CE-Oh no he didn't! Part XLVII: NBC Universal chief says Apple "destroyed" music pricing
By Nilay Patel 
posted Oct 29th 2007 8:26PM
posted Oct 29th 2007 8:26PM
NBC Universal CEO Jeff Zucker clearly did not get enough raisins in his cereal this morning, because dude was not holding anything back during that speech he gave at Syracuse's Newhouse School of Communications -- in addition to saying NBC had made only $15M in iTunes video sales despite being the number one producer of content, he flat-out said that Apple and iTunes had "destroyed the music business" in terms of pricing and that video was next unless "we take control." Of course, seeing as consumers can access Universal's entire music catalog with various subscription services for under $10 a month ($36 a year, in the case of Yahoo Music) and entire NBC shows for free on the web, but still choose to buy songs and shows straight-up on iTunes anyway, it might be fair to say that NBC Universal is still figuring out how to monetize its content effectively, but really, where's the fun in that? Round 7, fight!
The man has a valid point. I avoid iTunes and Apple products all together like the plague.
Yep me too. The sound quality is terrible (128kb/s instead of 192kb/s and yes I can tell the difference). The prices are high. Why use it. I like Yahoo! Music good quality and price.
Weather you buy Apple products or use ITunes is not the point. The Zucker is an idiot, and is only doing all this smack talking just to get attention for his crappy little hulu.com -- and you 2 are buying it hook, line and sinker.
We ALL KNOW NBC will be going back to iTunes -- all they're doing is wasting everyones time.
Uh... why did everyone downvote someone who was expressing their opinion about a company?
God forbid someone have an opinion without a bunch of fanboys freaking out and slamming down the - button.
To be fair, iTunes Plus music is 256kbps DRM-free AAC, and is now available for a ton of indie tracks as well as EMI, and no longer costs more (it's the same 99 cent price). At this point the only thing really preventing everything in iTunes from being in this same format is the other labels who aren't willing yet to follow EMI's lead.
Isn't a 128kb/s AAC encoded file generally thought to be about as good as a 192kb/s MP3 encoded file anyway? Not to mention that iTunes is moving towards 256kb/s AAC encoding.
However I do agree to a certain extent, I dislike downloading AAC as other programs and players aren't universally compatible with it to the same extent as MP3 files. For most of the population of iTunes users who dump stuff straight to their iPods it's probably fine though
I hadn't seen that LOLrus pic before. Where's his bucket?
@ Ignatius because, the article has nothing to do with sound quality (the second comment in this thread) and the first comment in the thread is ... well it's not a comment in the sense that there is no there there...
so they ruined it by lowering prices?
yeah. Kind of like how a credit card company refers to someone who regularly pays their bill as a "dead beat". It's all about viewing angle.
i would like to save less money more.
i would like to make more money less.
Isn't digital music sales the only field in which the Music Industry is growing and making more money than previously, iTunes being (I believe) the biggest digital music distributer probably had a pretty big part to play in this recovery (to a certain extent) of the music business...
Itunes is by no means the largest music distributor.
PSP software STILL holds that record.
Keep in mind, large populations in ASIA, AMERICA and South America still get their music "illegaly" on P2P cause they aren't willing to pay anyone ANYTHING.
Itunes is by no means the largest music distributor.
P2P software STILL holds that record.
Keep in mind, large populations in ASIA, AMERICA and South America still get their music "illegaly" on P2P cause they aren't willing to pay anyone ANYTHING.
Wow, I'm pretty sure you could have figured out by inference, and just common sense that I was referring to LEGAL digital music distributors.
...gee, i really love it when 12-year-olds all-caps the important words for me. it really makes what they're saying all the more clear and poignant...
Well since the previous poster successfully missed the point, I thought I'd go a tad overboard in getting my point across. I don't really understand how you're taking this as an insult to you unless you and 'dickhardknocks' are one and the same which seems unlikely as what you have said makes some kind of sense to read.
