple will start selling movies–likely beginning with Disney titles–in a smarter way. After which it will be a question of whether the other studios will see the light and sign on, or stubbornly try their own greedy formula. We’ll have to wait an see.