Apple cancels NBC shows on iTunes with near-immediate effect

Apple has announced that it is to stop selling NBC's TV shows on the iTunes Store, effective from the start of the new TV season this September (read: tomorrow). The New York Times was on the money when it said the reason for the cancellation revolved around NBC charging more for its shows: it turns out NBC wanted twice as much, with Apple saying it "would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99." The press release from Apple almost sounds bitter, with the company stating that it decided to end the contract early, since NBC was happy enough with withdrawing "their shows in the middle of the television season." Boo hiss NBC and Apple, don't you see that the only people that get hurt in all this are the consumers?

[DanDurand @ Aug 31st 2007 2:10PM]

Leave it to a major corporation to screw over fans of its content.

Guess I'll have to go back to the torrents.

[LikesGadgetsWillTravel @ Aug 31st 2007 2:50PM]

I'm sure you're referring to Apple here? As long as Steve is trying to dictate how much he's willing to pay to the content-providers, it's up to them to say, "No, Thanks."

[Calviin @ Aug 31st 2007 3:57PM]

LikesGadgetsWillTravel: Steve Jobs tries to keep prices down which means I pay less. I don't care how you want to spin it for the content providers, Steve's way will get my vote because it positively affects MY bottom line. Forget NBC. I don't care about NBC's bottom line.

[Calviin @ Aug 31st 2007 4:14PM]

Let's look at it this way. NBC currently charges $1.99 per episode for a show on iTunes. Heroes, an NBC show, has 23 episodes. $1.99 * 23 episodes = $47.77
I just bought the first season from Target last night, which includes an un-aired pilot episode bringing the episode total to 24 in the box set, for $37.99. Even leaving out the pilot, $37.99 / 23 episodes = $1.65 per episode.

So CURRENTLY, I can get the full season of Heroes on DVD with an extra pilot episode and additional bonus features, without DRM that as severly limits where I can play it. All that for $9.78 LESS then getting them on iTunes. The only benefit iTunes was giving me was that I don't have to wait. So ok, cool. I pay an extra $0.34 to not wait. I can buy into that.

NOW, they want to jack the price up to $4.99, so I am paying $3.34 for the convenience of not waiting. And with the DRM issue they have, I will probably have to buy it again later on DVD since they are probably trying to limit where I can play the iTunes videos.

Yeah. I'm gonna suggest that there is no way I am going to side with NBC on this.

[Andrew Jones @ Aug 31st 2007 4:29PM]

ATSC tuners FTW!

[E71 @ Aug 31st 2007 5:02PM]

Or how about $0.00 per episode via Bittorrent. :p

[LikesGadgetsWillTravel @ Aug 31st 2007 5:30PM]

@ Calviin -- you're wrong again, sorry. Steve Jobs doesn't have any interest in keeping the prices down for you, because he's getting paid on a percentage of what you pay. He's only interested in making maximum $. He figures if NBC raises the prices, they'll sell less, making him less money. There's no altruism here.

But in the end, it's all about choices. You *could* watch the shows for FREE and even record them. I do that all the time, even in HD. Or you could wait 'till the end of the season and get them on DVD for less than $2/episode. Or rent at BB or netflix at ~$1.50/DVD -- less if you use netflix's watch-now feature.

But no, you want it "now", at your convenience and without commercials... so pay the price. Whether at $2 or at $5/episode, you'd be better off finding a friend with a DVR or VCR. And if you're that hooked to a show that you simply must purchase and watch the one episode you missed, and are willing to pay $2 for it... what's the extra $3 mean to you... could even be less, as NBC no longer has to pay the iTunes tax.

[will Arnold @ Aug 31st 2007 6:15PM]

@ LikesGadgetsWillTravel

Umm Steve Jobs only gets paid one Dollar a year soooo.... Ya he is not getting a percent.

[Jeremy H @ Aug 31st 2007 6:31PM]

Woah woah woah.. let's not kid ourselves.

While I agree that NBC is being greedy, you can't be naive enough to believe that Steve Jobs is CEO of Apple as a 'hobby' and doesn't get a cut of every Apple venture. In fact, he was the highest paid CEO in the world last year according to Forbes magazine.