Referring to other posters is '12 year old boys' is not only showing a degree of your own immaturity, but also a disregard for the other people who comment on the site.
Have a good night!
Having read my previous comment it seems that I may have misunderstood you, were you haranguing me or the previous poster?
Sorry if I've misconstrued your comment!
I'm prett sure he was refering to tinyharddick or whatever his name is. And to tinylimpdick way to double post and mispell P2P as well as completely missing the point. Go ahead and call yourself a rebel all you want for illegally downloading music but if everyone did that then we would not have a music industry and no professional musicians. I download music quite often but only for bands who I wouldn't buy there CD. So 3inchlimpdick should get off my interwebz until he hits puberty or at the very least gains the intelligence of a 12 year old.
i torrent all my episodes of the office. I watch them when they are on, and then i get them, i sit through the commercials and everything. If they are letting me watch it for free im not going to pay.
Hey, if you dont want that 15 billion, I'll be glad to take it off your hands...
15 MILLion bud, not BILLion.
i think he'll take it either way.
Squeevi, you are right, and I would sincerely like to apologize to you and Mr. Zucker for misquoting NBC's revenue.
That said, I'll take 15 million, too.
Typical corporate pig statement well go figure!
every time a record company speaks, they talk out of their asses. they just don't get it, do they?
I still lol at the "ringle" concept
DRM is a bitch. For what you paid in iTunes, it is not worth the price when you figure in the wonderful rationale behind DRM. Thank you to Apple for willingly carrying this out for the music companies. DRM may not be Apple's idea, but they definitely didn't mind it.
I also avoid Apple and iTunes as well. Not necessarily for their overpriced computers, ipods, and music. But for the drop in quality in their products.
How do you know they have drop in quality in their products if you avoid them.....also do some research. The computer with the same specs are priced the same if not better than a dell or hp
I hate this comparison. They are not priced Apples to Apples the same. Apples support of products is universally considered the worst in the industry. Once they get you, they don't care. You've already bought into their marketing. Sure you can upgrade for some semblance of parity on support, but it costs much more than its PC counterpart companies. You're also locked out of all the windows apps. In terms of use for dollar spent, apple is the most expensive thing out there. And before you flame me for being a Windows Fanboy, I run Linux.
halcyon... are you kidding me?
Apple consistently rates highest for user satisfaction.
They also have a great record on support, but since you love Linux and everything else sux...
You know, a fanboi is a fanboi.
Speaking as a fanboi myself.
The upshot of this whole article is that Zucker is talking out of his rectum in the corporate version of the gonad crouch ( you know, to protect his balls). iTunes came along and showed the music industry that downloads are a viable business model. They just want more, as they always do. It is imperative that we as consumers show them that we won't allow it. Wether you support Apple or Yahoo or Amazon's new service (although I smell fish there) the recording industry and the AV giants need to see that we the consumer want readily accessible, inexpensive products.
And yes the misspelling of fanboy is intentional, I am not 12, I use multiple OS but prefer OSX, I have a family and kids, I get out and see the world, I am capable of forming coherent thoughts and sentences with correct grammar and will not criticize others for errors... and I will not call anyone a nazi or Hitler and invoke Godwin's Law.
Yeah, halcyon-- Apparently you don't read Consumer Reports, which has said for *many* years that Apple rates highest in customer service and product support. Highest. As in "beats every other technology company hands down."
So how's that product support for Linux, by the way?
It's still 15x more than Universal will have got from their $1 per Zune sold deal.
What a ridiculous statement. Video isn't like music at all, and NBC Universal has two *potential* paying customers. One are the advertisers who make the broadcast model work. End viewers get video for free in this scenario. The second paying customer is the person willing to buy TV seasons on DVD. They have to wait longer for content, but they're willing to pay a lot for something they could have for free--if there were no cable/satellite middleman.
