Apple slaps back at NBC in iTunes spat

A disagreement between Apple and NBC Universal escalated Friday as Apple announced that it won't sell NBC's shows for the upcoming television season.

The move comes a day after The New York Times reported that NBC Universal would not renew its agreement to make its TV shows available for download on iTunes.

Apple said in a press release that the dispute over price came after the iPod maker "declined to pay more than double the wholesale price for each NBC TV episode."

This, according to Apple, would have boosted the per-episode price of NBC shows on iTunes from $1.99 to $4.99. The move by Apple is an attempt to preempt a possible NBC pullout when their contract ends in December.

"Since NBC would withdraw their shows in the middle of the television season, Apple has decided to not offer NBC TV shows for the upcoming television season beginning in September," Apple said in its statement.

This is the second content supplier to reject long-term deals with iTunes over the issue of price. Universal Music told Apple earlier this year that it had chose not to renew it's long-term contract and would instead opt for a short-term agreement.

The fight appeared to be a minor dustup to James McQuivey, an analyst with Forrester Research, who said he began the day thinking the NBC pullout was going to blow over soon. He said Apple's response has changed everything.

"I thought that it would all be ironed out and wasn't that major of a deal," McQuivey said. "But Apple is sure directing a lot of blame in the direction of NBC. It makes everything seem much more final, which is odd given that Apple is totally dependent on NBC and the rest of the content creators to make their video playback devices, such as the Apple TV and iPod, valuable.

"If you don't have access to the top rated content, what's the point?"

Editorial note: I added more analysis to a new story that you can find here.

[DaiMac]

Good move..

I was wondering when I saw the story about NBC pulling out in
December how that was going to work with new shows going on
past that. I think Apple is smart to preemptively remove those new
shows from iTMS, to avoid consumer frustration and anger that
would inevitably reflect on Apple.

Also, gives NBC suits a couple extra months to see just how much
this is going to hurt their bottom line ;)

[sapphir8]

Apple

Both companies need to change their policies. Apple needs to try to maintain that low bottom line price, but they also need to change their price structure some way. $1.99 for thirty minutes is too much, but is just about right for an hour. $4.99 is insane, especially when they want to bundle videos together. NBC is a bunch of greedy fools. They want more DRM, more money and more jelly doughnuts for their execs. Unfortunately, I feel that iTunes is going to have a lot more companies balk and walk away from contracts as well. They will lose their market share very soon, but not down to alarming levels.

[christall109]

YEaH APPLE!!!

I for one am very disapointed in NBC. I really don't know how
they could justify having customers pay $4.99 for an episode
that can only be plaid via iTunes when the DVD that will later be
released will be about $40 for 30 episodes. Props to Apple for
sticking up for the consumer.

And I can't wait to see NBC's new video service..its going to be a
flop i know it and then NBC will come crawling back to Apple. It
will be amazing to see how much piracy of NBC shows will
increase. I can't wait to hear the numbers.

NBC you guys need to fire your executives and they wonder why
their network is in last place?

[BlackMicro]

Goodbye iTunes Hello Bittorent!

Stupid! Way to go NBC.

[christall109]

BitTorrent........will c an increase.

completely agree.

[hetzbh]

Dear James

you asked: "Whats the point?"

Here's my answer: V-O-L-U-M-E. Go see whats Apple's ITunes sales figure is, and then look at place like Zune Market place, Real etc... Apple is no. 1 at online sales.

People bought their IPods to listen and watch video which they can purchase and use EASILY. You think Zune purchase/backup/restore procedure is easy? think again!

NBC want to be greedy? fine, the pirate bay, mini-nova, Torrent Spy and dozens of other will surely be happy to serve the .torrent file few hours after a show has been aired (WAY faster than the 24 hours time Apple puts it in their ITunes store). With no DRM, great video and audio quality, who'll by from Microsoft (or it's "partners"), Real or anyone else the seasons? IPod (either iPhone, IPod Video) rules the market when it comes to video players, and stuff from MS won't be able to be play back. back to torrents...

No doubt, NBC executives ARE stupid.

[m.meister]

$1.99 per episode is high for 30 min shows

$1.99 seemed OK for a 60 minute show. But I thought the $1.99
per show was pretty pricey for a 30 minute show.

Now we find out that NBC was looking for something closer to
$4.99 a show. NBC needs to go to a detox center, as they are
clearly higher than a kite and making very bad decisions in this
state of mind.

Listen up NBC. Customers are looking for convenience and
reasonable pricing. Your on-air and nbc.com does not offer
convenience (as you either dictate the time or require me to put
up with streaming) and $4.99 is not reasonable by anyone's
definition for a single episode of any show.

