"It will be in a hard to use format"

The article says they will give you a copy for use with portables.

The cost of living comparisons are not directly related to currency conversion. Many consumer items are the same number here and there. So, think of 20 GBP as 20 USD despite the actual 'value'. Also, that number includes %17 taxes whereas here you add the sales tax on after. So, it is too much, but not nearly as bad as it sounds.

Ah no, they had to anticipate the new tier AT&T / Verizon surcharges into consideration when setting their pricing. I'm sure 'ma bell is going to want her cut of this too ..

Aren't AT&T/Verizon == Ma Bell?

"I can watch on my TV which has a bigger screen, better sound and a nicer chair than my computer."

In what century are you living? Modern dvd-players/recorders play MPEG-4 content, for about 50EUR you can get one with all necessary outputs for you surround system. Movies can be downloaded in different qualities:
- 700Mb: 2channel mp3 with good enough picture quality
-1400Mb: multichannel ac3 with good enough picture quality
-4500Mb: stripped/recompressed DVD images in a good quality
>7000Mb: untouched versions of originals

"thousands of audio file.... Movies aren't as versatile that way. If I'm going to watch a movie, I'm going to sit down and pay attention to it. There's no point for me having many thousands of movie titles."

You might have noticed that diskspace is dirt cheap these days. The same for DVDs on a 50cent DVD one can fit 6 movies. But if you have for example an modded xbox hookup up to your TV and a network disk it's almost the same as your music files example. With ease one can have a TB of movie data at your disposal, all you have to do is sit down and pick something.

Do the studios not realize that they are driving customers away by price-gouging?

They don't realize it because it's not true. People continue to buy what they want at a price that is acceptable to them. If it's not acceptable, why are they buying? It isn't as though movies or music are essential goods that people need to survive. Just because you personally think something is overpriced does not make it price gouging.

I'm a member of lovefilm.com, the company that are actually doing this, and they've been testing the water for a while now. I was initially quite excited, but then I found out that they require the latest version of Windows Media Player, which in turn requires Windows, so this is completely out for me on my mac.

It's a real shame because apart from this they are very good and have a huge range.

Cause a $10 album off iTunes isn't going to be more than 100MB... whereas a $10 movie is going to be at least 3~4 times as big (assuming it's formatted for the video iPod).

Doing a quick bit of math, 4 billion bytes would take about 21000 seconds to send over a T1. You could do that 123 times in a 30-day month, earning $1230. As long as Apple can get bandwidth for less that $1230 per T1-equivalent, that part pays for itself.

I know there are plenty of other costs, but I don't think that the cost of actually pushing the bytes around is as much as people are thinking.