News

Jobs: NBC Universal Welcome to Come Back

Thursday, September 6th, 2007 at 9:20 AM - by

NBC Universal may have decided not to renew its contract with the iTunes Store, but Apple CEO Steve Jobs said they are still welcome to come back, according to Reuters.

Mr Jobs stated "We hope they'll reconsider their decisions over time and maybe find out that iTunes and iPods are a great way to digitally distribute their content to tens or maybe hundreds of millions of customers around the world."

NBC Universal chose to leave the iTunes Store in favor of Amazon's Unbox service because Apple refused to agree to substantially higher video download prices and more restrictive copy protection measures. In response, Apple announced that it would not carry NBC's fall lineup even though the broadcaster's contract runs through December.

Earlier this year, Universal Music opted for a month-to-month deal with Apple instead of renewing its annual contract with the iTunes Store. Like NBC, the record label wanted more control over store pricing.

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deasys said:

member since 08 Apr 2003 with 296 posts, unranked, send him a message or view his profile

Thu Sep 06, 2007 3:12 pm

Jobs is too kind.

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A guest said: (hide)

Tue Sep 11, 2007 5:53 pm

That, and NBC accounts for a third of TV shows sold on iTunes. It's not like it's good for Apple to lose NBC.

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gslusher said:

member since 13 Nov 2002 with 2088 posts, unranked, send him a message or view his profile

Tue Sep 11, 2007 7:52 pm

Anonymous wrote:
That, and NBC accounts for a third of TV shows sold on iTunes. It's not like it's good for Apple to lose NBC.

No, it's not "good," but it's not that "bad," either. Apple's net per TV show is not very high. Also, TV shows are a smaller part of the iTS than songs. According to Jobs, iTS has sold about 95 million TV shows--and 3 BILLION songs. Guess which is more important.

Yes, they've been selling music a lot longer, but the rate of sales has been accelerating. According to this chart, At this time last year, Apple had sold 1.5 billion songs. Now, it's 3 billion. IOW, in the last year, they've sold 1.5 billion, as many as they sold in the entire previous history of the iTS/iTMS. TV shows have been available for more than a year , but, for argument's sake, say that all 95 million were sold in the past year. Apple's margin on songs has been estimated at about $0.10. As TV shows are (mostly) about twice the price of a song, let's say the margin is $0.20. A quick calculation:

TV shows: 95 million sold x $0.20 = $19 million to Apple

Of that, 1/3 (we've been told) were NBC shows, so NBC => $6.2 million to Apple

Music: 1.5 billion sold x $0.10 = $150 million to Apple.

Even without counting movies, NBC's shows were 6.2/(19+150) = 3.7% of Apple's net from the iTunes Store. Add in movies and it's an even smaller piece, as it will be if one didn't assign all the TV show sales to just the past year. Conservatively, then, we might say that NBC's TV shows might make up 2-3% of the iTunes Store net to Apple. Not a very big deal, at all.

That should give some perspective from Apple's standpoint.

A note about the sales chart: Some have looked at it and said that the iTS sales have been declining. However, that is a "semilog" graph--the vertical is the logarithm of the sales. A straight line would mean exponential growth. A line curving over on a log chart can still mean rising rates. I've shown that in a chart that compares the linear and log plots of several functions.

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A guest said: (hide)

Wed Sep 12, 2007 2:49 pm

Nice math, so you can see just how little this hurts NBC as well (for which the amount of revenue lost will be an even smaller percentage of the corporation's total). It looks like the real winners are consumers, who will now be forced to stop paying for content that is already free.

The real loss here for Apple is not financial, but rather they are now losing their status as the one and only service for music and video downloads. The have lost one of the major networks for television, and we all know about the loss on the music side as well. For one thing, that means consumers will just go elsewhere to get their content (such as walmart/amazon or directly to the content providers). For another thing, it means that other content providers are now more influential as they represent a larger piece of Apple's iTS business, and they also now have a precedent for using other services. Consumers are starting to find out that they can get their video and music elsewhere, or that some video and music they want is not even available at all from Apple. Apple is no longer THE place for AV downloads.

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