Comments on: NBC, Apple play game of brinkmanship
news analysis A day after reports said NBC would not renew its iTunes contract, Apple announces it will not offer NBC's new TV shows. This spat is about control.
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and also the successfulness of the iTunes store. NBC has done
nothing short of shooting themselves in the foot.
Do they really think $4.99 a show, even if it is retail is a good
deal? I buy rarely any season passes, $25 to $45 a season is
more than what the channel in many cases cost in a year... what
do they expect Apple to do say yes?
I won't even get into the argument that NBC are being controlled
by the same type of people, if not the same people who control
the Sci-Fi channel because we all know some of the very stupid
mistakes both companies have made, but I purchased the
seasonal pass for the Dresden Files, I got the videos for
$19.99...
I don't know about most people here, but I know Apple sees
very little of the profit with the music, I expect the same to be
said for the videos/movies.
It is good though that Apple is standing up for the little guy,
because right now I don't watch much TV because my work day
starts at 5:00 AM and ends around 8:30 PM... I refuse to buy
TiVo, or even get a premium package for products I mostly
never watch. For me iTunes is one of the only ways I get my
entertainment. I hope companies realize that I am not the
uncommon sub-class out there...
NBC is going to be having a rude awakening very soon I expect.
With over 100 million ipods sold, that's roughly 8 songs per ipod per year.
When you consider the market share apple were granted by the Record labels....Apple had exclusivity to the best and biggest music catalogues online, it's nothing short of a spectacular disaster.
It's no wonder the record labels are licensing to amazon, nokia and even wal-mart insisting on DRM FREE music, at a higher quality than itunes and at a similar/cheaper price.
Universal music have already pwned Apple, when they pulled out of their deal recently with itunes.
NBC pulling out suggests that Apple have failed, spectacularly, to learn from their earlier mistake with Universal music group.
I think Apple need to wake up and realise that the Earth don't revolve around Apple.
free, and nobody before Apple has come close to making digital
distribution a reliable business model.
Assuming your iTunes figures are correct, they really mean very
little. This is because most music is sold in physical stores. For
good reason, I can buy a CD, and have no DRM problems.
Moreover, I can legally make copies of the music on a blank CD
and give that copy away to friends. Media companies have been
doing everything they can to shoot themselves in the foot. First,
they want higher prices, even though the cost of distribution is
significantly less. Second, they are giving the artists less for
digital downloads. Third, they have fought for harsh DRM. It is
surprising Apple managed to get any deal out of these
bloodsuckers.
Let me also say, Apple wasn't given a market share, it created a
market share.
Let me also throw a few names out at you: MSNBC Universal.
That is right, Microsoft, NBC, and Universal are all closely related
business partners. Microsoft has been fighting Apple's media
dominance for years now. Universal wants subscription and
tiered pricing. So, the partners are partnering up to unseat
Apple. No surprise there.
Microsoft came out with the Zune, and Zune marketplace.
Universal didn't renew its contract with iTunes, but then goes
and enters a deal with Walmart where it gives Walmart all of its
content in DRM free format at roughly the same prices as iTunes
is offering for DMR free music. This is after Universal made a big
stink about how it wouldn't support DRM free music after Apple
was advocating it. Now NBC is claiming it will not renew its
contract with Apple.
These companies are greedy, pure and simple. They lobby
Congress to screw the public out of valuable rights, and then
sock it to you in terms of pricing.
While you try to diminish Apple with these statistics, I am very
impressed by Apple.
Why?
Well Apple was able to sell 3 billion songs (at $0.99 each), in an
environment where people would rather download the music for
free than pay for it. Color me impressed.
since the ipod was introduced. Most people use their mp3 players
for albums they already own... the time when music use to be
good. So i don't think people want to buy a whole albums when
they have the choice to buy the best tracks.
People's tastes are changing. People have more things to do now. If people are doing more things like internet, video games, etc, there is just not enough time to purchase and listen to music now a days. While the iPod did allow people to bring their music out and slow the decline of CD purchases, it has not stopped it and that is the truth. You cannot blame Apple for that.
I guess your not a consumer but a provider?
mart? Apple isn't going to stop you from buying it elsewhere, or
putting it on your iPod unless you are so incredibly stupid as to buy
in a Microsoft format. (They don't even support it on their own
Zune (wanna-be iPod).
I prefer to use something a bit less... 20th Century.
Maybe you did, but weren't able to understand the Really Big
Words?
NBC tried to bully Apple into a price hike.
NBC wanted to charge $5.00 per episode to download a TV show.
Apple said "No".
Do you feel silly yet?
Please note that the World doesn't revolve around Apple anymore.
Content Is King.
journalistic integrity you need to stop quoting Rob Enderle. He's
consistently wrong and consistently shows he does not
understand let alone have any insight into Apple's market. Have
you looked into his track record? Have you noticed he routinely
comes up with unfounded wild comments that seem more
geared to draw attention then to give real insight? It calls into
question the competance and credibility of any media outlet that
quotes him, yours included.
