Within the last week, news that Apple and NBC had failed to renew their agreement for TV show distribution via the iTunes Store is undoubtedly big news. An NBC Universal spokesman has been quoted by the New York Times as claiming that the iTunes Store's raison d'etre "[The iTunes Store] is designed to drive sales of Apple devices at the expense of those who create the content that make these devices worth buying." In some regards, it is a fair point: Apple needs content to offer so as to allow it to continue marketing and developing new iPods. But at what price? Setting a price at resale, or retail for that matter, and then raising it is not only unreasonable, but generally not accepted by us, the paying customer. In an age where we routinely put up with the demands of the networks and labels, and their interesting ideas on DRM, in order to legitimately obtain content online the prices that Apple touted as NBC's preference are simply unacceptable. Sure, variable pricing sounds fair, in theory, but cynics of NBC's supposed "variable pricing" (I include myself in this group) argue that giving the network carte blanche with pricing would not, in fact, lead to any cheaper content - such is the distrust held against the media companies.
Let's face it, Apple is a corporation whose intentions are to continue growing stinking rich with a video playing device. Apple is also dominant in areas of digital media thanks to the iTunes Store and certainly existing vendors and content providers should be wary of allowing themselves to lose vast swathes of influence within a new distribution channel. What NBC Universal fails to realize is this: Apple isn't the enemy. That's right, NBC may indeed want to raise the price of content - and let's face it, when 30% of all iTunes TV downloads are from your content, you'd like to print a bigger cheque from that 30%, but it's not Apple's ebullience and sticking to their guns over pricing that's their enemy. NBC's enemy is already out there, more prevalent and entrenched than even the almighty iTunes: normal television.
NBC is worried about their pricing on iTunes, but they've already made TV a cheap commodity, regardless of whether it was intentional. Instead of worrying over whether they get the better part of $2 or the better part of $5, they ought to wonder this: What if everyone said "Screw you, iTunes" and switched to another means of scraping content to an iPod that cuts out any digital media revenues whatsoever? Eye TV (as mentioned in an excellent piece at iLounge) and other options get the job done (albeit with a less elegant work-flow), and technically we don't pay yet another fee to the networks for such a privilege.
Sure, the iTunes Store isn't to everyone's taste (consumer and content-provider alike) but it offers something that noone has been able to emulate to-date: a simple, elegant, hassle-free, and unobtrusively-protected media store which (at least in the US) is fairly priced. For NBC to seemingly miss the boat simply makes the mind boggle at how, after all this time, some folks just don't seem to see the digital world, and its interactions with the physical, as it stands today.
Reader Comments (Page 1 of 2)
9-04-2007 @ 9:41PM
joshjagdfeld said...
Nice post Nik. Welcome to TUAW.
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9-04-2007 @ 9:44PM
ChrisM70 said...
I did some web surfing and some quick math, and I think this is pretty close...
"The Office" on NBC charges an average of $219,000 per ad. They run about 10 minutes of ads, which equals 20 ads at a profit of $4.38 million.
The ratings for "The Office is about 4.6 million per show. That's LESS than $1 per viewer per show - about what the iTunes store is charging!
So NBC is making $4.38 million for running the show on television, and they won't release how many shows on iTunes they are selling, but for the amount of work they put into it, I think they make a LOT of easy money from iTunes. A LOT.
NBC is GREEDY.
VERY GREEDY.
Oh, and stupid too.
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9-04-2007 @ 9:55PM
Cory said...
I agree - NBC is being stupid.
I can't get the content on iTunes now - being outside the USA, if I could, I'd pay the $1.99 - but since I can't, I just download it from Xtorrent and TVshows..... and when I do that, NBC gets NOTHING.
If they pull out - then we still get the shows and they get ZERO. I wonder where "The Office" would be without iTunes - can you say cancelled.
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9-04-2007 @ 10:03PM
GadgetGav said...
How quickly people forget...
The iPod existed before the iTunes Music Store - that's what the content providers don't get. We don't steal every song on our iPods that isn't downloaded via iTMS, we actually owned a lot of content (a lot of it digital) before the personal MP3 player came along. We just want to take that with us in the new format.
Admittedly, this means we still need the content providers as consumers, but it doesn't mean Apple need them to sell hardware. If you can't buy NBC shows (or even for that matter Universal Music) on iTMS, I don't think at this point it would hurt sales. People will want the new hardware because of what it brings in terms of storage, UI or other features, then they'll move all their existing content onto it. Only then will they look around to see if there's any new content they want to buy.
I can't understand why NBC would cut off a good stream of revenue that they had to do little work for. I doubt hulu or Unbox will come close to iTMS downloads...
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9-04-2007 @ 10:09PM
Ben the Dog said...
