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April 04, 2006

THE ENTERTAINMENT INDUSTRY often treats the Internet as a second-tier shopping mall, a place to sell products with more restrictions and little, if any, discount. The latest example is the move by six Hollywood studios to sell movies online that don't come close to matching the appeal or usefulness of DVDs.

On Monday, two firms called Movielink and CinemaNow began selling downloadable versions of films the day they become available for home video. The price -- $18 to $28 for new releases -- is at least as high as a DVD, yet the downloads would have few or none of the extras found on the discs. What's worse, the downloads cannot be copied onto a DVD that works in a regular disc player. Watching one on a TV requires running a cable from PC to TV, or piping it through a specially equipped home network.

The limits stem mainly from the studios' concerns about piracy, although they also reflect the competition between PC and consumer-electronics firms to equip the digital home of the future. (Executives from Hollywood, the tech industry and electronics manufacturers have been negotiating for months over ways to let people make legal copies of movies.) Hollywood is insisting on more protection against piracy than DVDs offer. Among other things, it wants manufacturers of new DVD recorders and players to adopt a system that could prevent commercial movies from being copied and bootlegged discs from being played.

It's easy to understand why the studios want more security. The Internet is filled with free, bootlegged versions of virtually every film. But the scrambling technology that protects DVDs was defeated years ago, and the discs generate billions of dollars in sales all the same. They now account for nearly half of the studios' revenue. That's because the studios balanced price, convenience and value in a way that trumped the black-market competition, at least in the developed world. Most movie buffs would rather plunk down $15 to $20 for a legitimate DVD than fish a free bootleg out of the Net's underground.

Downloadable movies don't strike the right balance. Sure, it's nice to be able to grab a movie from an online library on the spur of the moment. And the studios enhanced the value by letting buyers make copies of their downloads on two additional computers, which is ideal for travelers with laptops. These pluses don't overcome the minus, however, of having the movie bolted to a computer hard drive.

Besides, it seems pointless to demand better security for downloaded movies when bootlegged versions of popular DVDs reach the Net weeks before the discs go on sale. Rather than getting hung up over piracy threats, the studios should focus on making the downloadable versions of their films compelling enough to buy.

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