Speaking of journalistic credibility, where did you come up with
this assertion: "Apple needs to have access to a wide range of
content to keep iPod owners interested in their devices. Apple's
iPod succeeds mainly because of iTunes; its simplicity, low
prices and quality content. What happens if Apple lost access to
the best music and TV shows".
This is clearly and roundly recognized as wrong on many levels.
It is a false crisis. First, Apple doesn't need access to content
itself to drive iPod sales because most of the content on iPods
comes from iPod owners and not through Apple's servers.
Customers can and do get their content from other means and
load it onto the iPod themselves.
Sure, it helps Apple and iPod owners to have the iTunes Store to
make digital media super easy and convenient to buy, but most
people have bought iPods because they could load the media
they got from CDs, peer to peer networks and DVDs they've
bought, borrowed or rented. It's plain as day in the numbers
reported by Apple itself and research groups. Very little of iPod
content comes from the the iTunes Store. iTunes Store is a perk,
not the engine that drives iPod sales.
The context in which you state that "Apple's iPod succeeds
mainly because of iTunes" implies that it's the iTunes Store that
makes the iPod popular. This completely misses the fact that the
iPod has first and foremost succeeded because of it's own ease
of use and quality design and features. Remember, the iPod
drew lots of Windows users even before there was an iTunes
store...even before there was iTunes.exe jukebox software for
Windows (which is more important to iPod users than the iTunes
Store).
Also, for shame in confusing the iTunes software with the iTunes
Store. The way you described one when you meant the other is a
classic case of argumentative bait and switch.
market price for something has always been the lowest price it's being sold for in the marketplace.
For music, movies and TV videos on the Internet, that price isn't quite zero. As Steve Jobs has
pointed out, it's the value people attach to the hassle and time illegal downloads take. Apple has
probably guessed right that the hassle-factor is about $0.99 for music and $1.99 for TV shows.
No matter what is being sold, the market price can't rise much higher than that.
Keep in mind that the New Internet Economics breaks all the rules of traditional economics. Copies
are so easily made that supply will always meet demand, even if the selling price is zero. The only
way the entertainment industry can keep their products off this black market is to keep them
locked in vaults where they earn no money. Making any effort to make money off a product will
create a near infinite supply. That's the reality.
The New Internet Economics also breaks the old rules in another way. The more popular something
is, the more likely it is to be easily available for free. Someone who wants to watch an obscure
fifties sit-com will have to look long and hard for it and may, in the end, decide that buying it on
iTunes makes more sense. Someone who wants the hottest show on network TV, will find it easily
in the black market. Supply not only meets demand, the supply is best where the demand is
greatest.
That's why nothing demonstrates just how clueless the executives at NBC are better than their
antiquated assumption that they'd be able get larger profits selling their hottest shows for $4.95
rather than $1.95. All they'll do is create a livelier black market, one that isn't likely to go aware
when they return to reality.
In short, Steve Jobs' one low price for everything is the only way to make a buck in this New
Internet Economy.
I might add that I've got quite a bit of experience in this area. My primary business is publishing
interesting books that are in the public domain. Much of what I publish is available legally and for
free electronically and from other sources in print. I survive in that market by adding more value to
my books than anyone else with useful footnotes, commentary and appendices that make the
books more useful and enjoyable. Michael Crichton praised my edition of G. K. Chesterton's
Eugenics and Other Evils in his most recent novel, Next.
The entertainment industry's problem isn't bootlegging and it isn't the iTunes Store. It's the fact
that they arrogantly assume that nothing has changes since the 1960s and that they can control
the market and generate any level of profit they like if only they can "get control" again. They can't,
because this is a market no one can control. They're simply going to have to sell at a price that
reflects the value they've added to it. Nothing else will work.
--Mike Perry, Inkling Books, Seattle
original article. Kudos.
shows in the UK. (£1.89 sterling is about USD$4).]]
I tend to think that Apple is still forking over the same amount
to the studio, and keeping about the same amount themselves...
Where's the rest going? My guess is UK taxes... Don't get me
wrong... I love the UK... Spent the best couple years of my life
there (about 25 years ago), but UK, and most of Europe, is well
know for taxing the crap out of their citizens.
I don't know or claim this as fact, but I really doubt that Apple is
saying "Hey, let's screw the Brits out of a couple more bucks per
TV show, just because we can."
I would be very curious to see a breakdown on where the money
goes on UK sales vs. US sales.
It's time to dump NBC and Universal stock and invest in the stock of media companies that are changing with the times.
money off of ads, but there are missing out on money from me
and probably more like me. I can easily DVR the NBC Universal
shows I want to see but I dont because I like to watch them
during my travel time on airlines where there is no Internet
access! So now I will DVR all the NBC shows and not spend
any money or watch them on hulu.com. You have to have a
downloadable option for people who dont have internet access
and want to enjoy some TV shows.
Part of the deal with At&T (I think the iphone contracts were for 5 years) was a huge chunk of revenue being kicked back to Apple.