Apple offered a third model. Pay for video the next day without commercials, and download the content. This is what NBC wants to kill. They clearly feel they can collect money on both ends--from advertisers by leaving in commercials, and from consumers to download DRM'd content with commercials. They're just easing their way to that point.
The real winner? Bittorrent. Consumers might be sheep but they're not stupid ones.
No such thing as a free lunch buddy. I would not call sitting through 15 minutes of commercials for a 20 minute sitcom free. My time is worth a hell of a lot more than 4 dollars an hour......Of course, by posting this, I have just spent 50 cents. $1.99 for a commercial free sitcom is well worth my time.
@willy there will probably be about 5-6 30 second commercials throughout an hour of an episode, just as it is on nbc.com. that's 2 and a half to 3 minutes of commercials.
i'd rather watch 2-3 minutes of commercials than pay 2-3 bucks to watch an episode of anything.
itunes is a waste of money, there are cheaper alternatives. and how can you guys be mad at NBC? this is a business, they were getting screwed by apple, so why not make more money as well as get the content to viewers for free. i would think those of you that want to watch shows from fox and nbc as well as movies would rather do so for free with limited commercial interuption, instead you all bitch that they dont want to charge you.
Trsust me Pepper, you'll watch a whole load more than 2-3 minutes of commercials in a one hour show. This was most noticable to me when watching '24' on the BBC. Somehow each hour of 24 only took up 45 mins on commerical-free BBC!
But then rebranding 24 as 18 for the BBC might not have worked too well. Still, at least Jack get's some sleep...
I agree. Apple destroyed my continued search for brand new and heavily discounted $0.99 cd's. I used to love going to music stores and look for the stuff that was 3-5 years old and on clearance. Today, good luck finding that bin. All thanks to Apple's $0.99 cents per song crap. Now, everyone thinks that an album should be worth $9.99. Even the slowest sellers at the store. Obviously we're talking about two different methods of selling the same license. But, they all affect each other. Apple did the recording industry the greatest favor in the world; raise the value of their product. It screw cheap-deals searchers like myself by eliminating the clearance bin. Damn you Apple. Damn you.
Hey Rob, I can't agree more with you there! Gotta love finding those "gems" in those bins for $1.
Hmm..I'll stick with anyone that makes the consumer happy. Torrents ftw! =]
is it me, or does he look like a fat Tobias?
it's not just you.
THATS who he looks like!
Brilliant!
Their idea is to sue a couple hispanics in high profile "file sharing lawsuits" to scare the rest of us into buying these bullshlT services.
I'm not paying anyone ANYTHING.
Laptop. Wifi. Limewire. detachable 100GB HDD.
...that's all.
POTATOES!
I would think it has more to do with the fact that in the past an Artist could easily sell an entire CD for $12-$16 and they made money of the other 11 songs they put on the CD... now with the PayPerTrack type model a record label is only selling a fraction of the artists work... if you like 2 of the new Linkin Park songs why buy the whole CD for $14 when you can get the 2 songs for $2?? Its like they have lost of the ability to sell the ad-ons that nobody wants...
Of course I still like buying CDs... its a great way to find new songs that you will like... I get way too tired of a song if I listen to it over an over again... I like getting a new CD and finding 5 or 6 good songs that I might not have found by downloading the 2 popular tracks.
Movies will not quite be the same thing... Video stores have been killed by Pay Per View and Netflix already... Apple is way behind on killing the movie industry
speak on man, speak on
Maybe they should make an additional 12 songs that are worth while owning, that would make a CD worth $15. Instead they stick to the old business model where you truly pay $15 for two songs and 13 sections of "noise"
No one else access Universal's entire catalog for free via spiralfrog.com? Why not?
I'm also a student in university, and have access to ruckus.com. So long as media distributors are giving full albums away (and I could care less if it's 128kb, considering the quality of my headphones), I see no reason to purchase music unless it's from my favorite, independent bands.
