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How do you really feel?
August 31, 2007 -
Apple slaps back at NBC in iTunes spat
August 31, 2007 -
NBC says bye to iTunes, hello to piracy and lost revenue
August 31, 2007
news analysis An Internet game of chicken is being played by entertainment heavyweights Apple and NBC Universal, and the first round likely goes to Apple.
NBC Universal landed the first blow on Thursday night when someone leaked to The New York Times that the media conglomerate was refusing to renew its contract to offer downloads of TV shows via iTunes.
NBC never said that it would pull out of iTunes, but only that it was dissatisfied with the financial terms Apple offered. Then Apple raised the stakes by announcing it would not offer NBC's shows for the upcoming TV season and alleged that NBC Universal was asking for a price hike that would have required Apple to raise retail prices from $1.99 to $4.99.
When it comes to public relations battles, Apple is a devastating counter-puncher. The revelation about NBC Universal's demands is almost certain to rally consumers around Apple. To them, it appears that Jeff Zucker, NBC Universal's CEO, wants to stick his hands deeper into their pockets and Steve Jobs is protecting them.
But the long-term significance of the split between the two companies has more to do with control. This could be the start of a much wider struggle between Apple and the entertainment sector over who dictates prices at iTunes. The people who create music, movies and TV shows appear determined to push Apple off its pricing strategy.
Just ask Chris Castle, an intellectual property lawyer who once represented the original Napster but now owns his own music label.
"I think there is a general perception in the industry that we need to get tough with Apple and break the lock they have on the consumer market," Castle said. "I think what's happening is that there is a general gestalt of 'Apple is a pain in the (butt) so let's help some other companies out. Let's do something to build up a retailer other than Apple.'"
Earlier this year, Universal Music announced that it would not renew a long-term contract to sell music via iTunes. Instead, the company opted for a series of short-term contracts. Universal is believed to have lobbied Apple for varying pricing levels.
Many in the music industry, including music publishers and performers, want Apple to be more flexible with pricing instead of locking the industry into a 99-cent rate for each song.
In video, NBC Universal, owned by General Electric, appears to be among the first to challenge Apple over pricing, even while downloads of TV shows and movies make up only a sliver of Apple's revenue.
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?
"As long as Apple wants to sell TV shows and films, it's in their interest to offer as many content providers as they can," said Susan Kevorkian, an analyst with IDC.
To do that, Apple has to appease studios and record labels without alienating customers.
Allen Weiner, an analyst with Gartner wrote on his blog: "Apple must face the fact that charging flat rates for television programs of varying lengths and vintage will not resonate with an industry for which advertising is its lifeblood."
But the risks involved with bucking Apple are great. Apple has sold more than 100 million iPods. The iPod makes up more than 70 percent of the overall mobile player market. How long can NBC Universal go without access to iPod owners?
Even with the company's other distributors, such as AOL and its soon-to-launch Hulu site, which NBC Universal built in partnership with News Corp., Apple still represents one of Internet's largest video distributors.
NBC has to know that the concept of watching TV and movies downloaded from the Web still faces an uncertain future. Download times are often long, the quality is often inferior to television, and nobody has really answered the question of whether people need to watch longer-format shows on their computers when the TV experience isn't broken.
Other than YouTube, the video-sharing site that serves up snippets and 10-minute long clips, no other online video service has proven it can attract a big audience.
And trying to force Apple to offer tiered pricing could mean alienating the world's most influential consumer goods companies. What other new products and services could NBC Universal miss out on by angering Apple now?
Apple agreed to a long-term deal with EMI, and the two companies worked together on releasing music in an unprotected format.
Most likely, Apple will continue its tough stand with NBC Universal. It has to. If the computer maker gives much ground, other content companies may also play the brinkmanship game.
"The bad news for Apple is that after something like this, people start to question your dominance," Castle said. "Something like this happens and suddenly you got some tarnish on your armor."
See more CNET content tagged:
Apple Computer, Universal Music Group, contract, pricing, Apple iTunes
two or three years, I've never had a glitch. The pricing is
reasonable.
So, again, what problems?
music and TV shows?" Excuse me? Best TV shows? Aside from
Heroes, what does NBC have worth watching? If NBC were the
number one non cable network with multiple top 10 shows, I
could see why NBC may play the power trip game. Hasn't NBC
finished last in the ratings for last few years? So let me get this
straight... NBC, in an effort to make up for cash lost due to poor
programming, wants to stick it to the few people who are
actually watching their retarded programming? Rather than
finding new revenue streams, perhaps Zucker and Co. could
spend some time finding and hiring people who know how
program quality shows vs things like "Who wants to screw my
sister".
