Crave

Despite what Apple loyalists may think, iTunes needs NBC Universal more than the network needs iTunes, according to a report issued by Forrester Research.

As NBC shows such as The Office and Heroes began disappearing from iTunes over the weekend, James McQuivey, a Forrester analyst, warned Apple executives that it was in their best interest to "win NBC back."

In the report issued Monday, McQuivey asked what good it is equipping iPods with video monitors if there isn't any video to watch. The way McQuivey sees it, NBC Universal is the clear winner in the feud between the two companies.

"Don't let the Macgeeks posting angry blogs against NBC fool you," McQuivey wrote in a report issued Monday. "The loser here is Apple, which relies on NBC Universal to deliver 30 (percent) of video download sales. Any supposed backlash against NBC will not materialize because NBC has made its content available, for free, on NBC.com and six other major portals sites."

An Apple representative did not respond to interview requests.

Jeff Zucker, NBC Universal's CEO, has said that he hoped the two companies could figure a way to do business. But at this point, a mending of the fences appears unlikely.

"We're always open to dialogue, but right now there are no active discussions (between Apple and NBC Universal)," a spokeswoman from NBC Universal said Tuesday.

The relationship between NBC and Apple started going bad in August, when NBC decided not to renew its contract to sell downloads of TV shows on iTunes.

The reason for the split was money. NBC wanted more control over pricing of downloads but Apple has long held to a policy of selling TV shows for a flat fee of $1.99 and movies for $9.99.

McQuivey has long predicted that downloads of TV shows would be a tough sell when most networks offer the material for free on their own sites. Besides streaming shows on NBC.com, the network also offers them on Hulu.com and for download at Amazon Unbox.

A study by Forrester shows that only 19 percent of iTunes users buy videos from the site. Of that group, the average user spends only $30 on video, accounting for less than $100 million in sales for the first half of 2007.

TV and film writers will officially go on strike starting Monday at 12:01 PST, a spokeswoman for the Writers Guild of America said on Friday.

As the weekend may bring more negotiating between the guild and the group representing film and TV producers, one of the main sticking points is Internet revenue, according to a story published Thursday in The Wall Street Journal.

The writers want a share of ad revenue generated by online broadcasts of TV shows. Producers insist that the Web is more of a promotional tool and hasn't brought in much money.

The dispute comes as TV networks and cable channels are posting more and more shows to the Web soon after they appear on television. For example, NBC Universal and News Corp. last week launched a test version of Hulu.com, a new online video outlet where full-length TV shows from both companies appear.

ABC, CBS, and Viacom have steadily increased the number of offerings online in recent months. Feature films are still too big to distribute easily over the Web, but it's generally believed technology improvements will likely solve those problems. The writers want assurances that when that happens they will share in the profits.

The writers say they're trying to avoid missing out on Internet money in the same way they missed out on the DVD bonanza that has fueled much of the growth in the film industry over the last decade.

The writers agreed to a deal soon after the mass adoption of the VCR that eventually earned them 4 cents per DVD sale. They now are demanding a bump to 8 cents.

According to several publications, the producers and writers remain far apart on this issue.

The shaky relationship between NBC Universal and YouTube has collapsed once again, as an NBC representative confirmed on Monday that the network has decided to stop posting promotional clips on the video-sharing site.

According to the representative, NBC Universal pulled out of the deal on Friday to support the upcoming launch of Hulu.com, the Internet video service founded by NBC and News Corp. that could compete for eyeballs with Google's YouTube. A test version of Hulu, which will stream full-length TV shows, is expected to make its debut within the next two weeks.

The breakup is important because it shows that some of YouTube's best-known former partners are satisfied to distribute their shows online themselves.

"NBC informed us on Friday that they were taking down their branded channel and clips," Ricardo Reyes, a YouTube spokesman, said in an e-mail. "Our relationship with NBC was a YouTube success story, so we hope NBC decides to post more original content and stay engaged with our users."

NBC Universal's first dealing with YouTube occurred in 2005 in what turned out to be a watershed moment for YouTube and Web video. Unauthorized clips from the show Saturday Night Live began appearing on the video-sharing site and helped generate publicity and big traffic.

At first, NBC Universal demanded that YouTube remove the clips, citing copyright laws. Then, the entertainment powerhouse reversed its decision. NBC cut a deal whereby it agreed to post promotional clips of some of its shows on YouTube. As many have pointed out, it was really NBC and those SNL clips that helped YouTube build a name for itself with the mainstream. At the same time, YouTube helped introduce SNL to a new generation of fans.