Yeah for Apple for standing up (once again) for us. Yes, they
have their own reasons for doing it -- but it does seem like
Apple has been pushing for business models that work for the
customer. Too bad NBC, Universal Music, and RIAA in general
don't seem to get it.

I'm not going to a dozen websites to be frustrated by poor
streaming technology so I can watch an episode in a 2" box on
my computer. Sorry, Hulu will be a failure.

The result is I won't be watching NBC shows. And I'm not going
to go hunting around for Universal music. I will just stop buying
it -- period. That equals LOST REVENUE .

When will these dinosaurs die out?

[SeizeCTRL]

Exactly

This is one of the major factors why piracy exists today. Consumers feel ripped off on CD's that cost $15-20 and have two good songs on them. Why would I want to waste $20 for two good songs?

This is also why iTunes took off... no longer am I forced to pay $20 for a CD when I can pick which songs to buy individually! What a freaking concept!

The more these aging media companies fail to understand this 'new world' we currently live in, the more money they will lose to piracy because they just don't get it.

Personally I hate iTunes and consider it the bitter to the sweetness of my iPod... however, I think NBC's move is completely retarded! They will deserve the onslaught of piracy this fiasco will rain down upon them.

[yardi15]

Greedy

I totally agree. I think most people that purchase shows via Apple is doing so because at 1.99 it is high but you pay for the convenience. At 4.99 it becomes too large of an expense to be worth the convenience.

[ghostfear]

Apple: A Customer Centric Company, NBC: Money talks, Customer Walks

Some People don't get it. Why Apple fans are so passionate about Apple? When they stand up to companies like NBC and the rest to maintain low prices for their customers, as a customer, don't you want to be in their corner? Apple deserves everything they are entitled to. NBC really need to wake up and understand the basics: make your company efficient, charge less for your shows, and see your ratings sky rock.

[bobby_brady]

Good move for Apple! NBC, you suck and good luck trying

to sell your content with more DRM restrictions at even higher prices.

NBC and Sony should get together. NBC can supply the overpriced over restricted content and Sony can attach their rootkits.

[Awesomebase]

Universal, NBC dumb on business

I think both Universal and their side-business NBC are pretty dumb in business... they're trying to get a better deal without having produced or participated in anything resembling a serious alternative. That has spelled disaster for many businesses throughout the years caught in a similar situation. Fine, don't like the deal with Apple? Start working with others on an alternative and build that up to be something that can truly rival iTunes and THEN renegotiate an pull-out when you can still make a serious offer to your consumer's via an alternative business. This is basic business 101 and I can't believe how badly they're screwing this up. All people are going to do is a) just buy and watch competitor's offerings, or b) create illegal options by trading ripped music and movies online through no-pay or no-fee based sites. Either way, it is putting themselves in a worse situation. Some executive there needs to get canned for being this incredibly stupid. Earth-to-Universal/NBC -- content is not an "essential" like food/water and people aren't going to miss you that much; good luck with your own "offering".

[Dalkorian]

Nothing But Commercials

There isn't anything worth watching on NBC anyway, unless you
like watching commercials. Their shows all suck, they're mindless
drivel spewed out from an idiots backside to placate the moronic
sheep who follow them no matter what.

When you get around all the commercials, that is.

[belchmelch]

NBC... say hi to BitTorrent

if revenues from commercials are more than ADless iTunes episodes then fine. what they should offer is old episodes and save new episodes for regular TV.

AAPL is trying itʻs best to keep the price down. They could go along and let NBC charge $5. but then no one would buy.

anyway, just tape it on the DVR/VHS.

[Jim_Mattos]

Lots of posturing...

There seems to be a wholesale abandonment of future contracts
with Apple for sale with their proprietary iPod/iTunes sales model.
Perhaps there is somehting in the wings that no one at the highest
levels is talking about.

No one stays in the leadership position forever. It's time for Apple
to come up with a new business model that will appeal to everyone.

[Charleston Charge]

I agree

While the comments here tend to be outrage towards NBC, nobody knows for sure what exactly is going on behind the scenes. I'm sure it's over a combination of money and control between both parties. Historically, Apple has been a company that's wanted to have control and do everything themselves and not do well with partners. I just don't think there are enough facts to go one way or another for either side on this.