NBC/Universal. The stupid retard name Bonnie Hammer cancel
a good show like ?The Dresden Files?, but thinks ?wrestling? is
SCI-FI.
Please visit ?New Leadership for the SCIFI Channel at:
http://www.petitiononline.com/newscifi/petition.html
We need try to remove one stupid retard.
John
facts. It is a basic violation of Journalism 101. You always have to
be on guard.
wanted and they cannot stand that one company is bucking their
monopoly. And they wonder why people pirate their music and
video?
NBC has one factor down: I, as the owner and producer of my art should be able to set the price, get what the market will bear, and not listen to what someone has to say.
If I want to work all year long on a project, and then distribute if for free, then it is up to me. (Do not start salivating yet, RMS ... not gonna happen.)
If, on the other hand, I want to determine the distribution channel, and charge a fair price, then I should be able to. Just because someone else believes "the software wants to be free" or some other euphemism for "I wanna steal your hard work" does not make it so.
syndicated shows at less than $1.99? OIC, they didn't. They just
want more money. Lots and lots more money.
I applaud Apple and Steve Jobs for standing up to these greedy
bastards. I LIKE that I can expect to pay a flat rate for my
entertainment. If NBC/Universal had their way, everything would
be tiered and overtly complex. None of it justified.
I think I'll be taking a look at this "torrent" thing I keep hearing
about. Since the greedy record companies and networks are
scheming for ways to get more than I'm willing to pay, finding
out how to get the same thing for free should be worth the
learning curve.
for your money, life is hard. The RIAA is out to get you, Sony is
out to get you, Miscrosloth is out to get you. The cable/satellite
companies are out to get you. What's a poor consumer to do?
Then along comes Apple. They have a good idea and customers
are happy. Customers pay, they get value, Apple gets money. It
would seem like that was a good thing. If these companies aren't
treating you like a criminal and accusing you of piracy (ala,
Microsloth) then they want to push you into crime (RIAA/NBC).
Foe Pete's sake. iTunes has SOLD 3 BILLION songs. Those aren't
pirates, those are customers. And that is $2,970,000 plus tax
that someone got to split up. Greed knows no bounds.
they could split up! Can you imagine? And my understanding is
that Apple's take is actually fairly small!
Proud as a peacock my hind end! Now I am going to avoid their
programming.
The majority of this copyrighted material has been released by an insider. This is true because The Bourne Ultimatum movie that recently released in theaters has the watermark, ooopsy! "Universal Studios".
Oh by the way, did I mention the time stamp, at the bottom of the screen.
that type of fee for the crappy programming you're producing
these days. If it weren't for iTunes, "The Office" would be dead.
You should be licking Apple's toes.
As for "Bionic Woman" - I was looking forward to watching that
show at the gym. No longer, I guess. They're just going to drive
everyone to the bit torrent sites. Media companies seem to think
that people only buy iPods because of the music store. Harsh
reality check for them - Apple sold butt-loads of iPods before
the music store sold a single video, and they will continue to do
so. The pirates will just become mainstream again.
The real demon here is Apple. The ONLY reason a show would cost $4.99 is because Apple is wanting to mark up what NBC is asking for by 200%.
Then NBC say, we want $4.99.
Then in theory apple comeback and say, well $2.50, etc,etc.
Its quite common in business, clearly you have no idea what you are talking about.
Apple (how unusual) want to control the price, in Australia this is called Price-fixing, and gets you in trouble with the ACCC (Australian Competition and Consumer Commission).
NBC believes - their shows are worth more than some others. Sounds reasonable to me.
If NBC wants to charge more for their shows, than HBO, or A.N Other, then why cant they? The market will dictate if this new pricing strategy is successful; not a few forum nobodies.
If NBC dont want to sell on iTunes at all, they are also within their rights
Apple are worried that by charging more on iTunes for NBC content that they could be affected in 2 ways:
1. They wont sell as much, due to the higher price, especially if offered elsewhere for cheaper, or people just wont buy as much full stop.
2. they are also worried other providers might try the same thing. Fair enough. Apple are also within their rights.