NBC gets even more stupid - they are releasing content on Amazon's 'Unbox'.
That's right - the service that doesn't support Linux or Mac OS. What a bunch of chumps. So now Mac users will either a) not buy the shows at all, or b) get them from torrents.
The arrogance and stupidity of these people is astonishing.
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9-04-2007 @ 11:26PM
nanodalek said...
I think the real issue is that NBC is jealous of iTunes because there are no commercials. Tech-savy consumers generally would rather watch digital content and pay than endure "freebie" TV. It still is not quite "user-friendly" get content on to a portable device for most people, so they simply do not watch shows. There are a lot of people that I know that just watch web content and and get bombarded with ads(just the way NBC likes it), but these are the same people who simply do so out of necessity because DVR, DVD and digital downloads do not fit into their budgets.
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9-04-2007 @ 11:37PM
Chadonna said...
Oh, NBC...with your ratings and now this fiasco with iTunes, maybe you should rethink whether or not you want to keep the decision makers you have working for you.
Like many of these posters have stated, we'll get the content one way or another. I would rather BUY my content from iTunes, because I usually hate the inconsistency in quality from other sources. I have no problem paying $1.99 for shows on iTunes, because I know I'm usually getting a file of good quality audio and video-wise. But, if you really think that I'm going to pay $4.99 or even $3.99 for an episode of a half hour show just because it's recent, you really need to reassess your consumer base. I would rather buy a whole season of something on DVD if that's the price you're going to charge on iTunes. The problem with that is that by the time the entire season comes out on DVD, I'm not interested in the season anymore. This means that you get nothing, NBC.
It just makes me mad that you have consumers that are willing to PAY for, and not STEAL, content, but now you've decided to take advantage of us and think that we're going to put up with it. Stop making Apple look like the bad guys. And, stop accussing them of not doing their part to make your content resistant to piracy. They have DRM/FairPlay that allows the shows to be transferred to only so many iPods. If there's a way to break that, I don't know about it. I'm only an average consumer, so I don't know how to get around the DRM. Chances are a lot of people who buy shows on iTunes are the same as me, so you don't have to worry about us giving the shows we bought to all our family and friends for their iPods. I know there's a way to copy DVDs. Are you going after Sony, Philips, Panasonic, Toshiba, etc. to get them to develop better DVD players or the DVD manufacturers to make the DVDs hack-proof??? Apple seems to be an easy target.
Bad, bad NBC.
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9-04-2007 @ 11:50PM
Alan said...
The real stupidity of NBC's move is that they've cut themselves off from the actual devices that play the content. Amazon's Unbox doesn't play on iPods -- and they represent 85% or more of the portable video playing devices out there. The remaining devices that play video don't all support Amazon's format either. Good luck selling to the 5% of the portable market that's left.
They've cut off their nose to spite their face. Doesn't make sense at all, even if they would get to raise prices fivefold or more. They'll lose money on this.
It's the same thing with the music companies who only sell downloads in MS PlaysForSure format. Only a small subset of players out there support it. No wonder no one is buying.
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9-04-2007 @ 11:58PM
cookiebrownie44 said...
We will lose NBC and BRAVO AND SCI FI ( All Owned By NBC Universal!
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9-05-2007 @ 12:03AM
Phil said...
Just last night while watching Heroes on DVD (didn't buy it, borrowed it from my mom) I again realized how great watching shows commercial free is. I caught up on BSG by watching the first two seasons on DVD and am doing the same with Heroes.
All I could think while watching is that waiting 6-12 months for the season to come out on DVD is completely worth it. I hadn't yet bought any shows from iTunes but was preparing to start, and likely most of them would have been NBCU shows.
I doubt I'd go to the trouble to bit torrent them (I'm lazy) but borrowing, renting or purchasing used DVDs will definitely be something I'll do.
I'm not sure what my point was here. Anyway, NBC and Apple I think are equally to blame for airing it all in public. Glad Apple stuck to their guns and kicked them in the ass on the way out, but still it played out like a playground fight between children.
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9-05-2007 @ 12:07AM
AS said...
When the iTunes/NBC spat went public, Apple appealed to public opinion by saying that NBC wanted to raise the cost of shows to $4.99 per episode. Perhaps Apple exaggerated. It's really besides the point, because NBC's reply--i.e., their appeal to public opinion--was utterly idiotic and showed how out of touch they are: "it is estimated that the typical iPod contains a significant amount of illegally downloaded material.” Put another way, you are all a bunch of thieves. Screw you, NBC; where would The Office be without iTunes?