Link:

http://www.forbes.com/leadership/2007/05/03/ceo-executive-compensation-lead-07ceo-cx_sd_0503ceocompensationintro.html

Just because his official 'salary' is a dollar doesn't mean he doesn't rake it in through other venues.

[JD @ Sep 2nd 2007 12:26AM]

It is entirely in Jobs' interest to keep prices down, Likesgadgetswilltravel. They can say "NBS Shows only $2 on iTunes (and only iTunes)." Would you pay $5 an episode? Absolutely not. That alone may be reason enough to keep you out of the itunes store that one time, which is one less time you may buy something, anything, in the store. Plus, they'd lose their "Every TV show $1.99" thing en masse, since there are lots of (great) NBC shows on iTunes. Oh well. It's true, though: we, the consumers, get screwed in the end.

[nick @ Sep 2nd 2007 12:42PM]

NBC wants more money, pure and simple.

Right now, Apple is charging $1.99 per show. By NBC selling direct, they cut out the middle man and having to share revenue with Apple. Keep in mind, NBC is already having to share revenue with the creator of the content.

Basically this is a move for NBC to realize more profits.

On one hand, if I were NBC, I'd be questioning why I'm helping Apple, when in the digital age, I can bypass them, assuming you have a web presence to do so.

The loser her is anyone who relies on iTunes for a CENTRAL source of content.

I'm thinking we'll see new websites that consolidate content from across different sources, so you have a central point of access.

[Alric @ Aug 31st 2007 2:12PM]

They'll come back. Just wait until they realize no other place is viable for TV show purchases. Too bad. I was waiting eagerly for Galactica in HD to be offered in iTunes.

[Boredone @ Aug 31st 2007 3:44PM]

Alric writes "They'll come back. Just wait until they realize no other place is viable for TV show purchases. Too bad. I was waiting eagerly for Galactica in HD to be offered in iTunes."

You do realize if NBC, Fox, CBS, NBC, and every other broadcaster were smart they would just sell the shows from their site or else sell advertising for comercial loaded shows that could be downloaded from their site.

Who needs a middle man like Apple to tell you what to charge and air dirty laundry about negotiations if they break down?

[alexhrose71 @ Aug 31st 2007 3:52PM]

See there is this little service out there called xbox live video marketplace with over 300 movies on it and movies and TV series in HD and SD resolutions, its by some unknown company called Microsoft, and only has around 7 million subscribers.

Waiting for Hi-Def from iTunes ?? What for playback on the iPod ?? or via AppleTV ??? Neither of which can really do hi-def.

tsk tsk

[Tristan @ Aug 31st 2007 3:56PM]

The whole advantage with iTunes is letting the average consumer easily download music, movies, and shows to the most popular mp3/video player in the world without having to convert or even go to the trouble to add it to the library. you'd be suprised how many people are still computer-illiterate these days.

[seewright @ Aug 31st 2007 4:57PM]

To whoever said that NBC will come back when they realize there are no other outlets for their content: Microsoft has recently become the leading distributor of online entertainment content thanks to Xbox Live. Granted, game content makes up a decent chunk of that, but movies, TV shows, and music are all over it as well. Maybe it's not the best medium, but it's definitely a potential channel for NBC.

[Michael Moran @ Aug 31st 2007 2:13PM]

People will still download the shows, only NBC won't get any money. Geez, talk about shooting yourself in the foot.

[Cash @ Aug 31st 2007 6:28PM]

Exactly.

Now instead of making 2 bucks per episode, Apple and NBC are going to get jack squat while software that converts Divx to H.264 is going to fly off the shelves. I know a lot of business travelers that were really excited about the impending release of a widescreen iPod and would rather pay for ready-to-play video files then go through the hassle of downloading from torrent and converting them, but if it's that or nothing at all, the paradigm shifts and suddenly the extra effort becomes justified.

Anytime a company (or companies, in this case) make bad decisions that cost them money and customer satisfaction/loyalty, I just slap my forehead and shake my head.

