NBC hits back at Apple, claims it didn't want more money
By Ryan Block 
posted September 1st 2007 4:07PM
posted September 1st 2007 4:07PM
If there's any good news, it's that NBC insists that its content, despite Apple's claims to the contrary, will still be available on iTunes through the end of its contract, which is up in December. In the mean time, you can rest assured that if NBC didn't actually want you to pay more for their shows, at very least they think you're a dirty crook who shouldn't have the privilege anyway.
In order:
Read - NBC and Apple break up
Read - Apple insists, "No, we broke up with NBC."
Read - NBC insists "No, WE broke up with Apple. But not because of money."
"flexibility in wholesale pricing" = higher prices
"package shows together" = discount when you buy a crappy show together with a good show
"typical iPod contains a significant amount of illegally downloaded material": and how exactly is it Apple's fault that torrent sites exist?
Pretty much, NBC is a whiny bitch that is complaining and trying to lay the blame on Apple, and Apple is trying to maintain uniformity in it's pricing.
Apple are still looking to come out on top over this argument...
Oh yeah, and AFAIK nobody rips Apple-purchased TV shows. Has FairPlay for video even been cracked yet? Nobody cares; pirates don't rip the low-quality stuff. They go straight to the source: over-the-air HDTV broadcasts. What exactly is Apple going to do about *your* unencrypted brodacasts, NBC?
"NBC is a whiny bitch that is complaining and trying to lay the blame on Apple..." while Apple is a whiney bithc that is complaining and trying to lay the blame on NBC.
Here's news to you, Engadget, Apple is all about the money too. That what business is about.
The sad thing here isn't the apparent money grab or who's doing the grabbing, it's that Apple, and now NBC, is attempting to negotiate in the public. That's disgusting and Apple started it.
Craig,
Given Apples recent behaviour in these types of negotiations, I sort of half expect Apple to keep the videos up after NBC pulls em. Then they will claim that NBC is violating their IP in the counter suit after they get sued.
That is their recent MO anyhow.
Exactly.
And that was a response to the first post.
The big question is what TV media outlet is going to give this battle/debate "fair" and dare I say "balanced" coverage? While Fox News might be MSNBC's archrival, I'm sure Rupurt is siding with NBC. Probably the same with CNN.
This battle could be won in the court of public opinion but I doubt it will make it to the public...
This is just NBC trying to save face.
I don't get it. If they don't want more money, then why do they want to jack up the price?
Lying greedy pigs!
Why not just go to a P2P place and download the damn thing. Fuck paying this shit when you can get it free in the first place (TV).
Apple isn't worried about it anyway, they get only a few dimes out of each one. It probably makes up the cost for the bandwidth.
TV is free? NBC needs to work pretty hard to make money on their shows -- they cost a ton to produce, and through product placement, advertising (syndication, DVD & digital sales) they make their money.
Even if you only receive your TV over the air (and do not pay cable or sat costs), you are paying in ways other than monetary. Whatever TV is, it is not free.
@ Iulius
You may have misunderstood me.
I didn't say TV was free, I said the programs were free.
I could care less how much it costs them to produce it, because advertisers pay them, not me.
@ Joey:
Actually, you pay the advertisers (when you buy their products) and they in turn pay NBC. By downloading pirated content, you are bypassing NBC's advertising revenue. This is why all TV networks which stream their shows on their websites put in advertisements. Since there are no advertisements on iTunes, they must charge you. Simple economics. Nothing is free in this world, except for air. :)
@Joey
Companies and services pay networks to air their ads during their programing, in which you, the TV viewer is bound to watch it. As popular the program gets (in viewing ratings), the pricier the ads will be during the particular time slot. The ads are designated for you to watch, if possible. Thus, proving that programs aren't free.
@Blooble
That's true, however. It is entirely legal for me to take a signal over the air, and cut out the commercials on my computer without ever seeing them. So why should it be illegal for me to let someone else do that for me and let me download it over the internet?
