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Report: NBC wanted a cut of iPod revenue
I will say this: NBC's Jeff Zucker has got serious stones.
According to a report in the venerable entertainment industry trade rag Variety, Zucker, president and CEO of NBC Universal, asked Apple for a cut of iPod revenue as part of the failed negotiations between the two companies over a contract extension for the right to sell NBC's shows on iTunes. (Thanks, Valleywag.) If that's true, wow.
A source familiar with NBC Universal's negotiations confirmed that the company asked for a slice of iPod revenue but only after Apple refused to budge on variable pricing.
NBC reportedly asked Apple for a cut of iPod revenue during their negotiations over putting shows on iTunes. Fox apparently didn't.
(Credit: CNET Networks)"Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money," Zucker reportedly told The New Yorker's Ken Auletta during a benefit for former football powerhouse Syracuse University. "They did not want to share in what they were making off the hardware or allow us to adjust pricing."
The content industry has long had a beef with Apple's fixed pricing structure on iTunes. They would prefer to charge more for newer hit shows and less for older programs, but Apple CEO Steve Jobs has been firm on the $1.99 pricing for television shows on iTunes. Now, NBC and Zucker certainly have the right to decide what they want to charge for their content. And it's very early days for online video sales, so you can see how negotiations might have broken down over the pricing.
But seriously, you guys asked Apple for a cut of iPod revenue? Justifying it by claiming that they are making tons of money off your content?
I'm not even sure where to begin. First off, in earlier comments reported by Variety Zucker said that NBC took in only $15 million in revenue through iTunes during the last year of its deal. I'm not exactly sure when that began or ended, but in 2006 NBC Universal did $16 billion in revenue, according to parent company General Electric's annual report. So even if you tripled the amount of money NBC was taking in from iTunes sales a year, that would have only amounted to 0.3 percent of NBC Universal's revenue for the year. By comparison, NBC Universal's theme park business did $100 million in revenue.
So it's not like Apple screwed NBC out of all this revenue they would have otherwise been earning, although the network will get a chance to prove otherwise with the pending launch of its Hulu project and its own NBC Direct site. But that's not really the point.
How much revenue does Sony give NBC when it sells a television? How about Panasonic? Or Sharp? The idea that NBC thought Apple would agree to give them a share of iPod revenue is either the funniest or the most horrifying thing I've ever heard come out of the mouth of an high-profile executive like Zucker.
NBC may or may not need iTunes to distribute its content, and it will be interesting to see if it can build an online distribution model on its own. But does Apple really need NBC's content? I'm sure Apple would like to sell hit shows like Heroes or My Name is Earl on iTunes, but I can't imagine there's a network show good enough on television to justify Apple giving anyone a share of revenue from its crown jewel.
You have to have leverage to demand revenue from a prospective partner, like Apple did with AT&T over the iPhone. And that worked: the iPhone is AT&T's top-selling model, and brought hundreds of thousands of new customers to the carrier. Is Bionic Woman really going to bring thousands of new customers to iTunes?
I would have given anything to have been a fly on the wall when Zucker or one of his lieutenants made that pitch to Apple. Apple immediately retaliated after talks broke down, announcing plans to pull NBC's shows from iTunes before the contract between the two companies ended. They're still offering several shows, perhaps a signal that not all is lost, but I'll promise to watch an entire season of The Singing Bee if Zucker gets a cut of iPod revenue from Apple.
By the way, if you're going to start selling your own shows online, shouldn't you try to get a cut of PC sales from Hewlett-Packard and Dell, while you're at it?
CNET News.com's Greg Sandoval contributed to this report.
Tom Krazit, a staff writer for CNET News, focuses on all things Apple. He has covered traditional PC companies such as Dell and Hewlett-Packard, chip companies such as Intel and Advanced Micro Devices, and mobile computers ranging from Research In Motion's to Palm's. E-mail Tom.
I, being a customer at your fine establishments across the USA
for the past two decades, and purchasing any food items offered
at said establishments regardless of price and/or quality, do
hereby request a 10% commission of all profits made from the
date of this request until the end of forever.
---------------
Man that guy's got some balls. iTunes and the iPod were
successful long before NBC began offering their crap for sale on
the service.
Pull your content from iTunes.
Cancel fantastic shows like Studio 60.
Broadcast ridiculous crap like the Real Wedding Crashers.
Continue to languish in the ratings.
How are these morons not fired yet? Are there any job openings?