Well, they ruined it with DRM
apple destroyed the music business - that is a good one - i guess it takes a rich ole asshole who prob makes millions a year to make these statements to pull that one out of the sky - and honestly look at nbc's business model - yeah that stock price is soaring with this guy at the helm - i will take jobs's 3000% since 96 increase on the stock price over this clown anyday - and honestly if apple wrecked the music industry so bad then why are all of these music companies profiting so much - apple clearly isnt making money on selling the music - its all about the hardware - be glad that the consumer had a company that has gained in power looking out for you - and honestly - that quality sucks - i have used several services - rhapsody, itunes, urge, napster - its all the same shite - as for this guy - mr ceo of nbc - i guess he went to some fine institution to make stupid comments like this - LOL - d#ck
Is that a white Al Roker?
OK, so now it's Apple's fault that consumers are willing to pay just a few bucks for a song and several hundred dollars for an iPod...
Well, OK, maybe Apple can be blamed for 50% of it.
I didn't buy NBC TV shows for the iPod or for iTunes, so it doesn't bother me if they don't post their TV shows. BTW, APPLE has been going towards 256kbps for $.99.
i can't even believe that they wanted a piece of ipod sales, is he on crack, next thing they gonna want a piece of every tv set sold, its pretty much the same thing, how in hell they figuere that people brough ipods because of NBC shows, Dam they even make it sound like it was free. Then they DRM free all of their music and Blame apple for their own Mistake of Leaking artist material on the web, lol what a bunch of dushbags. If i was a Artist i would stay 1000 miles away Universal Music because next thing you know they will be making records for free, who the heck is goin to pay for stuff being leak all the Wold Web you will be a fool to do soo Its there responsability to proctect their material not the public whats why they make money and the public does not
Man is Conan O Brien right, Jeff Zucker is a greedy bastard. He will be fired by the higher brass soon.
Greed is good, stupidity is not
ahh i just read another headline about this
"nbc exec unhappy with profit".
just read that 5 times and explain the genius logic behind that one...
i love oxymorons (with a strong emphasis on MORON)
If by destroyed he means Apple brought price points to a level that consumers are comfortable with...then yah. Apple went Independence Day on their ass.
Universal's Chief can up and die for all I care. Greedy bastard. Someone should shoot all the execs in all the major labels of the RIAA. The world would truly be a better place, and I'm not exaggerating. Corporations are slowly destroying everything.
Why is it that I can buy CDs directly from Sony/BMG for $6.99 with free shipping? Surely they are still making a profit, even at that price?
http://www.YourMusic.com/
Is that the subscription model where if you don't make an "alternate selection," they send you two selected CDs anyway? They make money by selling you stuff you don't want but forget to cancel. Also cutting out one or two middlemen.
No, YourMusic.com only sends you one disc per month, and that is a disc of your choosing from a Netflix-like queue.
Right now I feel as if I'm qualified to replace this guy. I'll just write on the bottom of my resume "Will not make assbagery comments to the press."
Maybe they just prefers loosing $15M with their new services...
Its Apple's fault for destroying the music industry.
Its Apple's fault for destroying the movies industry.
Its Apple's fault for destroying the mobile phones industry.
Its Apple's fault for destroying the PC industry.
Yeah right!
Its Apple's fault for destroying this thread.
Translation: "iTunes is forcing us to be competitive just like every other industry, and we're mad now because we can't charge whatever we want anymore. Damn."
Screw NBC! They're the only network company that charges for OnDemand. WTH is that?!
IMO, Charging money for a lossy track is absolutely mind numbingly absurd.
Jeff, just because you launched Hulu.com (good job distancing yourself from the NBC name, I keep having to explain what the hell it is to people) doesn't mean you get to trash everything else today. When/if your launch is a success and you turn a steady profit will you be able to trash on others.
His lawyers must be jumping off buildings after they found he made such a stupid statement. His statement regarding "control" could be construed as intent to conspire to fix prices. Not good.
