Variety reports on an issue that Microsoft and RealNetworks are no doubt paying close attention to: Apple Computer is looking to get into the movie download business.

Apple is in talks with studios to begin selling movie downloads on its iTunes Music Store, the report says. CEO Steve Jobs had proposed selling all movies for $9.99, but the studios balked at the flat pricing model. Now, the report says, Apple may back down and sell movies at a range between $9.99 and $19.99.

But a deal with Apple is key for many studios hoping to grow the digital distribution biz because of the huge iTunes install base and the popularity of video iPods. Apple has sold more than 22.5 million iPods since the video version launched in October. (It's unclear how many are video iPods and how many are the smaller nano or Shuffle.)

Since Apple does not license its antipiracy software, other online retailers can't sell music or video that works on an iPod, and other manufacturers can't make players that work with iTunes content.

"Every studio wants to have broad distribution in digital, and we all know that having Apple as part of that is very, very important," a studio exec said.