my iMovie want let me drag a video or music
my iMovie want let me drag a photo or video or music to make a movie
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Most of the times when I use iMovie to create a new project is to fix open iMovie then select that you either want to create a Magic movie, iMovie, or Storyboard.
I typically use iMovie then select the photos and or videos to create an iMovie.
Try that method, does it work for you ?