NBCU to pull out of iTunes
Cory Bergman August 31st, 2007
The single biggest supplier of video to iTunes, NBC Universal has decided not to renew its contract with Apple, reports the NY Times. The decision likely stems from frustration over Apple’s refusal to allow flexible pricing or product bundling.
There are two ways to look at this, of course. The first is there are other players on the market now, like Amazon Unbox, that would be much more willing to flex with NBCU’s demands. There’s also NBCU-News Corp’s upcoming Hulu.com video site, which may incorporate paid downloads. So NBCU has options, and besides, paid video downloading is still in its early years. (And as Safran mentions in comments, you should be able to set pricing for your own products.) The other side of the coin is iTunes dominates the paid video download business right now. NBCU was one of iTunes’ earlier adopters, and the network even trumpeted the fact that the popularity of The Office on iTunes helped boost the show’s ratings. If that’s true, a move like this while NBC is trying to rebuild the network’s programming may not resonate well with the marketing folks.
Regardless, as the NY Times points out, NBCU’s decision to bail may motivate other media companies to drive a harder bargain — or leave iTunes altogether. Reactions?
11 Comments Add your own
1. Jason | August 31st, 2007 at 6:04 am
I can’t imagine consumers are going to side with media companies on this one. Has anyone you know been clamoring for the opportunity to buy bundles of NBCU product?
“I love iTunes, if only I could buy ‘The Office’ and ‘The 40 Year Old Virgin’ in one shot!”
If an NBC show I want to watch is available free somewhere, I’ll seek it out, but nothing beats the ease of using iTunes to buy/download.
2. Safran | August 31st, 2007 at 6:25 am
I’m going to take NBC’s decision out of the equation for a moment here and express some sympathy overall for the vendors and customers.
Imagine not being able to change the price of your product. You see that there is low demand for a given pricepoint, but the retailer insists you charge too much, so it continues not to sell.
Imagine something is selling very well and you could make money if you charged more. The vendor tells you that you can’t do that.
On the customer front - when I go into a CD store, there are bargain bins full of older titles for $5.99, $6.99 or so. The label knows it can’t get full price for those titles. But Apple won’t let them cut their prices online?
I realize all the benefits of the iTunes store - and we’ve been huge champions here for it and for networks joining it. But it is in everyone’s best interest for Apple to allow more flexibility in its pricing.
3. tdc | August 31st, 2007 at 6:44 am
hulu loco.
4. Joe | August 31st, 2007 at 9:13 am
As much as I love the ease of downloading episodes of Adam-12, I have to say I don’t really care if NBC leaves iTunes. I’ve got more choices now than NBC will ever have. I no longer having to be held hostage to NBC’s scheduling whims or pricing schemes. As for Apple setting the agenda on pricing and what-not, I think NBC could do with a taste of its own medicine after all these years. As usual with media companies, this is ultimately all about issues of control. There’s no consideration for the viewer or their needs.
5. scott W | August 31st, 2007 at 12:20 pm
I think the pricing is the issue.
iTunes can’t win if partners start to bail. Many music companies have very short deals as well.
6. Anon | August 31st, 2007 at 12:24 pm
Does anyone know more about the privacy concerns? Otherwise I agree about not being able to price your product as you see fit. I think this is a bad sign for iTunes, as I wouldn’t be surprised to see some other media companies pull their material as well.
7. Greg | August 31st, 2007 at 12:54 pm
Apple is claiming that NBCU wanted $4.99 per episode of NBC shows . . . . NBC just shot themselves in the foot.
8. Jason | August 31st, 2007 at 1:34 pm
I agree with you Steve, but I don’t think the vendors are looking to cut prices to move product. At least that’s not their primary motivation. They want to raise prices.
I do agree that Apple could let people raise prices, and then we as consumers could decide whether or not we want to buy the product. Instead of saying: Everything costs x and if you don’t like it, go elsewhere.
Wal-Mart demands suppliers to come in with low cost items. Apple seems to be doing much the same thing here.
I appear to be taking both sides of this issue, and so I’ll stop talking now.
9. Dave | August 31st, 2007 at 3:17 pm
Anyone ever figure out how much an episode of say ‘The Office’ costs (including, talent, production, and network costs) versus how much that episode makes on iTunes?
Is it possible to be in the black?
10. Jason | August 31st, 2007 at 4:41 pm
The Office will make its money in DVD sales and syndication. iTunes is gravy.
11. Rick | August 31st, 2007 at 8:39 pm
Apple (and most of the content partners) are notoriously secretive about individial sales.
But my understanding is that the top end for individual episodes has been around 900,000 or so, but most episodes have been in the range of 100,000 or below.
It’s not a bad revenue stream, particularly given the fact that on shows produced by NBC/Universall, they’re probably walking away with $1.60 or so per sale.
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