There is another aspect why Apple is blamed for destroying the music business. In the past music distributers had two main profit sources. The music itself, from which they had to share revenues with artists and the cd production. CD production prices were kept artificially high and led to great profits.(Ditto with movies and dvd) Now the iPod (and others) has replaced the cd and this line of revenue is drying up for the moguls. They have been outsmarted on profiting from the vehicle that carries the content and thats why they are screaming mad. They love to forget that they had their chance to embrace electronic distribution and blew it. Not once, but many times because they wanted to maintain the same profit margins they had on CD. So now they have not only lost control of the industry, but of their revenue as well. Now that madonna jumped ship, the only question is how long before the others will follow? Greed always has a price and it eventually has to be paid.
If I was in charge of a network, I wouldn't be pulling content from the best known and most easy to use download service, I'd be digitizing every episode of every show the network has ever aired and making them available for sale on iTunes. DRM is already taken care of. No physical discs to press or ship. It's all gravy and for stuff that's just taking up shelf space in storage and could be bringing cold profit.
Imagine if old eps of Conan or Johnny, or Letterman were available for download. I think they'd sell like hot cakes and right now they are doing nothing but collecting dust. Welcome to the future networks. Giving us what we want when we want it is how you will be making your money.
this guy is the realworld HOMER Simpson!
ahh NBC.....If it´s going the way you want it, you have just produced yet another torrent customer.
How about this, Mr. Zucker: You're a dick! I'm certainly never ever going to use anything other than iTunes and AllofMP3.com (around $.03 for each MB of music, with 9 different types of encoding, including FLAC). I also applaud iTunes for starting to go non-DRM for no extra price, but $1 is still way too much for a song.
If Apple truly did destroy the music business then I applaud them. Somebody needed to take a stand against those crappy companies and bring things back to where they need to be.
Also, he's complaining about the amount of money they made on shows they already made their money back on. Fifteen million dollars is pure profit. Heroes and the other shows make their money off add revenue and DVD sales. NBC is NOT losing money on these shows. He should be thankful ANYBODY is willing to shell out three bucks for something they can basically see for free on television, or DOWNLOAD for free on P2P.
Zucker is part of the problem, not part of the solution.
Objectively speaking, the music industry destroyed the music business. They saturated an overpriced market with really shitty music. Instead of getting two or three good songs on an album, you maybe got one. Still, the con worked until Napster came alone and let people get just the music they wanted. iTunes, MusicMatch, Rhapsody, et. al. made this model legitimate, preventing the music industry from ever going back to the old model.
This model is not without a cost in terms of music availability. It makes music producers even more risk averse.
The problem with video is that it doesn't, and never has, followed the music model. When people get their undies in a bunch and complain NBC is stupid miss the point. $15 million is chump change in the television industry. Even third tier cable networks sell more in that in commercials in a week. Despite those sales, the profits aren't huge--television is very expensive to produce (a good drama costs over $1.5 million per "hour" episode.)
However, unlike music, you can't just salvage the "ten good minutes" of a program. It's pretty much an all or nothing deal. The worry of television executives is that if you destroy the revenue model, there's nothing to replace it with to pay for the volume of production the networks now have (HBO and Showtime produce a fraction of content compared to even USA or Sci-Fi channel, let alone the major networks [also note that both HBO and Showtime tend to produce serial dramas that can be done relatively cheaply--i.e. contemporary with real locations and one or two stars, with the rest being nobodies or actors trying to recover their careers. Even then, they're depending on the commercial model of syndication to make up the balance of their profits.])
Some argue that NBC shouldn't be complaining because $15 million, or whatever, is "pure profit." Sure, for now. But what if there is a major demographic shift in video viewing comparable to music listening? If networks can't get viewers, they aren't going to be producing material. Not because they're bastards, but because they won't be able to afford it.
