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."
I thought the whole point of actually paying 1.99 on iTunes was as the content was ad free. If this hulu is 1.99 with ads ... what's the point?
I think that some are failing to see the point here. I do however see the trend on here - Apple is good and anyone opposing Apple is bad. NBC is a corporation. Apple is a corporation. And they both want to increase their profits. NBC believes that they can do better without Apple. I happen to agree. People like Apple's iPod and iTunes because the both are great products. They combination of the 2 might be unbeatable. NBC's content seems to be pretty special if it is considered to be the “best selling…”
The point here is that NBC wants to sell more of the content. To do this, lowering the price on older content for example would be a good strategy. (Anyone that understands business or economics knows this.) I do not understand the hostility towards NBC for wanting to do this. Apple is behaving like a monopolist (and in this case an evil one). I am sure that people here can understand this simple concept – sell older products at a discount. Car dealers do this. Music stores did this (I imagine the ones that still exist still do this). I have heard that Apple was considering this which if true, I am confused why NBC would not wait it out unless Apple is not talking about it.
I predict that NBC will move their content to Netflix and maybe WalMart or possible YouTube. Apple will not be affected by this but if other content providers make similar decisions, Apple will make adjustments. After all, Apple has been pretty smart up to this point.
It's not that Apple is "good" and NBC is "bad," it's that Apple is in tune with the modern consumer and is evolving with the times, all the while NBC thinks consumers are going to be happy paying $5.00 for a TV episode.
So by evolving with times means not lowering prices of old content!?
I'm sure you were happy to pay the 2 dollar fee to activate the 801n. After all, they are just evolving with times.
If you really think NBC will offer last seasons Heroes for less than $1.99, I'll buy you a Coke(or pepsi, RC, Dr. Pepper, etc.) Honestly that is not going to happen. More than likely they will offer "blocks" of programming. Either with new shows, or weaker shows, at an inflated price. Then claim it is worth it because it is more programing. Or, they will jack the price of their higher viewed shows.
Yeah NBC will offer stuf on Hulu (or whatever it is called) filled with unskippable advertisements and an even lower quality. This doesn't bother me to much because I don't watch NBC anyway.
"since it is estimated that the typical iPod contains a significant amount of illegally downloaded material."
What does this have to do with them selling their shows on iTunes? The DRM on iTunes vids hasnt been cracked, so WTF business is it of NBCs & have to do with anything??
You cant put illegally downloaded content on a Zune??? Hmm, I guess thats easier to overlook since they got their hand up MS's ass.
Assuming that there is any validity at all to NBC's "concerns" about iPods containing pirated content, it would seem that what they're trying to push is a change that would prevent the iPod from playing *any* content (in video form at least) that is not purchased from the iTunes Store (and therefore wrapped in DRM).
This would of course make NBC very happy in knowing that the only way to view their content on an iPod would be to buy it, but of course would be a death-knell for the iPod as a video playback device, not to mention the floodgates would justifiably open to European legislation about lock-in.
Remember, NBC/Universal are part of the same groups that would make you re-purchase your content in every form you want to consume it.
Companies making money of Apple should just shut f**k up. But for companies who made money of Windows, and if Window make a peep on its policy, MS is the big evil company. Apple like MS are bots evil companies - stop making Apple as angelic company.
Feeling shafted by NBC’s proposed $4.99 an episode price hike that got their new fall season kicked out of iTunes?
Kevin Wick has been kind enough to look up the contact information for the NBC Executives that are key to getting this situation reversed.
Amy Zelvin, NBC Universal Digital Media Communications, (212) 664-7436 amy.zelvin@nbcuni.com
Joe Libonati, NBC Universal Television Group Publicity, (818) 840-3050 joe.libonati@nbcuni.com
(edit) Some additions-
Jeff Zucker, President and Chief Executive Officer, NBC Universal (212) 664-4444 jeff.zucker@nbcuni.com
Ben Silverman, Co-Chairman, NBC Entertainment and NBC Universal Television Studio ben.silverman@nbcuni.com
Now, please don’t call these people and threaten them, cuss them, or yell at them. That’s not going to get anything accomplished.
If, however, you want to politely let them know how you feel about their suggested price increase, and subsequent removal from iTunes, it might actually have some affect.
If enough people call, NBC just might listen…you never know.
Are you saying that NBC wants to price the shows at $5 per episode? If so, and people buy it, good for NBC. If it is too expensive the demand will drop and they will sell very little in which case they will have to lower the prices. This will be a simple case of economics. This is not like gas where people need the stuff to get to work. It cost NBC to sell each show after the first one. (i.e. the first show has to get on the website to download which has a cost. After that, it is a simple process of collecting the payment and then selling the next one. There is an incentive for NBC to raise prices (all companies would like to charge as much as they can.) But no one wants to sell zero or just 1 or just 2... Apple does not allow the price to drop to say $1 for crappy shows. NBC therefore has a difficult time incenting people to buy it. Apple is the one screwing customers. I cannot buy crap music for less than $1. I have to go buy the entire CD for $2 from my local music store. Even they know that what once was priced at $15 is only worth $2 years later.