[canettijazz]

NBC/Universal doesn't get it

Clearly, NBC/Universal doesn't get the internet thing (How to
build a following online to accentuate the product.) For the most
part, many of the NBC programs offered on iTunes are available
for free if you set your VCR, Tivo or other recording device.
Heroes is the only show I watch regularly on NBC, and I've
actually purchased several episodes because I didn't set the VCR
and NBC only has the most recent episode available for online
viewing. This is pure profit because Heroes and The Office are
some of the top selling TV programs on iTunes. ABC/Disney
makes most of their programs available for online viewing all the
time, not just the most recent episode, otherwise I'd be buying
more episodes of ABC programming.
NBC also had a great opportunity to make The Tonight Show and
the Conan O'Brien show available on iTunes, but the per
segment pricing was outrageous.
Even if Apple agreed to NBC's terms, I'd bet the consumer would
balk at the hefty price. If I miss enough episodes, I might stop
watching the show altogether.
Your loss NBC.

[The_Raven]

Goodriddance, NBC

How is this anything but positive for Apple.

They are the ones that created a market where the likes of NBC could actually make money on shows consumers can get absolutely free elsewhere.

[tgrenier]

steve' pissing off the studios

If he keeps trying to make them play ball his way , it will be very interesting to see who wins. The old-boy netowrk at the studios or the creative computer company. NBC et all make their money from commercials. I am sure Itunes has very little impact on the bottom line over at GE. Check the market cpas of each company. TV also comes in Cycles. Sure NBC isn't hot right now, but when the next Friends or Seinfeld comes aorund, people will buy it after watching it for free as long as there is an easy to do it.

ASk this: If all the studios got together and told Steve to go stick it, how successful would itunes be? They do want a computer company getting in on their playgound.

Itunes exists to sell ipods.

Can I put my ripped DVD's or any other non-apple non-quicktime videos on my ipod? Can your grandmother do it?

Can I buy digital content online from someone else (with ot wothout DRM) and synch to my ipod?

[protagonistic]

RE: steve' pissing off the studios

"Can I buy digital content online from someone else (with ot
wothout DRM) and synch to my ipod?"

I put non DRM'd stuff on my iPod all the time and it is "so easy a
caveman can do it".

[jkda]

Answer: ImTOO

"Can I put my ripped DVD's or any other non-apple non-quicktime videos on my ipod?

Yes you can. Get yourself a copy of "ImTOO DVD to iPod Suite" or ImTOO Ripper Pack Platinum.

Can your grandmother do it?"

I submit to you if one's grandmother can draft a document in MS Word or send an e-mail via MS Outlook, she will be able to operate either of the programs referenced in my post. I have converted several of my movies from collection for viewing on my PSP and 5G iPod and have experienced no problems whatsoever.

[cartablst]

yep

"Can I put my ripped DVD's or any other non-apple non-quicktime videos on my ipod? Can your grandmother do it?

Can I buy digital content online from someone else (with ot wothout DRM) and synch to my ipod?"

Yeah, actually. You can. People do it all the time. Use your google-fu.

[The_Raven]

Good Riddance, NBC

How is this anything but positive for Apple.

They are the ones that created a market where the likes of NBC could actually make money on shows consumers can get absolutely free elsewhere.

[Wind_Freak]

There is a Loss

We will loose Heros. I looked at the dvd price for Heros and ran the
other way. Considering the price and ease of portability digital
itunes will remain my number 1 method of watching tv.

Maybe itunes should embed handbrake into it then we can netflix
the dvds and import them to my ipod instantly.

[rscorer614]

DVD Price for Heroes?

The price for Season 1 on DVD was $39.99 in the Target by me. There are 22 episodes, a ton of extras, some cut scenes and even a whole pilot that wasn't aired.

If you break that price down its less than $1.99/episode and you can always make it a digital copy (legally).

You people are all sucked into the micro-universe which only revolves around Steve Jobs ego.

[drod01]

NBC = Nothing But Commercials

I am going to miss those commercials.

[ppgreat]

Voice your opinion to NBC if you want

NBCUNI.COM FEEDBACK
100 Universal City Plaza
Universal City, CA 91608

NBC Universal
3000 West Alameda Avenue
Burbank, CA 91523

http://www.nbcuni.com


Jeff Zucker, President and CEO

Lynn Calpeter, EVP and CFO

Beth Comstock, President, Integrated Media

John Eck, President and CIO, Media Works

Jay Ireland, NBC Universal TV Stations and Networks Operations

Cory Shields, EVP, Communications

[Painter662]

gee wasn't it just a couple years ago...

Wasn't it just a couple years ago all the media Giants, were
screaming bloody murder because piracy was rampant, and
eating them alive? Then comes along iTunes, and while they
still scream about Piracy, it seems to have dimmed a bit, but
now they wanna charge like pirates anyone stupid enough to
play legal. I was reading an article a couple weeks ago on CNET,
(I think) about how the record companies are still charging
artists breakage fees, on legally downloaded music... would you
mind telling me how you break an mp 3 or 4???
I guess, my point is If you wanna live like a Pirate, you better
expect to be pestered by Pirates.