BUT, its for Apple and NBC to decide. If Apple want the business, they meet the asking price, if they dont, they should stop whinging. If NBC arent happy with the price, take it to someone who will pay it.
I am sure there are plenty of online stores who would love some quality exclusive content which apple do not have.
And Moofer, if the programming on offer from NBC is soooo crappy, then why are you even replying to this story? If you dont want it, the price hike, or the decrease in availability, shouldnt affect you.
But of course, your an apple fanboy who loves his Ipod and are really shattered by the decision. This is because you cannot buy your content from any other store and play it on your device.
This must be the apple advantage.
P.S. I did not build the computer specifically for a DVR, it's just a perk I put in when buy all the parts. And you can get a TV tuner for other OSs if you don't like Microsoft.
don't need pay-for TV. And I have all the music I need in my used
CD library that I rip to the iPod.
Let's break the greedy recording executives. Don't buy their
garbage at their high prices...if at all!
I am not an SJ fan, but YOU GO, Steve!
a: He shot himself in the foot.
In the last 15 years these broadcasters have been consolidating ownership and profits under considerable government fostering of near monopoly market structure while receiving special pricing consideration for digital broadcast spectrum licenses. These same cash rich corps could have pioneered or backed iTunes precursors but their executives and boards were too busy discrediting the idea as having no potential. Now that iTunes is starting to rival Walmart as a distribution channel they want to crash the party. Why? Because they want to be paid more for doing the same or less all without risking a penny or increasing distribution costs. Six companies control the recording industry, and about them same number of companies control television; what we need is not more iTunes competitors, but more competition in the broadcast industry. You want to keep prices low, then expand the number of content providers. More networks, more diverse and plentiful content, and the more competition for the available number of dollars. There is a reason why cable programs, and smaller networks have some of the best content. They actually still believe in differentiation and competition.
designed, best sounding mp3 player in the world. To be sure the
combination of iTunes and iPod is seamless, elegant and a large
part of the enjoyment factor, but it is by no means the only reason
for the iPod's success.
themselves talk.
The iPod was a successful player before iTMS ever existed. Now,
it's even more so because of the elegant simplicity that's been
designed into the iPod/iTMS content buying experience. That's
why it's so popular, not because of some perceived lock-in
imposed by Apple on the buying public. If anybody imposed
anything on anyone, it was the industry that demanded content
be "protected" by DRM. They created this monster and now they
don't know how to kill it. Steve Jobs gave them the antidote
back in February when he implored them to drop the DRM.
I'm sure Apple will sell millions of new iPods and iPhones to new
customers throughout the fall and holiday season. Too bad that
NBC be part of the content buying frenzy that ensues.
Apple created this market for NBC, etal and successfully
convinced consumers that it was reasonable to pay $1.99 for
content that could be obtained legally for absolutely free.
The iPod is successful because it's well designed both from a visual perspective and a simple user interface.
I personally think $1.99 price is fine for episodic TV, maybe 2.99 or 3.99 for made for TV movies. I'd give the broadcasters props if they'd offer "Uncensored" versions of shows for $2.99 or $3.99 so adults don't have to watch the "Kiddy" version of a sitcom or drama series.
buck an episode for something they can already watch on cable
and it doesn't make much sense to spend the same amount
downloading the first season of a show you recently discovered
at the same price you can buy the CD.
Increasing the price will only mean more people will download
the shows from pier to pier sites for free.
I already pay a lot of money for Satellite tv with PVR so I can
watch what I want when I want it (and skip the commercials),
and I still go to the theaters to watch any movie that I can't wait
for. What would make me download a tv show from iTunes? If
it cost less money for equal quality.
Just think, by the time the Satellite company passes on to the
networks the fees for what I pay, they are getting only a
miniscule amount of money. even if I were to pay less for the
shows online, the networks would be getting more of my
money.
As for advertising money, i have PVR (TIVO) and so I skip the
commercials anyhow.
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...
numbers and had what was it 24% growth last quarter? That same
Steve Jobs and that same mac?
hips and wait for it?
Man, I'm glad most people choose not to live in your Bizarro World.
Over 4 years:
100 million ipods sold
3 billion songs sold.
That works out at 30 songs per ipod over 4 years or about 8 songs per year, per ipod.
When you consider the market share they were granted by the record labels (up until recently, Apple were one of the only companies to have such a rich catalogue of musicto sell online) it's not surprising that record labels are turning to Amazon, Nokia, even wal-mart, insisting on DRM FREE music to envigorate a market that Apple have failed spectacularly to capitalise on.