@ Bloobie
"Actually, you pay the advertisers (when you buy their products) and they in turn pay NBC. By downloading pirated content, you are bypassing NBC's advertising revenue."
Um. If you're still watching the show.. you're still subject to the product placement etc etc. After the matrix I wanted a GM car or had a better awareness of their car lineup even though I was watching it on a computer screen. NBC needs to realize that someone downloading "the office" on itunes two days later doesn't count the same as a "viewer". The advertisment revenue should be equivalent to that of a rerun. They arn't loosing a customer when they do that. They're gaining or maintaining one. It'd be smarter for nbc to give the show to them to keep them interested in the series instead of trying to bundle it with some other lame season pack trying to upsell you.
Now NBC is also not just a production company but a distribution company. unfortunately they thought MP3's would never catch on cause who would wait to download a 4mb file when dialup was 28.8. Broad band fixed that. They thought movies/tv wouldn't be sellable because no one would watch TV anymore and it would hurt business. Unfortunately that's not true either. I can't wait till tuesday at 8pm to watch a show. I got other stuff to do but I can watch it on my lunch break at work or piece meal it on a subway ride with my ipod video. Again NBC can't make money distributing TV or Music because they missed the boat and it's killing them that Apple beat them at their own game. That new CD. About a dollar goes to the artist before he pays a manager etc. The rest is supposedly eaten up my production and distribution costs. These are often a %. Say disney's hit "high school musical 2". Over 3 million sold @$15+ That's 45 million in revenue. 9 million is about the store profit. 4.5million is given to the 6 kids. Works out to 750k each before management. Supposedly it cost disney $5 million in plastic and the rest is the cost of production and distribution. They claim it costs over $3 to ship each disc to the stores. They've really shown their true colors in this case. Sorry media companies. The Game's Over!
Ubuntu is free :D
Remember back from high school: There's no such thing as a free lunch :P
Oh no they didn't!!!
Uh huh, NBC has only my, the consumer's, best interests at heart. Riiiight.
Newsflash to NBC: even $1.99/episode is too much. Give me HD quality for that price, or cut the price in half for SD quality. Morons.
Oh, and no, I don't want to watch your shows on my computer in a streaming format in a little window surrounded by banner ads on your crappy website. I want it on my iPod/iPhone or on my TV.
Isn't it funny that after decades of companies making money by producing DVD players, TVs, VCRs, CD players, etc. etc., it wasn't until Apple came along that the media companies suddenly felt affronted by a hardware maker making money selling devices to play their content? Ludicrous. Apple makes a pittance selling their content for them and makes up for it by selling hardware. And suddenly the media companies want a piece of that action too? Perhaps Best Buy should give NBC Universal a percentage from every TV they sell? Hey, Microsoft was willing to bend over, maybe everyone else will too!
Goodbye NBC/Universal. There are plenty of other venues out there in which to spend my entertainment-related time and money. Evolve or face extinction.
"Isn't it funny that after decades of companies making money by producing DVD players, TVs, VCRs, CD players, etc. etc., it wasn't until Apple came along that the media companies suddenly felt affronted by a hardware makers..."
That's really not true. Read up sometime on the fight of big media against the VCR, audio tape, DVR, etc. They always fight, this is just the most recent example.
"Uh huh, NBC has only my, the consumer's, best interests at heart. Riiiight."
And Apple does?
"Oh, and no, I don't want to watch your shows on my computer in a streaming format in a little window surrounded by banner ads on your crappy website. I want it on my iPod/iPhone or on my TV."
Through only devices that Apple sells, apparently.
"Isn't it funny that after decades of companies making money by producing DVD players, TVs, VCRs, CD players, etc. etc., it wasn't until Apple came along that the media companies suddenly felt affronted by a hardware maker making money selling devices to play their content? Ludicrous."