I'd love to make incredible amounts of money will repeatedly
screwing up... where do I sign?
Apple (some) made money thanks to NBC content. So let's give NBC a cut. Now this was possible because of networks and all; so let's give Cisco and the Internet providers a cut. Again this was possible thanks to electricity, so let's give the utility companies a cut!
Seriously, Sucker (oops I meant Zucker), that line of thought is ridiculous.
elected officials and ask them *** is going on out there???
HEY, NBClowns, MY iPOD IS FILLED WITH CD'S THAT I BOUGHT
FROM THE STORE.
*** gives YOU the right to TAKE ANY MONEY FROM ME, when I
have ZERO SQUAT ZIP %$@$ of your product on MY player?
Is this something that we need to be writing our State AG's about?
I mean... seriously, these morons need to be slapped down HARD.
single handedly. And, with the GE honchos giving him more money
and power he will continue in his quest to turn the NBC line-up
into a vapid, left-wing 5th-place disaster. It is so good to see
Steve Jobs cancel all of NBC's offerings on ITunes, because by the
end of this season there will be nothing left to offer anyway.
Zucker must go. But GE seems to be blind to what is happening.
Greedy NBC...
But this presupposes that people will want to watch Hulu in the first place. The videos are ad-laden and you can watch them only while you're connected to the internet. How does that address the viewing habits of the people who bought videos from iTunes?
Did they contribute to the R&D of the iPod? Did they help in the
distribution or marketing? These guys are delusional. I hope they
tank in every possible business. I'm now done buying anything
from NBC Universal.
get burned, and bullys are becoming passe. The turd will soon be
third.
says, that he burns those who deal with him. I have asked
moderator to remove when I saw the typo. I had originally typed as
title ZUCKER TO GO? Somehow it blended. I hope the moderator
has removed this unintentional typo which I noted shortly after
reviewing my posts.
Now they think, they can do that everytime.
Do they get money for every CD or DVD player, because they sold the CD's or DVD's.
Or as a frozen meat company, am I entitled to a cut for every freezer?
desperate to make up for lost time in the area of digital media.
A terrible precedent. The costs get passed on to us. If every
provider of content were able to demand a cut of hardware
sales, we'd be paying a great deal more for hardware even
though we might never play a single show or song from the
companies taking the cut.
Content and hardware have to stay separate for this reason.
Further info on the Zune/Universal Deal:
http://daringfireball.net/2006/11/buy_that_for_a_dollar
And the Audio Home Recording Act of 1992:
http://www.howstuffworks.com/framed.htm?parent=music-royalties.htm&url=http://www.virtualrecordings.com/ahra.htm
I wouldn't be surprised if there are examples that pre-date this as well. And, Apple isn't entirely innocent here. After all, they charge to interface after-market hardware to the iPod.
Bottom Line: What comes around goes around. And we poor consumers are stuck in the middle, no matter with whom you might chose to do business.
--mark d.
Well, if he is one of them, this is a very funny story indeed.
You can expect Leslie Nielsen at any moment now....
Thanks, Microsoft, for opening this can of worms when you were trying to steal iPod sales with a "scorched earth" policy!
Seriously-- if anything, the media companies should be paying the hardware companies for distributing a **medium** for their content!
* producers (the people who actually put the shows together,)
* consumers (the people who want to watch the shows the producers put together) AND
* advertisers, (the people who pony up the cash for access to the process while getting sold on nebulous "audience share" numbers based on the "facts" that people don't have any friggin' lives, families, pets, bladders or colons to distract them.)
NBC and the rest of the broadcasters are entirely UNNECESSARY on the internet.
No wonder they're running around like buggy whip makers after Henry Ford.
They're all going to get KILLED (and the world will go on fine after they're gone.)
They first show that gets to solicit money directly from the audience is going to slaughter them; absolutely slaughter them.
If NBC does get a cut they need to bring somethign to the table. Like Free Music via iTunes since they get a cut of the player, they could give up selling the songs. After all the argument for NBC getting a cut is to pay for piracy. All pay for piracy schemes like this only result in revenue for the media company and no forgiveness for the people who are fronting the bill. The RIAA would still sue them.
Money for nothing is extortion.
AT&T, HP, Apple, NBC, FPL, Bellsouth, Microsoft, and c|net, accrued annually per month in perpetuity.
I'm off to the Bahamas, send me a check after you sign on the dotted line.
