Last week Amazon launched Unbox, its long rumored video download service. In the days since its unveiling Unbox has attracted a storm of media coverage – a surprising amount of which has been misinformed and misleading. As a service to Medialoper’s readers, we will now attempt to debunk a few of the most persistent myths surrounding Amazon Unbox:

Myth: Amazon was first. Various news sources are reporting on Unbox as if it was the first moon landing. The Seattle Post-Intelligencer’s headline proclaims “Amazon wins race to offer online movies“.

Fact: What they mean is that Amazon beat Apple by a few days. In fact, there are already quite a few services offering legal movie downloads. If this were a race both Amazon and Apple would be finishing well behind CinemaNow and MovieLink – neither of which has been an overwhelming success. That should tell you everything you need to know about the advantage of launching first in this market. This is one of those races where the winner doesn’t always win.

Myth: Amazon’s reliance on Windows-based software could pay off after Microsoft starts selling its rival player, called Zune, later this year, according to the LA Times.

Fact: As far as we know Zune won’t support the current generation of Windows Media DRM and Microsoft probably won’t license their DRM to third parties like Amazon. If Zune is a hit it will do nothing to help Amazon Unbox.

And while we’re on the topic handheld devices, it’s amusing to note that Unbox officially supports exactly six portable devices. Although, Amazon does offer a bit of hope for owners of other Windows Media compatible players:

“If your device is Plays For Sure compliant it may work”

Is it any wonder that Microsoft is abandoning Plays For Sure?

Myth: Amazon’s digital videos are reasonably priced.

Fact: In many cases Unbox downloads are priced nearly the same as DVD’s of the same title. For example, consider the smash hit Bridge On The River Kwai. The DVD edition of this 39 year old film sells for $18.99, while the Unbox download sells for $18.99. The DVD gets me a product box, permanent media that’s compatible on every DVD player in the world (including the ones built into my Mac computers), and a few extras. The Unbox edition requires me to use my own bandwidth, have adequate hard disk storage, and will only play on Windows PC’s (or maybe on one of those “Plays For Sure” devices). Given the fact that my Amazon Prime membership would get me free shipping on the DVD, this doesn’t seem like much of a bargain.

Myth: “Customers are not DVD lovers or download lovers, They’re movie lovers and TV lovers. Then what we can do is offer choice.” – Amazon VP of Digital Media, Bill Carr.

Fact: Actually, I know quite a few people I would describe as DVD lovers. Literally. These are people who buy DVD’s just to add them to their personal media collection – even when they may not watch a particular DVD for years, if ever. These uber-consumers account for a fair number of DVD sales. My guess is that the DVD loving consumer won’t be quick to embrace video downloads.

Myth: Lack of iPod support will hurt Amazon Unbox’s chances of success.

Fact: Despite what I’ve already noted about compatibility issues, I don’t believe lack of iPod support will hurt Unbox. The truth is that consumers aren’t clamoring to watch feature films on a 2 inch portable screen. A bigger hinderance to the success of Unbox and similar services is the inability to burn movies to DVD. Sure, there are scenarios where people may want to watch movies on their laptops or PC’s, but the vast majority of consumers want to watch movies on those huge screen TV’s they’re buying at an increasingly rapid rate. Burnable movies would also solve the cross platform problem – DVD’s play equally well on both Mac and Windows.

Myth: Customers who buy Unbox videos own them in the same way they own DVD’s

Fact: Despite the fact that consumers are paying essentially the same for a download as a DVD, they aren’t acquiring the same rights they would with the physical media. Amazon’s terms of service are unbelievably restrictive. Amazon reserves the right to revoke or change your license at any time. Furthermore, Amazon may delete your Unbox movies without notice. When was the last time Amazon deleted one of your DVDs?

Myth: Amazon is responsible for the restrictive terms of service, licensing restrictions, and DRM.

Fact: Amazon is just doing what it needs to do in order convince the movie studios that their content will be safe on the internet. I suspect that the studios are also behind the unreasonable pricing. Apple has had similar battles with the music industry. The truth is that both Amazon and Apple must balance the demands of copyright holders with the needs of their customers. Media companies currently believe they can not make a profit from digital products without some form of copy protection. The irony is that their movies are still subject to piracy, and the restrictions and pricing will only inhibit the growth of legitimate digital download services.