Jobs can kiss my ass...oh , and itoons sux :)
"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."
Oh really? Assuming they're referring to iPods, I've bought lots of shows and music through iTunes and don't have an iPod, don't have a TV and don't want one, and still don't feel compelled to buy an iPod to watch TV shows. My iMac screen is fine, thank you very much. I just like to watch shows when I want to and iTunes delivers: fast downloads, quality encoding, fast searching at the store, good content selection (and it's growing), etc. It's good for me (cheaper than cable subscription and Tivo), good for Apple, and good for consumers who thanks to iTunes have access to inexpensive shows and the ability to support only the shows they like.
The television ecosystem is surviving, but obviously threatened by online distribution (legal or otherwise) that can bring a host of new delivery options, new production companies, and new corporate support that's not controlled by GE, Disney, or National Amusements, Inc.
I think NBC is really missing the boat. What, do they have some subscription online content delivery service up their sleeves that's going to compete with iTunes? Please!
Can someone say Zune Zune Zune? NBC's BS will bite 'em in the ass when they come out with content endorsement for MS Zune. Anyone wanna bet when that happens?
The stupidity of content publishers never ceases to amaze me. More DRM? Do they think that'll sell more episodes on iTunes? Seriosly. Hey, take a page from EMI, Zucker...
NBC have been caught with their hand in the public cookie jar
Now let's sit back and enjoy listening to the whining child like excuses that the NBC PR company have been spreading across the web ;
'Steve Jobs made us do it cos he's a control freak. This is a strike for freedom'
'Each digital downlaods costs much more than DVD's. Were losing money on every copy we sell. A really big hit show could actually bankrupt us if it sold a billion copies!'
'We are just a poor little hungry corporation trying to feed itself on the few crumbs left in the jar'
and the best one so far directly for their own press statement ;
APPLE IPOD USERS ARE ALL THIEVES AND SO THIS IS OUR WAY OF MAKING THEM PAY!!
I think you are all over complicating this whole mess ... it sounds to me like Apple is keeping most of the profits for themselves and throwing a quarter at NBC and NBC wants a bigger cut because they are the ones doing most of the work producing the content.
Price gouging and hoarding profits is at the heart of Apple's business practices. Most people are blinded to it because Steve and Company sell quality products that are marketed as "magic beans".
It honestly sounds to me that Apple isn't cutting NBC on enough of the profits plain and simple. It is a disservice to Apple's fan base because there are a lot of geeks out there that need their NBC, SciFi Channel, and USA shows ... all of which are owned by NBC.
Except, of course, that that's utter bullshit.
http://images.apple.com/pr/pdf/q307data_sum.pdf
In Apple's most recent quarterly financial statement, they reported TOTAL iTunes revenue of $608M for the quarter -- that's Apple's take from iTunes' gross revenue which includes sales of nearly a billion song downloads during the quarter, as well as several million TV and movie downloads. That's also not Apple's PROFIT from iTunes (significantly, Apple isn't reporting its bandwidth or hosting costs in its quarterlies).
Apple doesn't disclose the details of its deals with content providers, but it's widely speculated that Apple returns in the neighborhood of 70-80% of the revenue back to the content providers. Based on Apple's public sales figures for iTunes and their revenue reported, that's not unlikely.
More significantly, it bears repeating that iTunes is a ZERO COST distribution channel for Apple's content providers. NBC's cost to sell on iTunes is essentially nothing. They may have a one-time labor charge to encode content, but Apple provides media encoding tools to its content partners for free, and you can be sure that NBC isn't paying huge sums of money to its interns who get to deal with encoding last night's episode of Scrubs and upload it.
Apple's deal with its content providers is relatively simple: let us price your content at a flat fee and we'll provide you with a new revenue stream and distribution channel at no cost to you; let us give you FREE MONEY. You've already absorbed the production costs of shows we're reselling. Let us sell the thing you would otherwise broadcast for free.
In short: NBC makes free money from Apple, gets MOST of the revenue Apple generates from iTunes, but *Apple* is greedy and not returning enough money to its content providers? Sorry, but the facts just don't support that.
There is no way on Earth Apple returns 70-80% of revenue to the providers. That is just silly. You also said yourself that Apple doesn't disclose it's contract deals with content providers.
Thinking Apple only keeps a tiny percentage is very naive.
apple fanboys are annoying.
Its total BS to say NBC will sell their shows for $5, just mind you apple crooks wait and come back submit your apology when they sell it for less than $1.99/episode.
They probably make a lot more on each episode of a popular show the old way. Imagine evey time this episode airs, they get to sell a lot of commercial time (where I live (The Netherlands), this can be as much as a third of the total broadcast time). Episodes also air multiple times each week when they're new, and after that some shows are repeated a few times. This means the money they make on one episode's advertisement space sales is huge. And then they get to sell the shows abroad, imagine how much they get from the European stations.
