Winning over the file sharers

To be clear, you're saying that the combination of the downloadable subscription and these new devices will be competitive with the iPod?
That's correct. It's a situation where we are coming up with a response at a period of time when Apple has decided to be proprietary in the way they distribute their files.

The record labels have made a big effort to get into the college market. Now you're moving into video as well. Are the movie studios working with you? Do the movie studios have the same concerns about educating students?
Absolutely. More and more when you talk to school administrators, they say that the letters they're seeing are from the MPAA, not the RIAA. That's a trend that's changed this year. In our conversations with the studios, we're finding them to be more and more cooperative and more and more supportive of working with distributors like ourselves.

You have a few deals already with Disney and a few others. What do those videos cost now?
It's $1.99 for direct to video and library titles and $3.99 for new titles.

So it's still pretty comparable to going out and renting a movie?
It is comparable. So far we haven't been in a position where there is any additional discount or different discount being offered because we are a college service. But those conversations are happening, and I'm optimistic that at some point in time there may be some discounts realised, given the importance of this audience, and the potential. The poor college student does seem to be somewhat of a reality.

So you ultimately expect to have a full CinemaNow-type range of content?
That's one of those things we're going to see. I'm pretty focused on not just doing studio deals that would put us in the position of just offering the same catalogue that MovieLink does. I'm certainly interested in working with Hollywood, and I'm optimistic we'll get more deals done this year. But the situation with us is doing it on the right terms.

I think it remains to be seen, but given the way conversations have evolved, I think there are several deals that could be done with studios that would not just be deals, but would be deals that would get college students using our service in a high volume.

So the idea is to be cheaper than that?
I think the cost component is something to consider. I think there are three things that need to be evaluated by studios as well. One is cost. Two is business model. What is the right model? Is it pay-per-view? Is it subscription? What is the right way to package? Then you have other considerations. Our pay-per-view films are available on a 24-hour basis. Is that right, or should there be 48 hours or longer?

So there is an evolution that needs to happen on a price basis, on the business model basis, and on a user experience basis. When all that's combined, those are the kind of deals we want to get into.