If you unlock a phone and put in a t-mobile sim card...apple loses all that moolah...for the next 5 years.
the music and broadcast industry continue to play greedy, and
blame all their woes on the Internet. I wish the media would do a
better job of investigating this story. Apple has been a breath of
fresh air to an otherwise heavily controlled music and broadcast
industry. Look at the number of artists who otherwise woudn't have
gotten exposure.
rivalry between Blu-ray and HD-DVD. NBC has ties with
Microsoft, ie. MSNBC, who support HD-DVD while ABC has ties
with Apple ie. Steve jobs having a seat in the board of directors
at Disney which owns ABC, support Blu-Ray. Media companies
are choosing sides on which format to go with while others are
staying neutral and are doing movies and shows in both
formats. The new revenue for NBC is the HD-DVD format. They
have something to fall back on if hulu.com fails. In the end, the
consumers lose.
It is clear that Apple's retail pricing strategy for its iTunes service is designed to drive sales of Apple devices, at the expense of those who create the content that make these devices worth buying."
http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=AAPL:US&sid=aR7Te_sjiGug
Yeah, so what's the other part of that variable pricing scheme?
Something along the lines of "this show is popular, so let's force
people to spend a lot more for each episode".
NBC sucks.
the right to do with iTunes whatever they want, they created it
and it belongs to them. They can set prices in their stores
however they want to. NBC also has the right to not agree to the
terms and with hold their business from Apple. There is now
good guy bad guy here, they are both well within their rights in
what they can do with their property.
However having said that, there is the question as to which is a
better business model and who has the more economically
sound concept. Prices are more than just a price. They are
information about the thing that they are associated with. For
example, an old Leave it to Beaver episode and a new Desperate
Housewives Season Finale probably do not have the same
market value, yet I suppose on iTunes they would in fact have
the same price, since Apple insists on flat pricing. Prices are
indicators of what people want and demand and what people
dont want. Flexible pricing means as much lower prices as
higher prices. Yes some things would be higher, and some
things would be lower. The prices would reflect the preferences
of the customers not NBC or Apple. If a show was in demand it
might cost more to own it, if its been in reruns for decades, even
the flat price might be too high for most. Flexible prices also
give feedback to the vendor. They can try out a price for a show,
and if sales a lacking they can lower the price, and vice versa.
Prices are information for both the vendor and the customer.
Apple can do what they want with iTunes, but if they want to
have an even more vibrant marketplace there they should
establish freedom in prices in their store, afterall wouldn't it be
odd if you walked into Wal-Mart and all the CDs were exactly the
same price ?
Hypothetically, let's say it takes roughly 50 visits by iTunes members before someone decides to buy the video.
That means for every 1000 people that comes looking for their shows NBC makes about $30 in sales. That's obviously a hypothetical ratio and probably on the optimistic end of the scale.
Which sounds great, doesn't it? It does until you realise that if people know the entire season of that show that they love is free on NBC.com they will definitely go there. Free means that 1000 potential viewers on ITunes turns into 50,000 definite viewers on NBC.com.
Still with me?
Each video advert on NBC.com is worth $20+ CPM, which means they make at least $20 for every 1000 viewers per ad. At 4 ads per episode, that's roughly $80 per 1000 viewers.
So, not only will they make more per 1000 people who come looking for their shows, if they focus on NBC.com they will also get 50x more viewers.
Now do you understand where the $4.99 price point came from? It basically matches what they make from the free stream.
I'm not saying that's right or wrong, I'm just pointing out the economic logic behind how NBC might have arrived at the $4.99 price point.
Of course, an equally logical argument could be made that NBC will actually lose paying customers to illegal bit torrent downloads or P2P - where the adverts will probably be stripped out - but, they face that threat anyway and for my money, I would tend to follow the quality route...i.e.
Offer consumers a low quality stream/download for a low price point as well as offering a medium/high quality version for a slightly higher price.
Which is the variable pricing model that Apple fought for years with itunes music because they insisted consumers wouldn't "get it".
And how wrong were apple about that?
After years of fighting the music industry over variable pricing...Apple quietly introduced it this year, with the "next big thing" promotions after EMI's offering of higher quality DRM FREE versions of their catalogue...
managing, and configuring music collections with a Nokia phone?
Who the hell says, "omg I love my music applications on my
phone!"
Well, besides iPhone owners. Even then? it's an iPod.
Jesus, either apple is 'beleaguered' and should just shut its
doors, or it's the king of the hill and no one can touch it?
If other people competed on quality, Apple wouldn't be so
dominant. Period.
And don't use the iTunes-DRM argument, because the
overwhelming majority of tracks on a typical iPod comes from
CDs ripped to AACs or MP3s.
No one's stopping people from buying Zunes and putting their
own music there instead of on an iPod.
- how much do the networks charge Apple?
- by godofbiscuits--2008 September 2, 2007 11:18 AM PDT
- Do you know?
- Like this Reply to this comment
-
Showing 2 of 3 pages (155 Comments)Did you also know that for music, the big publishers charge over
70 cents per track? Add in iTunes production, software
development and bandwidth costs and do you really think Apple is
out there to gouge you on price?