Online retailer Amazon, which just announced it's entry into video downloads with its Amazon Unbox service, has tried to differentiate itself and lock in customers through its own player, which will not accept downloads from other sites that use the same Windows Media Player DRM.

However, Amazon at present offers video downloads at exactly the same price as it sells DVDs and the market is wondering why.

Perhaps a touch more realistically, probably the most successful of the independent video downloads site to date, Guba, has tried to win customers by appealing to their hip pocket nerve. Unlike Amazon, Guba has avoided the proprietary player approach and has a temporary offer of movies at cheaper prices than they can be purchased on DVD.

Guba believes that getting the pricing model right is a key to the success of video downloads. According to Guba, its market research revealed that offering users a significant price-cut for its library of movies and TV programs during a 30-day period boosted the site's total sales 1000% and its traffic more than doubled.

In the case of Apple, one of the reasons for its success with iTunes music downloads was its insistence on having music that could be downloaded at reasonable prices. Steve Jobs is known to have fought hard with music companies to keep prices down and there were reports a couple of months ago that he was doing the same thing with movie studios.

Just as Jobs wanted all music downloads to be 99c, he was reported to have wanted movie studios to make new releases available for US$9.99.

Coincidentally, US$9.99 for new releases is exactly the price that Guba claims has given it the phenomenal 1000% filip to its sales.

It is unlikely that Apple's DRM will allow video downloaders to burn their movies to DVD. However, it is interesting that the latest iMac model now offers a 24 inch monitor.{moscomment}