Updated: Apple Wants To Cut Video Download Costs: Report

A report in Variety adds an interesting element to the iTunes (NSDQ: AAPL) video pricing debate: three people familiar with the proposal say Apple wants to cut the basic video download in half — to $0.99 — for most TV shows. We haven’t been able to confirm independently yet but this makes sense when you remember that iTunes is all about selling content to propel sales of hardware — not about the byproduct of making money for content providers. Cheaper video could lead to more shopping and more interest in the expanding iPod video line.

NBC Universal (NYSE: GE) wants to be able to sell some content — particularly deeper library shows — at a discount but execs there are looking for a range that allows for new or highly popular shows to be sold at prices higher than the current $1.99. (A source familiar with their plans suggests that kind of variable pricing will be coming in their deal with Amazon (NSDQ: AMZN) even though the launch rates are standard.) As Variety points out, a switch like this could make buying through iTunes far less expensive than acquiring the DVD and could eat in to those sales. Apple, says Variety, contends the volume created by lowering the price will make up for it.

So far, no one is buying the idea, according to Variety, although Disney — where Steve Jobs is a major shareholder and board member — may be willing. I wonder if Apple could make it more appealing by giving up its rev share and selling TV as a loss leader much the way some big box stores handle certain DVDs and CDs.

Update: We’ve been able to confirm that Apple has raised this idea during discussions. More to come.

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