Do remember that in years past, syndication rights were part of the consideration for producing shows. There are many TV shows that made no money during their first run. Movies are somewhat related in that domestic box office receipts ideally pay for the movie, while the profits come from video and overseas sales. If the syndication or after-market fails for either, the result will cause a major shift in Hollywood.
That's may be a good thing. It may be bad. Who knows? It won't be the first time the entertainment industry has had to make changes and won't be the last. But don't pretend change isn't going to happen or that NBC's concerns are simple greed (or even peculiar to NBC. Zucker is saying aloud what all the other chiefs are thinking.)
I heard Congress is mad because they can't tax each and every download. Maybe they'll append that to their bill of taxing the internet. NBC will be there to support the bill. Everyone standby.
Perhaps if the music industry hadn't been voraciously greedy for decades it wouldn't be in this position.
They've stuck their head in the sand on alternative distribution methods until they were forced by Apple to reconsider - and now they want control back?
They made their bed - good luck sleeping in it.
I'm not surprised that this has kind of devolved into a fanboy argument, but the fact is that iTunes was beneficial to NBC and others. First of all, this is still a developing market and $15 Million may not be a lot but what would the market develop into. While I understand NBC's desire to fully control the revenue, they are missing the point. Shows like The Office have actually grown because of their exposure on iTunes. It's not that they are only getting $15 Million from iTunes because the ratings for The Office have increased allowing them to charge more for ad time. The benefit of iTunes is that it is an established marketplace where people might be exposed to something new. Kind of like impulse aisles in a supermarket. Hulu.com relies on people coming for content, limiting the exposure to new customers.
Where to begin. The man has a point, much as I hate to even humor anything a record exec says. iTunes exists to sell iPods. If that line shocks you, you might as well stop reading now. Apple doesn't really care about profit maximization from iTunes, so long as it is popular. I'm sure they don't want to operate iTunes at a loss, but iTunes does not exist for profit generation. So it is Apple's best interest to deliberately underprice songs to get maximum market penetration to feed people into its iPod franchise. The record companies, on the other hand, see online distribution as a profit generation source. This does not mean that the record companies are evil (which they are, but for different reasons.) Just that they prioritize the online music business differently. Up until now, the record companies have pretty much gone along with Apple because it was the only game in town. Better to get some profit than none at all.
The main problem is Apple's pricing makes no sense. Let's face it. They want to charge you $1 for every song you buy. Even if the song is 25 seconds long and can be heard in its entirety in the 30-second preview. Ditto with TV shows. A TV Show is $2, whether it's the uberpopular Heroes or, well, the "acquired taste" of Trick My Truck. For market penetration, this is an excellent strategy. For profit maximization, this is insanely stupid. You don't price a Tickle-Me-Elmo doll the same as some cheapo plushie with no tags just because they belong in the same catagory.
And, in summary, that's how Apple ruined Christmas for the record execs. Before you all going cheering about how Apple's sticking it to the man, though, the record execs will have the last laugh. Nothing (or nothing of significance) is sold on iTunes that isn't licensed to Apple by another company. As the online marketplace becomes more mature, these companies will probably set up their own content distribution services and yank distribution rights from Apple. Apple is scared stupid of this. Remember that scare a little while ago when a story was leaked that one of the record companies (Universal?) was planning on yanking distributions rights from Apple, and Apple immediately tried to cover up the story through press releases? Only to get conflicting press releases from the record company saying, yes, the story is true, and we are leaving Apple? I still to this day wonder exactly how Apple got them back.
I don't see how you all can agree with Zucker. I mean, NBC Universal is the only company that has a problem with Apple, do you hear about any others wanting out of contracts or rebelling? Hell, they did the same exact thing with YouTube, and now they're gonna compete with YouTube with their own service called Hulu. I think NBC needs to get the sand out of their vaginas. And if you don't agree FUCK YOU, CHOKE ON A DICK AND DIE.