I just read an article on ars technica (http://arstechnica.com/news.ars/post/20070904-after-ditching-apple-nbc-signs-up-with-the-small-guy-amazon-unbox.html) regarding the new deal NBC just made with Amazon's Unbox. Get this: no mixing of accounts; only one account per PC (it's Windows only); that's the tougher DRM these jerks wanted! So, here's my situation. I live with my girlfriend. Each of us has an iTunes account. She buys some music, films, TV shows, etc. on her account and I do on mine. We share one computer, an iMac. On my iPod, I watch shows and listen to music that she bought, and vice versa for her iPod. Even if we had a PC, we couldn't both be able to buy shows with our respective accounts on the computer. Or, according to NBC (and Amazon), we're "stealing" shows. The real thieves here are these self-righteous content providers who want to overcharge for their shows, impose draconian DRMs and don't seem to get that the only reason anybody pays for their shows is a combination of a our (the customers') goodwill and the intelligent and intuitive design of iTunes. So, once again, screw you, NBC.
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9-05-2007 @ 12:16AM
Nik Fletcher said...
duscrom,
Apple has, at least when it comes to music sales, been the most generous of the major media stores. That in mind, I doubt they were able to persuade the video providers to provide content for less than a similar % amount. Remember, Apple just about makes profit on the iTS - they merely charge for bandwidth, store costs (CC etc) and then perhaps a few cents profit. That, combined with the ease of use, and access to the iPod, makes iTS a great deal for those who see it.
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9-05-2007 @ 12:45AM
Aug said...
but is not NBC attached to "MSNBC" which is Microsoft & NBC and don't you think when Billy G. and his boys come out with their "Music & Media Store" that NBC will lead the content??
Just a thought
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9-05-2007 @ 12:48AM
garrick said...
My e-mail to NBC.com:
I'm quite disappointed in your decision to withdraw from the iTunes store. From what i have read, you are moving to Amazon.com's Unbox, which doesn't support OSX. And the Unbox shows will be available for the same $1.99 price as iTS? I don't get that. I purchase many individual episodes of NBC shows, as well as full seasons of Bravo shows (I don't purchase cable).
Please re-think this decision. I would hate to lose Top Chef, Heroes, Tim Gunn's Guide to Style, The Office, Project Runway, Scrubs, Top Design and 30 Rock. Don't make "Must see TV" into "Can't see TV."
Sincerely,
garrick
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9-05-2007 @ 1:08AM
jyroflux said...
Someone at NBC is a Mac hater. I'm now an NBC hater. Anyway, what's to like? Universal/NBC is a dinosaur struggling to stay alive and making all the wrong moves. Bye, bye now.
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9-05-2007 @ 2:58AM
Nathan said...
So apple uses television shows to sell hardware. Oh my god really. Oh wait Tivo uses television shows to sell harsware. Oh no the world is all upside down TVs use content to sell tv sets. DVD players use movies and televisions to sell hardware. So I guess NBC is a little behind on this line of thought. Believe or not iPod sales wouldn't really drop if they didn't have the iTunes store. What would go up is th amount of music, television shows, and movies that would be illegally downloaded to be put on the iPods. Apple is nice enough to give companies a place where they can sell something that you could essentially use an eye tv to record to your computer and port right to your iPod for the lovely price of free. Personally not making a ton of money off tv shows is worth the fact that its essentaily free advertising to sell there content on the iTunes store.
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9-05-2007 @ 6:44AM
Chadonna said...
And, screw you, NBC. Almost everything on my iPod and iPhone is legal content! Not only are you guys greedy bastards, but you're also rude and insulting to your loyal consumers by saying that a significant amount of content on an average iPod is illegal. I'll think again before buying any NBC content or DVDs. Maybe NBC needs to be taught a lesson, whether it be people downloading their shows illegally, boycotting NBC shows on TV or DVD, or a simple, unpleasant letter to the jerks in charge. The more I read about this subject, the more upset I get. I pay for my content, NBC, so screw you.
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9-05-2007 @ 7:50AM
Scott said...
Anybody else notice that NBC and Universal are under the same parent company.
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9-05-2007 @ 8:15AM
nv2900 said...
Oh, and NBC doesn't want my money since it isn't making much anyway. So, what the hell, I'll turn to BitTorrent and my evil iPod the piracy tool.
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9-05-2007 @ 8:34AM
duscrom said...
The Office would be canceled w/o iTunes? Cause.. a show needs more then 4.6 MILLION viewers to stay on the air? While Family guy was brought back from the dead on Cartoon network with little over 1 million viewers.
I have a feeling that NBC isnt making much off iTunes anyway.. My guess that the profit from the service is neglicable, and they could porbabbly do without it. I mean, imagine about 100k downloads, and they get about $.50 per episode.
Then they look at the fact that this let's apple keep their monopoly over the DMP market, AND make the bear's share of profit from the sale.. Or even worse, it's a flat rate for the content. they get $5k per episode posted...
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