[Alex @ Sep 1st 2007 3:20PM]

Now if Apple really wanted to get back at NBC, they could add DivX and XviD support to the iPod, and maybe a few additional codecs.

[gayu @ Aug 31st 2007 2:14PM]

Universal also wanted to increase the price for music and according to www.techztalk.com that was the main reason they did sign the contract for music also come on universal

[Kedar @ Aug 31st 2007 2:15PM]

Before I comment, how the hell does this hurt the consumers? Apple is protecting consumers from being having to pay $5 for 20 min--$120 for 24 episodes compared to $30 for the DVDs. NBC is hurting the consumers.

Anyways, talk about owned.

Apple just handily bested NBC Universal. Not only does NBC look like complete assholes for wanting three times wholesale, but now NBC's fall season has taken a huge setback. Shows like The Office and Heroes were popularized by (at least in part) by iTunes. Given that NBC is launching significantly more shows than usual this upcoming season, Apple just hit NBC right where it hurts. NBC was hoping they could take advantage of their shows being available on iTunes through December to build audiences for their new programming, but now NBC is left out to dry. NBC's fall programming builds on the success of shows like The Office and Heroes targeting a similar audience. Without iTunes, NBC stands to suffer greatly this fall.

Well played, Apple. Well played.

[Matt Mallory @ Aug 31st 2007 2:44PM]

How is Apple protecting anybody? Who is Apple to protect me anyway? What if I would gladly pay $5 for an episode of The Office? Can you imagine if Target or Wal-mart started dictating prices just because they don't agree with it? What a joke... Apple needs to take a course on supply and demand pricing. Let NBC's TV show sales drop, what does Apple care? Oh no their bloatware iTunes brand will be associated with inflated prices... oh, wait.. how about their $0.30 extra for DRM free, acceptable quality music.

[John Laur @ Aug 31st 2007 2:59PM]

Walmart does dictate pricing when they don't agree with it and stipulate many other things besides the price. Have you ever tried to get Walmart to carry a product? They make insane demands of vendors. Are you insane? Maybe you haven't noticed the specially censored music section they have with scrubbed albums available only at Walmart...

I'm sure Apple is well versed in supply-and-demand in as much as they are a company worth billions of dollars. They have said publicly that they do not want to set a precedent of allowing providers to dictate pricing on their own music store. I don't buy anything from iTunes but at least it is nice to see a company doing what they said they would do for a change rather than gradually letting their music and video store morph into a disaster of $30 albums and $200 TV seasons.

[Neon Jebus @ Aug 31st 2007 3:03PM]

@Matt

What's funny is that you were able to say Wal-Mart doesn't dictate prices they don't agree with. How do you think they offer those low, low prices everyday? They go to the manufacturer and TELL them what they are going to make and how much they are going to sell it to them for. The manufacturer doesn't have a choice because they need Wal-Mart's business.

But really you were just looking to hate on Apple for a minute am I right?

[BWhaler @ Aug 31st 2007 7:47PM]

Matt Mallory,

You clearly don't understand retail, given the painful use of your example of Walmart and Target.

These companies have built their empires doing EXACTLY what Apple is doing: putting pressure on manufacturers to lower their prices.

Try selling to Walmart. (I have) They know your raw goods costs. They know your manufacturing and distribution costs. They allow x% for profit and marketing. They they tell you what the price is going to be.

There is no room to negotiate. If you claim your costs are higher they will either walk to your competitors or help you lower your costs. Don't want Walmart to tell you how much you can make--then go sell somewhere else.

Apple is going what Home Depot, Barnes & Nobles, etc., etc., all do. They are fighting for the lowest prices. No, not because they are good guys and are your drinking buddies, but because this is good business.

And we win in this model. We win.

[johnzilla @ Sep 1st 2007 8:29AM]

@Matt Mallory: someday I hope you get smacked over the head with a huge clue-by-four. You couldn't have described the situation any more incorrectly if you had worked on it for weeks.

