News

NBC: No New iTunes Contract

Friday, August 31st, 2007 at 9:25 AM - by

NBC Universal has decided not to renew its contract to sell TV shows through the iTunes Store. The media company apparently notified Apple of its decision Thursday night after failing to reach an agreement over pricing, reports the New York Times.

An anonymous source close to the contract negotiations leaked the information, and later an NBC Universal spokesman offered a confirmation without additional comments.

While the breakdown in negotiations shows the tension between Apple and media companies that want more control over download pricing, it doesn't mean that NBC's shows will disappear from the iTunes Store tomorrow. The broadcaster's contract runs through December, so there is still time for both sides to come to an agreement.

Most media companies feel Apple has too much control over music, movie, and TV show download pricing, and are looking to charge consumers more and also want the iTunes Store to offer subscription services as well. Apple, however, has maintained US$0.99 per song and $1.99 per TV show downloads. The company does offer a sliding price scale for movies that starts at $9.99.

Apparently, NBC Universal also wants stricter piracy control, and is also pushing to sell videos as bundles to increase revenue. For example, NBC could cash in on the popularity of Steve Carell by selling The 40 Year Old Virgin and an episode of The Office together.

NBC Universal isn't the first company to try strong arming Apple by refusing to renew its iTunes contract. In July, Universal Music Group decided not to renew its annual contract with Apple and instead move to a month-to-month deal where it could pull its music library from the online store on short notice.

While threatening to pull content from the iTunes Store may seem like a good way to force Apple into changing download prices, it could ultimately backfire on media companies. Consumers could interpret the move as an attempt to milk even more money out of them and ultimately turn to illegal file sharing services -- which in the end leaves studios and labels with even less money.

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Tiger said:

member since 17 Jun 2003 with 950 posts, unranked, send him a message or view his profile

Fri Aug 31, 2007 10:22 am

In other words, the networks want to rape the consumers and Apple is keeping them in check.

Haven't they learned yet from the other failed models, companies, etc., that iTunes is their distribution channel now? Consumers could interpret the move as an attempt to milk more money out of them? Give us some credit. We all see this for what it is.

And "stricter piracy control" is really going to endear them to their viewers. Really.

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burrito said:

member since 07 Aug 2005 with 176 posts, unranked, send him a message or view his profile

Fri Aug 31, 2007 10:58 am

"Most media companies feel Apple has too much control over music, movie, and TV show download pricing, and are looking to charge consumers more and also want the iTunes Store to offer subscription services as well."

well, considering apple is the first company to actually make an online media store work, then i wouldn't think it such a bad thing to put pricing control in their hands.

maybe what they need to do is upgrade the itunes infrastructure and start selling HD content at a premium. they could charge another buck 'n episode and i'd have no problem with it.

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acdc1174 said:

member since 16 Apr 2004 with 680 posts, unranked, send him a message or view his profile

Fri Aug 31, 2007 10:58 am

Indeed. I own the entire Season of Heroes that I purchased from iTunes. I ALSO intend to purchase the DVD set. I know several people who are doing the same thing because the DVD set will include other content NOT available on iTunes. I guess the approximately $44.00 US I spent wasn't enough EXTRA money for me to throw at them.

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ctopher said:

member since 25 Aug 2006 with 86 posts, unranked, send him a message or view his profile

Fri Aug 31, 2007 1:15 pm

Don't blame NBC for keeping it's options open. I'll bet the money they make from iTunes isn't enough to really move the needle. And so they'd like to experiment and have the freedom to try other things. You know you can watch a lot of NBC shows right off of their web site. There are probably marketing folks that are tweaking the available options and watching traffic both at the iTunes store and on their site.

NBC also has a download area where you can download their shows. Yes it's windows only, but again, it's all still a test. Will people do it, can they get sponsors, can they get dough from the individual viewers, will one kill the other or are they mutually exclusive?

So if they can go month to month, why not?

Feel screwed if you want to, but that's what happens when you're on the edge of technology. You get to experience the highs and the lows.

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gslusher said:

member since 13 Nov 2002 with 2051 posts, unranked, send him a message or view his profile

Fri Aug 31, 2007 1:31 pm

The issue is a bit more involved. It seems that NBC didn't just want to "control" the prices, they wanted to dramatically INCREASE them. From MarketWatch:

"Apple said Friday it won't be selling NBC television shows for the upcoming television season on its online iTunes Store, after Apple declined to pay more than double the wholesale price for each NBC episode. The higher rate would have resulted in the retail price to consumers increasing to $4.99 per episode from $1.99, Apple said, and the network decided not to renew its agreement with iTunes."

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deasys said:

member since 08 Apr 2003 with 263 posts, unranked, send him a message or view his profile

Fri Aug 31, 2007 1:47 pm

Stupidity and greed is a bad combination--NBC Universal and UMG both have it, in spades.

The iTunes Store is doing all the heavy lifting for them in marketing and distribution and taking a pittance in return. Now the fools at NBC Universal think they can do better. Good luck with that...

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A guest said: (hide)

Fri Aug 31, 2007 1:49 pm

This makes PVRs look better all the time.

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A guest said: (hide)

Fri Aug 31, 2007 2:12 pm

Let see $1.99 for each episode times 24 episodes is $47.76 and I sure like the music companies they got at least 75% of the gross for $35.82. That not bad considering people could record it free using a VCR or EyeTV. But $4.99 for each episode times 24 episodes is $119.76 are they insane!

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A guest said: (hide)

Fri Aug 31, 2007 5:16 pm

The irony is that these media companies are unhappy because Apple's prices are deemed to low for some of their content so the go and sign deals with others (e.g., Wal-Mart and Amazon) to sell the same content at even lower prices. They also complain about Apple's power but don't give a second thought to the power that Wal-Mart has (remember last year's threat to the movie studios if they made their content available through the iTunes Store)

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gslusher said:

member since 13 Nov 2002 with 2051 posts, unranked, send him a message or view his profile

Fri Aug 31, 2007 7:58 pm

Anonymous wrote:
The irony is that these media companies are unhappy because Apple's prices are deemed to low for some of their content so the go and sign deals with others (e.g., Wal-Mart and Amazon) to sell the same content at even lower prices. They also complain about Apple's power but don't give a second thought to the power that Wal-Mart has (remember last year's threat to the movie studios if they made their content available through the iTunes Store)

Excellent point, Guest. Wal-Mart certainly isn't known for "playing nice" with suppliers

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