Back then, nearly everyone said NBC Universal was smart to cut a deal. Analysts were predicting that YouTube could one day be the gateway for all Internet video. The site would be a hub where millions looked for user-generated clips, full-length TV shows and perhaps one day feature films.

But the number of pirated clips on YouTube--users recording a favorite TV show or movie and posting the copy to the site--angered many media executives. To many in Hollywood, Google dragged its feet when it came to preventing piracy. The issue came to a head earlier this year when Viacom filed a $1 billion lawsuit against Google for copyright violations.

At the same time, Viacom and NBC started asking whether they really needed YouTube. The companies ratcheted up efforts to distribute video through their own sites and other Web portals.

Anyone wishing to watch an episode of Heroes can go to iTunes, NBC.com and soon Hulu.com. Fans of the Viacom-owned comedy series The Daily Show can just log on to that show's site.

So did Google blow it by playing hardball with the content creators? Did it push too hard when it should have paid the fees the big media guys wanted? This way it could have made those companies dependent on the traffic generated by YouTube and also hooked people on finding their favorite TV shows on the site. It might have been tougher to leave YouTube then.

But Google probably didn't have much of a choice. Such a scenario would have meant that Google would have emerged as a powerful gatekeeper. Google would have become to video what iTunes has become to music, and the TV and film industries are resolved not to follow the same path as the record labels. It was probably only a matter of time before NBC and others struck out on their own.

What this means for the near future is that YouTube, with far less professionally crafted content on the site, is going to compete for eyeballs with the likes of NBC and Viacom as well as a legion of other video plays cropping up seemingly every day.

In the coming months, as YouTube purges its site of more and more copyright content, we'll learn the real value of true user-generated content.

Pirates getting in the way of business? Let's form Voltron.

(Credit: TV Tokyo)

The announcement has been made--read CNET News.com's full coverage here.

The Wall Street Journal reported on Thursday that an impressive cast of major media and technology companies plans to announce a high-profile list of joint guidelines for preserving copyright and fighting piracy online. Sources told The Journal that the companies involved include media moguls CBS Corp., NBC Universal, News Corp.'s Fox (and its MySpace social network), Viacom, and Disney, as well as tech icon Microsoft and French video-sharing site DailyMotion.

It's unclear whether these are the only parties involved in the deal. Inquiries to several of the companies allegedly involved in the agreement went unanswered.

The most notable party absent from the group is Google, according to The Journal's Kevin Delaney. Apparently, the Mountain View, Calif.-based tech titan had been in talks about joining but did not go through with it. Google is the parent company of YouTube, the wildly popular video-sharing site that had come under fire from media companies for making it easy to share copyrighted content.

Google recently announced an antipiracy technology initiative for YouTube.

Apple is trying to convince Hollywood to reduce prices of downloads of TV shows from $1.99 to 99 cents, according to a story in Variety.

The trade publication reported Friday that TV networks have shown little enthusiasm to price cutting, although Apple is telling them that lowering the cost will boost sales, according to the story.

Last week, NBC Universal announced that it would not renew a long-term contract with Apple to sell TV shows via iTunes. Many in the entertainment sector have wanted more control in pricing their products at iTunes, but Apple CEO Steve Jobs has held fast to his model: most songs cost 99 cents and TV shows $1.99.

Apple accused NBC Universal of pulling out of its deal only after the network asked for a price increase that would have forced Apple to charge customers $4.99 for a TV show. NBC has denied this and said that it only wants more flexibility in iTunes' pricing.

When it comes to mobile video, Apple is the leader. The company has sold 950,000 and iTunes offers more than 500 different shows. But the company is increasingly finding itself competing against its suppliers.

Not only has NBC Universal partnered with News Corp to launch it's own video site, Hulu.com, but TV networks are starting to rely on their own Web sites to distribute content online. And many offer shows for free.

To watch Viacom's The Colbert Report on the Internet, all one need do is go to comedycentral.com . Clips of the shows are available free of charge as long as one is willing to sit through a commercial.

NBC Universal didn't waste any time replacing Apple.

Episodes of The Office and Heroes will begin appearing at Amazon's Unbox starting next Monday, according to a statement released by the companies.

Amazon customers can download the pilot shows for new series, such as Bionic Woman, and Chuck, free of charge and in advance of their network premiers. Other shows will be available on Amazon Unbox the day after they air. Amazon and NBC Universal are offering a range of packages, including a 30 percent off deal when purchasing a complete season in advance.

NBC Universal and Apple engaged in a public relations battle last week. The spat started when NBC announced it would not renew a long-term contract to offer TV shows for download on iTunes because Apple wasn't offering favorable enough terms.

In response, Apple said it wouldn't sell NBC's shows for the upcoming season.

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.