First: Apple is the KING (or at least one of the kings) of brand engineering. Two of the major qualities of the iTunes and iPod brands are consistent, reasonable pricing, and convenience. That means all content providers should agree to the same pricing structure. Brand Marketing 101.

Second: Wal-Mart is the undisputed KING of predatory supplier practices. Spend 30 seconds with Google and this will be obvious.

Third: Apple needs to "take a course" on supply and demand pricing? LOL You must have missed the past few years where they've absolutely CRUSHED the DAP market. Spend another 30 seconds with Google and check out a) how many iPods they sell each quarter over and over, and b) how much revenue they book from iTunes.

Seriously, dude, whether you hate Apple or not, GET A CLUE. LOL

[Galley @ Sep 1st 2007 5:38AM]

@ Neon Jebus

Check out this story about Wal-Mart forcing Vlasic to sell a gallon jar of pickles for less than $3.00.
http://www.fastcompany.com/magazine/77/walmart.html

[Dave T. @ Aug 31st 2007 2:16PM]

Dumb question, but can someone like NBC offer downloads on its site, for money, formatted properly for the iPod on its own? Does it have to go through the Apple store? Why should Apple control all content?

Even if it doesn't do that, NBC and the other networks have reinvested big time on their online sites to play their shows. ABC's is really nice. They're just not portable.

[aj_robins @ Aug 31st 2007 2:30PM]

Dave: NBC can (and does, IIRC) offer shows on their website.

The problem is that their website probably has nowhere near the number of subscribers, compared to iTunes. NBC appears to be cutting themselves off from a large number of potential customers.

Also, I'm pretty sure that you can't put downloaded-directly-from-NBC shows on your video iPod, which further reduces the number of potential customers.

There's an open letter at iLounge which pretty much sums it up: http://www.ilounge.com/index.php/articles/comments/an-open-letter-to-nbc-re-leaving-apples-itunes-store/

[yoshi @ Aug 31st 2007 2:35PM]

Apple is not "controlling the content" in any way whatsoever - except price. NBC cannot very well offer their shows on iTunes for $1.99 and everywhere else for more than that.

Of course NBC can offer the content on their own. Whether Apple distributes it or not. Same thing as distributing music through Tower Records, Wallmart, Target, K-Mart, Virgin Records.... The reason you choose multiple distributors is to get your product into the hands of as many consumers as possible. The ONLY reason that makes sense for them not to want to distribute through iTunes IN ADDITION TO every other outlet is that they wanted to raise the price.

[Dave T. @ Aug 31st 2007 2:41PM]

Apple is controlling it to the extent of a cable company controlling content. NBC wanted to double prices that's not $1.99 to $4.99 to me. So the extra dollar is coming from Apple charges? I'm not saying I'm asking. Maybe apples cut of the pie is too high and NBC doesn't want to pay it. I run a site called firejeffzucker so I'm not sticking up for NBC. But it might not be so stupid as you all say it is to force the already hooked consumer to an nbc site to get their downloads. Are web surfers THAT lazy? If someone said to me. "If you buy the new episode of The Office on NBC.com it'll be a $1 cheaper than on iTunes you bet your bippy I'm on NBC.com.

[Carlos @ Aug 31st 2007 3:09PM]

Problem is that NBC wants all of their media to have DRM -

In order for a DRM file to play on an iPod it needs to have Apples FairPlay DRM. FairPlay DRM is good but is currently only offered on videos and music purchased through the iTunes store.

So NBC could not offer DRM video files from NBC.com and have them be compatible with iPods.

What NBC could do is offer the files without DRM and add in some commercials but that would be to easy and they would loose control of their precious content they plan to re-sell to customers every time a new format comes out (DVD, HD-DVD etc)

[Simon @ Aug 31st 2007 3:29PM]

Dave, from the Apple PR piece:

"The move follows NBC's decision to not renew its agreement with iTunes after Apple declined to pay more than double the wholesale price for each NBC TV episode,"

That reads " more than double", not "double". There's no extra dollar going to Apple. NBC are entirely to blame for this, IMHO.