Posted on: August 31, 2007, 11:25 PM PDT
Story: NBC, Apple play game of brinkmanship
The apple doesn't fall far from the tree. Steve Jobs will do to the
ipod and itunes just what he did to the mac. Time to start
shopping for oranges"
Hello Windows troll. I understand that George W. Bush needs a
few good people to keep him from imploding before the end of
his term. Thinking of signing up?
"Apple has a lock" on music, video... whatever, I'm going to
scream.
APPLE DOES NOT HAVE A LOCK ON ANYTHING, GOT IT?
Apple is in the enviable position of market leader, because we,
the CONSUMERS, CHOOSE to shop iTMS.
Quit trying to color articles with these "weasel words" in some
lame attempt to spin a story.
There aren't any Apple Ninjas in my house.
No one from Apple is pointing a gun at my head.
I LIKE shopping Apple, and I CHOOSE to shop Apple.
It's time these slimebags get called out, each and every time
they talk $@!%.
of operation they are familiar with.
Hey Nokia, how about putting a standard headphone jack on your
media capable phones (w/o charging $20 for an adapter)?
Apple - long ago they said "Don't worry about them - they only have a small targeted market niche - they will never be ??? LOL.......
Apple - the power to be their best - and their Ad Man - Bonus round for whatever price - they do it well!
- correction to the article
- by mickiavellian September 1, 2007 5:06 AM PDT
- The article states that "The iPod makes up more than 70 percent of the overall mobile player market."
- Like this Reply to this comment
-
-
- Bah
- by Groucho6 September 1, 2007 6:26 AM PDT
- NOKIA? Are you serious? You're comparing iPods to crappy cell
- Like this View reply
Processing -
- Nokia
- by whclevelandjr September 1, 2007 7:36 AM PDT
- Wait... you're spewing figures on Nokia as a MP3 player? I got a
- Like this
-
Showing 1 of 3 pages (155 Comments)That's not true.
Between April and June of this year, Nokia, alone, sold 100 million music/media player/phones. That's more than 1 million music player/phones a day.
I just thought I would point that out.
The idea that Apple is baulking at charging their customers a high price for something is actually very funny. Apple don't seem to have a problem charging $4.00 for TV shows in the UK. (£1.89 sterling is about USD$4).
What's fascinating about the NBC/APPLE fracas is that you would have thought Apple would have learned (the hard way) the importance of content when Universal (music) pulled out of their deal with iTunes earlier this year.
It seems Apple still think the Earth revolves around Apple.
phones? Give it a rest, you NBC apologist.
For the record, the networks make their money long before the
point where they sell shows to Apple to resell to iPod owners.
They have made it on first run and second run and syndication
and DVD and ancillary rights. It's all gravy to them, but there's
another five letter word that begins with G, and of course that is
GREED. This little turf war is all about more and more greed.
I stopped watching network television when it began feeling like
there were more commercials than content (greed greed greed).
I *might* pay Apple's prices for conveniently downloadable
shows that pique my interest. I certainly won't pay NBC's idea of
what those prices should be.
As David Letterman once said, you know what NBC stands for --
Nothing But Cash.
brand new Nokia (complete with stereo output and FM receiver)
and I only picked it to replace my broken Razr because it was
free and it supported bluetooth.
I rather use my 3 year old Creative Zen Micro than this brand
new phone to listen to music.
Why?
1. Stupid Nokia audio plug.. Come on Nokia your stupid
headphones are made worse that god awful square
multipurpose jack. Also, why force me to by and adapter to use
a standard headphone?
2. Crappy menu system... It makes the Creative menu system
look great. Why should I have to delve through Menu->Fun &
Apps->Media->Music Player to turn on or off the player.
3. Battery life sucks for a phone why would I make it worse by
using it as a music player.
4. Why can't I listen to music through my regular old bluetooth
headset? Why am I required to use the awful wired stereo
headset or buy an expensive stereo bluetooth headset?
So my point? == I have a brand new Nokia media phone and I
never use it for Music. I use it for a Phone... However, I am sure
all the people who purchased an iPod doesn't use it as a phone
but as a music player. If they wanted to use an iPod as a phone
they would buy an iPhone.
So your number is a totally inappropriate measure of Nokia's
penetration into the music player market.