It would be if it were true but it is patently false and if you were old enough you'd know better. Media companies have always fought hardware companies. Do a little research before going off on your little, ignorant rants.
"Apple makes a pittance selling their content for them and makes up for it by selling hardware."
How do you know that? Like to see your proof.
"And suddenly the media companies want a piece of that action too?"
Who says they do? Where is your source for any of your claims?
"Perhaps Best Buy should give NBC Universal a percentage from every TV they sell?"
How do you know they don't?
"Hey, Microsoft was willing to bend over, maybe everyone else will too!"
Maybe!
"Goodbye NBC/Universal. There are plenty of other venues out there in which to spend my entertainment-related time and money. Evolve or face extinction."
I'm sure they will miss you.
Good business is a win-win situation: Customers get what they want, companies make money. Like the iPod.
Bad business is a lose-lose situation: Companies offer what customers don't want, customers don't buy it. Like $5 TV episodes.
NBC is hurting itself the most, but not without spreading a little bit of the pain to the rest of us who happen to like some of the programming - but not for ridiculous prices.
As for wanting to change the pricing structure: Logic dictates that prices could either go up or down. Hands up who believes that NBC wanted to lower the prices. Yeah... didn't think so. The pigs got greedy that's all.
There is a fair point here, that Apple, while in this case on the side of the consumer, really only cares about selling iPods, AppleTVs and Macs. Single-price music and video adds a level of simplicity and value to the iTunes brand that reflects on the iPod ecosystem.
My guess is that this is fixed by the time the old contract runs its course. iTunes was good to NBC, and NBC was good to iTunes. Neither company wants to give that up, but both feel they can leverage a bit of public opinion to help their cause.
Nice to know hissy fits apply equally to 3-year-olds and multinational corporations :-)
I'm pretty sure the music industry used the exact same "flexibility" line when they were negotiating with Apple. Right before they caved in, if I remember correctly.
They want stricter piracy measures!? They want apple to stop allowing people to put any video they own on their iPod? So their idea of fixing this is to leave Apple altogether and use MS DRM. And now considering 80% of portable players out there are iPods most people can't play this on their players. So now what happens? Well the only way to get it on a iPod is to pirate it... Great idea NBC! Something is fishy at Universal because they are being complete idiots. I think they are looking for extortion money like MS paid them for the Zune.
lol .. lots of apple iSheep tooting their horns.
You hate apple that much that you want increase the price of ___. (fill in the blank)
I kinda think I know how NBC feels about this one.
The way I see it, NBC isn't making much $ out of this in the first place, and they feel like they're being tooled.
How? Because I think they feel that they are providing content that is being inevitably pirated and used to fill iPods, which in turn drive iPod sales, since it doesn't matter what an iPod is filled with as long as it's sold.
Somewhat irrational since yes, broadcasts of much higher quality are ripped and made available via P2Ps and such (or even just plain recording) that probably makes up the majority of what fills iPod video-content.
My opinion on the whole issue is that NBC went into this thinking it could get lots of $$ because of all the video on iPods and such, but when stats came out of amount of video on iPods vs amount of NBC shows sold via iTunes, they started feeling like a tool to drive iPod sales and not the whole NBC-Apple pay-for-content partnership. Higher prices would've offset the figure of content available vs purchased, because many people get NBC content via other sources, but using that as a way to recoup revenue probably isn't the sensible way to do things, especially since it is not Apple's fault Bitorrent exists.
I guess I think NBC wanted to get out of the entire iTunes deal, and that's legitimate, but right now, it seems just like a PR war just to see who is stuck with the least blame at the end.
"How? Because I think they feel that they are providing content that is being inevitably pirated and used to fill iPods, which in turn drive iPod sales, since it doesn't matter what an iPod is filled with as long as it's sold."
Increase does nothing good for NBC but making fewer people willing to pay for it and more people willing to pirate them.
Apple really doesn't care, because either way, Apple will sell more iPods.
