With a slowness to adapt to market conditions by the record industry is seen by many observers to be the reason for the MP3 and Napster problems, the film industry has been quick and keen to pre-empt the Net's potential to be a major illicit trading platform for filmed content. While the Moviefly deal won't limit such piracy, it at least offers consumers wanting to access filmed content digitally a legitimate alternative.

The deal is interesting for two reasons. AOL Time Warner and Vivendi Universal, as the two largest global media conglomerates, are close competitors, and under the deals signed with regard online distribution of music content, AOL Time Warner through Music Net directly competes with Sony and Universal through Duet. The duopoly has already created logistical problems in that there is still not a single legitimate web service where consumers can access all music labels' libraries. That so much of the film industry - famously opposed to collaboration - is working together on this assures the services success, and guarantees Sony a big slice of the pie.

Secondly, the deal is interesting for who is excluded - Disney, Fox and Dreamworks. Disney intends to offer its catalogue through movies.com, although conventional logic would dictate that a service offering films from five catalogues will win over a service offering just one. Fox owner News Corp is known to favour DTH (Satellite) distribution over the Internet after News Corp got its fingers burnt with a host of web ventures earlier this year. But again Murdoch's conglomerate risks being left in the cold as the four largest media organisations in the world are working together in this. Little reason can be seen for Dreamwork's exclusion, although the mini-Studio was one of the last studios to license for DVD and even create a company website. It can only be assumed that the studio's chiefs are cautious of such new-fangled toys as the Internet, or maybe that it is so cash-strapped that it cannot afford to stump up the estimated $150m contribution needed to make the service work. The wisdom of such a move by all three studios should be questioned, although it is probably at the advantage of the grouping as regulators are already sniffing over a partnership that could appear to be un-competitive.