---------------------------
control over the pricing of their content and Apple said "No" so
they allegedly proposed an alternative which Apple had the right
to consider and then apparently chose to turn down.
Now why do iPods sell? Is it because people play music they've
created themselves and publish service television to watch on
them? NBC's point is that if Apple is going to sell a product
marketed towards displaying their content and then is going to
position themselves as the only reasonably convenient legal
retailer of the content (it's a lot easier to rip a CD to MP3 than a
DVD or recorded TV) and then on top of that, is going to hold
monopolistic-like control over the pricing, what do they do if
they aren't happy with the deal that Apple is handing them?
I'm not an NBC defender but as a person who makes their living
off of content creation, I understand NBC's point which is that
more and more in people's minds, the value of content that
costs millions of dollars to make is exactly zero... Or in Apple's
case, $1.99. I can see where an NBC executive might think that
an episode of "Heroes" with an expensive budget to produce
might be worth a little more than an episode of the reality TV
series on MTV, "A Shot at Love with Tila Tequila" - I know that
you won't see the two priced the same in Best Buy when this
year's season comes out on DVD.
On the other hand, it is very easy for Apple who paid absolutely
nothing to produce either one and who has a near monopoly on
the portable video/music market to tell NBC, "you'll sell your top
rated show for the same price as crap reality TV or you won't be
in the mobile market" and it's in Apple's best interest financially
to do this because making the content purchase cheap and
simple (but especially cheap) for iPods makes buying and iPod, a
much more sensible decision in most peoples minds.
I just don't get why NBC who's content includes everything on
NBC, MSNBC, MUN2, Sci Fi, Trio, and the USA Network not
wanting to get royally screwed by Apple till the end of time
makes them money grubbing monsters? This is a business and
in business terms, Apple has never been a nice company. NBC
hasn't either but I don't understand why so many people jump to
Apple's side on issues like this when none of us really know the
whole story and when none of us (unless you are a shareholder)
have ever been given anything from Apple that you didn't pay
through the nose for... Unless you count that $1.99 episode of
The Office that you are watching on your $400 bipod touch. Oh
and why did you spend so much money on a portable media
player with such a nice big screen?.. Umm, yea.
PS - for the record, this has no comparison to TV makers as one
person tried to claim. If RCA made a TV that had a 75% market
share and then was also the only cable provider sending a signal
the TV could understand, they you might have an argument but
last I checked, RCA was just making TVs that work on open
standards - not dictating pricing or how networks broadcast
their shows to them.
but I just checked and the DVD price for season one of Heroes is
$40 on Amazon and current episodes are $1.99. If the season has
21 episodes that is less than $1.99 per.
It seems that Apple's pricing model is reasonable and that NBC is
trying to squeeze iPod customers more than thoses that choose
Windows Media devices.
Apple's model is fair with regards to the record labels that are just the wholesalers of the music.
But talking about video contents, it would be fair if Apple will reduce his profit margins on the shows proportionally to the show popularity.
OTOH if Apple accepts NBC's conditions, the next thing that happens will be renegotiation with record companies.
[i]"Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money,"[/i]
Truth is, NBC never charged RCA, Zenith, Curtis Mathis (yes, I'm that old), and the like for a cut of the revenue to broadcast NBC onto them.
In further truth, NBC gets ad revenue for shows played on the iPod screens, no?
In short - you, Sir, are an idiot. A desperate idiot at that. Meanwhile, Fox (whose content is, like yours, mostly pre-packaged lowest-common-denominator crap) continues to outperform you. Go figure.
/P
totally free-ATSC signal in HD?I have my HD DVR recording all the
shows. When I view them I use the DVR's 30 second skip feature,
its commercial free!!! (well almost). Then again I do that with all
free content recorded.
- Would someone explain to me...
-
by riodejaneiro2007
October 31, 2007 6:19 AM PDT
- Why NBC is selling the same content on Amazon.com for the
-
Reply to this comment
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See all 42 Comments >>same price per show? I realize they now have DRM restrictions
(not really) and practically no portable players (well not any good
ones that is). What's the benefit for NBC and their parent
company, GE. Are they getting a cut of the TV, Xbox 360 and HP
that the shows are played on from Amazon? I wonder what
Microsoft, HP and Sony think about that, if true? By the way, the
shows don't play very well Microsoft, NBC and Amazon! iTunes
is a much better product!!!
Zucker sounds like a pompous a** to me.