If too many companies break away from Apple, Apple can just release a firmware update that opens more music and video formats to be compatible with the iPods/iPhones. Either way, Apple makes money.
"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."
Ha! As if NBC actually CREATED anything *eye roll*
NBC doesn't create any of the shows they broadcast, they only broadca... oh wait, it's the local affiliate stations that do the actual broadcasting. What does NBC do? Ah yes, they make money off of commercials. NBC is ALL about money and nothing more.
I'm so glad Apple is actually fighting to keep prices reasonable on iTunes. If it were any other company, we'd be spending $3 a song and $10 a TV episode, legal downloads wouldn't be half as popular as they are today, and piracy would be increased tenfold.
...And since when did making a copy of a broadcasted TV show with a VCR/DVR and sharing it with a friend become theft? Isn't that kind of what they're for?
actually, they do make many of their shows. have you ever heard of Universal Media Studios? they're a division of NBC Universal.
Also, is there any brand of mp3 player out there that doesn't contain "a significant amount of pirated material"? Or is it just the iPod?
NBC is still my favorite TV network and I enjoy Sci-Fi Channel. But they're managemet are idiots! Look at theirs shows. Heroes is the best thing they got. Law and Order shows are waning (I never liked for SUV, and Criminal Intent was pushed to USA network). Bionic Woman looks hot but it hasn't aired yet. So it is unknown quality. So what the f**k are yoiu gong to "bundle" together? As someone said, good shows with crap isn't best for the consumer.
The only TV show I have purchased from iTunes was two "My Name is Earl" espisodes and that was becasuse my DVR f*cked up the recording. I guess in the future I will just have to do without if my DVR screws up.
As for as increasing the price, I'd pay 50¢ more for HD content but that's it.
I remember hearing a theory that really this is coming down to the entertainment industry disliking the fact that Apple has to much control over things like digital distribution. Thus the entertainment industry is trying to break apples stranglehold. My only problem with this is like apples stranglehold...or is it that I really dislike the entertainment industry when it acts backwards to technology ie. "We need more pain-in-the-butt DRM in our CDs to stop piracy, which in turn leads to more piracy because people hate DRM."
Since you can't get anything on an iPod without out it FIRST being on a computer, it's the personal computer that should be NBC's real enemy. Hey NBC/Universal, why don't you ask Microsoft to pay you $1 for every copy of Windows sold just like you got them to pay you $1 for every Zune sold. Then watch Bill Gates and Steve Ballmer laugh their asses off before they kick you in the nuts.
NBC/Universal: a classically evil, clueless corporation.
They wouldn't make any money out of windows sales though
K u no what NBC ndz 2 STFU bcz Apple r trying there best to satisfy the consumer. I dun c NBC coming up wit innovative product like da ipods or da the iphone with awsum
tuchscreen
this is just a marketing ploy for NBC to make a little noise so that people become aware of http://www.hulu.com/ which will be a complete and utter BOMB!
Something that seems to missing in this argument is that there are a growing number of alternatives to NBC and the other major networks. The number of quality independent content available has been increasing exponentially. There are only so many entertainment viewing hours in a giving day. I've noticed that I've been watching more and more of these alternatives over the pass few years and NBC lost me a long time ago. It seems to me that traditional media networks need to keep their content accessible, relevant and reasonably priced in order to compete with the growing number of choice among viewers. We're still in early days but if taken in that context maybe they have already lost.
A little something to think about NBC: The only pirated content on my iPod is the content I couldn't find on iTunes. Sounds to me like you may have made a miscalculation there. If you want to make money, make decent shows and put good content on iTunes, what was the deal with 15 minute conan o'brien clips costing the same $1.99 as full shows? I would have gladly paid for full episodes of C. O'B had NBC published them instead of individual skits. Sorry NBC, I won't shed any tears for you.
we'll see just how much this "isn't about the money" when NBC shows go on sale on Hulu next month at $5 a pop.
boo NBC
hulu is ad supported...
that said i'd rather pay $1.99 per episode than watch an ad.
