NBC Pulls Out From iTunes
09.10.07 - 11:34am
“To be or not to be” for NBC shows on iTunes is the question. The contract is set to be renewed at the end of 2007 but negotiations have turned so bitter that Apple is saying it will pull all of NBC shows now refusing to show the new fall lineup saying it wouldn’t want to end things half way through the season.
The reason Apple says it is pulling the shows is because NBC wants to make a “dramatic price increase” jumping the price of their shows for $1.99 to $4.99.
NBC flatly denies those allegations, with NBC Universal spokesman Cory Shields, saying, “Apple is not telling the truth. We never asked to double the wholesale price of our shows. Our negotiations were centered on our request for flexibility in wholesale pricing, including the ability to package shows together in ways that could make our content even more attractive for consumers.”
NBC also said that Apple is maintaining the low prices “designed to drive sales of Apple devices, at the expense of those who create the content that make these devices worth buying”.
NBC says they won’t renew the contract without new prices and Apple says forget it.
NBC programs on iTunes currently account for 30 percent of iTunes television sales with shows such as “the Office”, “Heroes” and “Battlestar Gallactica”. NBC says it hopes to reach an agreement before December but Apple says it is not waiting till then although legally the contract runs through December. NBC says their shows will be on iTunes through the December contract.
NBC says that they will be deepening their relationship with Amazon and will be selling their shows through there instead. NBC is also planning to launch an online video portal called Hulu.com with News Corp. to show their film and television clips.
“We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase,” said VP of iTunes, Eddie Cue. “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”
In the meantime a report in Variety said that according to three sources, (who only spoke on the promise they would not be named), that the real reason for the fight between NBC and Apple is not that NBC wanted to raise prices but that Apple wanted to lower them to $.99 cents cutting their price down to half that of boxed DVD sets, a big revenue source for NBC.
“According to three people familiar with the proposal, Apple has told networks and studios that it would like to slash the cost of most TV episodes sold via iTunes from the current $1.99 to just $.99 cents.” the Variety report said.
However, if NBC has just simply renewed their current contract with Apple, as ABC has already done, they would have retained the $1.99 price for their shows, as that was already in the contract. Now if they are to resign with Apple new contracts would be made.
According to the report, Apple is stressing that the price cut of downloads would skyrocket sales, more than making up for the slowdown in DVD sales.
There is no doubt that if iTunes prices of TV downloads did drop it would be even more advantages to get one of Apple’s new iPods, as part of their allure is the content you are able to download onto them. Holiday sales of the new iPod would likely go through the roof on the news, with Apple a huge winner. On the opposite spectrum if Apple loses too much of its content from iTunes people may go with other players
Apple has declined to comment on any price cut pointing only to their previous statement that they wouldn’t resign with NBC because of NBC’s desire for a “dramatic price increase.”
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