Simon

[UberFu @ Aug 31st 2007 4:04PM]

ABC's is really nice. They're just not portable.
------------------------------------
Dave - Did you know that ABC is owned by Disney ?

Did you know that the CEO of Apple has controlling interest of Disney ?

Did you know that the CEO of Apple is on the Board of Directors for Disney ?


Did you know that if you click on the following link - you can buy ABC content that is portable - via moving to an iPod or an Apple TV ?

http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewRoom?fcId=203044312&id=37

[Miranda Kali @ Aug 31st 2007 2:16PM]

Not so much "Boo, hiss NBC and Apple". Everything was fine till NBC had to go and be greedy bastiches and ask for twice what they were getting for shows.
..Damn rat,%$#&@!
'Course, they're just shafting themselves. People will just download pirated copies of their lousey shows now.

[NHAnimator @ Aug 31st 2007 2:27PM]

Yeah! Fargin iceholes!

[rxse7en @ Aug 31st 2007 2:38PM]

What a bunch of maroons!

[Hawkman @ Aug 31st 2007 7:30PM]

Bittards!

[John Q Poster @ Aug 31st 2007 2:17PM]

How do you figure Boo hiss Apple. It looks to me that they have my interest at heart. I will not buy the content at a higher price point. The pricing is what makes it work.

[LiQuiD_FuSioN @ Aug 31st 2007 2:20PM]

The price is already questionable considering the fact that TV shows on iTunes are encoded at a rather low resolution.

http://chucker.mystfans.com/2006/09/22/itunes-tv-shows-still-flawed.entry

I'd like to see Apple give consumers a choice of video quality like with the "iTunes Plus" thing going on for music. Instead of paying $1.99 for a made-for-iPod show/movie, they should let us buy higher quality videos for use on HDTVs and such.

[Ray-- @ Aug 31st 2007 2:21PM]

I see this as a good thing for consumers. Considering its easy and legal to get NBC's shows off the torrent sites why would anyone pay? This is good for consumers because now they will be smart and stop paying for what has always been free. Plus more ppl in the torrents makes for faster downloads which makes it better for all. GJ NBC and thanks.

[wunderbar @ Aug 31st 2007 2:29PM]

ya, um, torrenting TV show's actually is not legal. Not even a little bit. Nice try though.

[Eric @ Aug 31st 2007 2:42PM]

"Considering its easy and legal to get NBC's shows off the torrent sites why would anyone pay?"

Easy? Yes. Legal? In most places across the globe, no.

[Ray-- @ Aug 31st 2007 2:58PM]

It's a PUBLIC broacast, its free. They get paid from the advertisers not the consumers. I dont see how downloading something sent freely over the airwaves to all the country is illegal? It sent out freely... to be consumed freely.

[CraigJ @ Aug 31st 2007 3:06PM]

Ray, that is a good point, and a good argument, however, it is still illegal to redistribute copyrighted content.

[wraith808 @ Aug 31st 2007 3:09PM]

Good luck with that argument in court...

[Kris @ Aug 31st 2007 3:32PM]

Free TV broadcasting doesn't give you the right to distribute a company's programming.

[chris J. Shull @ Aug 31st 2007 4:04PM]

I believe the theory is that if you get a show on your TV, you can have a recording (eg VHS, TIVO), and that a torrent is just a way to obtain that recording of something you already have received (via antenna/cable/sat depending).

[aj_robins @ Aug 31st 2007 2:21PM]

Yes, how are consumers hurt by low prices?

While Apple's "monopoly" does suck if you're a content producer like NBC, at least Apple is trying to keep prices low.

Conrad, I really don't understand your reasoning. While the current situation sucks, please tell us how you would like to see this resolved. If the prices stay the same, NBC loses. Is this what you want to happen? If the prices go up, the consumers lose. Is this what you want to happen? Please enlighten us.

[yoshi @ Aug 31st 2007 2:42PM]

Will you people QUIT SAYING THAT! Apple does not have a monopoly on music or anything else. There is NOTHING preventing NBC from distributing television shows and Universal distributing music ANYWHERE they want to in addtion to iTunes.