It pisses me off no end when content providers directly or indirectly blame piracy on Apple and the iPod. Do the record/TV execs not realise that it is their OTHER channels of distribution (noDRM CDs, OTA HD broadcasts) which provide the source for the rips that pirates make?? Come on NBC, can you find me even one torrent that's come from a cracked iTunes download of one of your shows? Didn't think so...
Thank goodness for EyeTV.
When will companies learn that when you screw over the hardcore then you'll screw over the mid-core and then you'll screw over the mainstream.
Sorry NBC but even though I like Heroes, it looks like I won't be downloading it at all.
AKBlade13
The point that NBC is making is that their programs make up the plurality (the largest portion of any single networks, but not the overall majority) of TV shows downloaded by iTunes - somewhere in the vicinity of 40%, if I recall, and they feel like they should be able to raise the prices, which I agree with, it should be market forces, not Apple mandating prices. When they say that iPods are full of illegal content, they mean that iTunes is set up to make buying an iPod more attractive, which is true and a goal towards which NBC recieves no money. So they, in effect, feel that Apple is totally playing them, which has some truth to it. It's not fair to say that this is NBCs fault - it's their content, produced with their money, and they have the reasonable opinion that they should get to sell it for what they want, or possibly in what packages they want.
So, all that said, they still need to think of the analogous situation of Wal-Mart and any major household goods manufacturer - it's Walmart who sets prices, and they can wreck your company by deciding not to sell your goods. Apple's not there yet in terms of leverage with digital media, but they're certainly acting as though they are.
Two things...
"hen they say that iPods are full of illegal content, they mean that iTunes is set up to make buying an iPod more attractive, which is true and a goal towards which NBC recieves no money."
Well, um. No. Apple pays them a wholesale price for each chunk of content that they then turn around and resell for $1.99. That revenue is free money for NBC. They don't pay for hosting or bandwidth costs associated with iTunes. Apple does. NBC doesn't factor iTunes sales in its production costs per show (those are all based on projected advertising revenue), and the sale of repackaged shows that have already been cancelled are just pure profit (the cost of original production has already been absorbed). Essentially, iTunes is an ancillary revenue stream, like sales of television episodes on DVD. Apple just had the good sense to try and get content providers to provide current shows, during the broadcast season. To claim that NBC makes no money on the deal is simply wrong on its face. NBC makes nothing BUT money on the deal, since their cost for selling on iTunes is zero.
Is Apple using the iTunes Store to sell iPods? Sure. But to claim that that's somehow nefarious is inane. To claim that content providers aren't being compensated is equally inane.
"It's not fair to say that this is NBCs fault - it's their content, produced with their money, and they have the reasonable opinion that they should get to sell it for what they want, or possibly in what packages they want."
Of COURSE it's NBC's fault. THEY'RE the ones who started this little PR stunt in the first place. Their contract with Apple stipulated that they inform Apple 90 days in advance of a decision not to renew the existing contract -- NOT to put out a press release in the hopes that Engadget and the blogosphere would run with it, which, naturally they have.
Apple's position through all of this has been exactly the same: pricing on iTunes will be as uniform as Apple can possibly make it. If you don't like those terms, don't sell your content on iTunes. For everybody pissing and moaning about letting "the market" decide pricing, that is EXACTLY what Apple is doing with iTunes. The proof is in the sales figures. iTunes has been successful and nearly everything else to date has failed, and failed spectacularly. The market for downloadable content HAS SPOKEN. It doesn't want variable pricing and stupidly restrictive DRM. Those methods have been tried and rejected.
Watch when Hulu (stupid name) launches. The prices will be 1.99! They want Apple at a higher price point, so they can drive business to their site. The site will be hard to navigate and full of ads. Don't suport it people!