I think they make a lot more money on all these things than on purchases from iTunes, which is why they don't really want to sell much of their shows there. Unless we pay 5$ for each show, which is what they want.
iTunes is too convenient for users, because they get the content they want very soon after it is broadcast on TV, they get it ad-free and they get to watch it for ever and ever, as much as they please. This is great for us, but not for the companies that make these shows, who rely on all the sources of income I mentioned above. These shows are expensive as hell, andthey will want to make profit with them.
I think iTunes and the user-centric approach is best, and think the content companies should make an effort to cut cost elsewhere, and not try to charge us more money.
There's a lot of people viewing the world thru their apple colored shades. I actually like both companies, but let's be realistic here. NBC pays all development and production costs, including union wages. Apple takes approx. 30% of each sale plus 100% of the profits stemming from the sale of the hardware. For that 30% what does apple/itunes provide? A distribution system, yes, but co-op advertising? Not really. Guarenteed placement or promotion? Nope. Again, I have no real opinion, but I can understand NBC wanting more of the total sales price to amortize their costs, and I can understand Apple's inflexible one price fits all as anything else would cause chaos. And hey, it is their distribution system. If you don't like it, take your ball (or in this case media) and go elsewhere.
Jalbert said,
"Again, I have no real opinion, but I can understand NBC wanting more of the total sales price to amortize their costs,"
Seems like quite an opinion to me. Amortize their cost's? WTF? They have already made the show. They have already sold the advertising. If they were not Making money on that deal they would not be doing it. PERIOD!!!!!
If you think otherwise then you my friend are the one wearing the completely black shades that NBC sold you because they don't want you realizing what they are doing.
These companies have had extra revenue streams from these same programs FOR DECADES!!
Syndication
Video Tape
DVD
International Distribution
If they want to make more money why not simply release more shows on Itunes that are over and done with such as old seasons of ER or Cheers etc. and other cash cows that continue to make the studio money decades after the people who produced them have died or left the company. And again I stress If they didn't make money they wouldn't be doing any of it.
Last I checked the heads of these studios and most of the upper ups all live a hell of a lot better then the average joe. So I have absolutely no damn sympathy for them when they cry foul when someone else starts getting a piece of the pie that they have been gorging themselves on for the last 60+ years.
These studios SHOULD have seen this coming (Napster anybody?)and instead just like the RIAA and MPAA Sat on their asses and waited for someone else to show them how to monetize their content. Then provided them with a Road Map on how to make money they couldn't make 5 years ago and most likely can't make by themselves. These idiots think people are going to pay the same amount for a downloaded copy as they do for a DVD. While there are some people who like mobile versions of shows for use on Ipods or other devices, there are those of us who won't pay for the studios cost of re-encoding it down to a lower quality copy and putting it on a website.
They are clueless and I for one will praise the day when some of these backwards thinking companies start really losing money due to their shortsightedness.
Don't get me wrong I am all for paying for my content. I purchase shows I really love on DVD or now HD-DVD on a consistent basis. But I will not pay the same price as those DVD's for something full of DRM and that some dumb ass in hollywood tells me I don't actually own.
2 years from now when NBC closes it's virtual doors of whatever stupid venture they try to cram down our throats. I am going to love hearing the crys from all of the "non apple fanboys" who can't play their videos any more because of the DRM. And before anybody says that won't happen, ask the admittedly few people who bought videos from Google.
TimT
This is becoming quite a catfight. NBC now says that they did to explore alternative biz models. This is a growing trend among media entities. I am sure more content producers will go down this route. Apple does have a monopolistic position in the online media commerce, which is not conducive to these media entities.
Also this will allow alternative business models and may make content cheaper for us consumers. Universal did the same.
Read more of my thoughts here:
http://abhishek.tiwari.com/2007/09/02/growing-ihate-for-itunes/
Yeah, because Universal is going to offer music cheaper than apple offers right now...
Lets be serious for a second people. This is an issue where the Entertainment industry thinks that its products are worth more than what Itunes is offering. Without itunes, prices would be MUCH higher, and with more DRM than you can shake a stick at. This would be coupled with higher prices for products because the entertainment industry would insist that the those mp3 players would be used for pirated products (see Canada's CD-R tax) or for that matter the deal Microsoft made with Universal.
This issue is way more complicated than NBC or Universal makes it out to be.
This was really stupid of NBC. Who is going to pay $5 for an episode of 30 Rock? I bought a couple of episodes at $1.99, but looks like from now on I'll be exclusively downloading them illegally. I went on NBC.com looking for a feedback page to tell them what a bad idea this is, but all I get is a freaking generic survey. Oh well, back to stealing I guess.
If that's the case I still applaud apple as opposed to NBC. The reason you have to have your television in programming "packages" from your provider is because of similar reasons. Broadcasters would rather have a television provider carry all of its channels in a "package" or "bundle" deal or have none of it at all.
What I suspect is that NBC pulled their shows from the iTMS just in time to hawk their HD-DVD editions of the previous seasons shows. Who's gonna buy the first season of Heroes on HD-DVD when they could buy every episode on the iTMS at 720i resolution and still come in under by several dollars?? It's just a temporary thing while NBC tries to maximize profits off their disc sales.