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NBC exec slams iTunes revenues/business model


The ongoing NBC Universal v. iTunes slap-fight has just become well, more slap happy. As reported in Daily Variety, Jeff Zucker (the President and CEO of NBC Universal), revealed some of the details of the NBC/iTunes impasse in an interview with the New Yorker's Ken Auletta.

Some of the highlights:

  • In the last year, NBC U reported only $15 million in revenue from the deal with iTunes
  • NBC U programming accounted for 40% of iTunes video sales
  • NBC did want to experiment with higher pricing, albeit for only one show and on an experimental basis, but Apple refused.
  • NBC U also wanted a cut of Apple's hardware sales (presumably iPods) to supplement revenues from the iTunes Music Store.
I'm sure it was just a coincidence that these remarks were given on the day of the launch of the beta, NBC's attempt to answer iTunes.

Issues of profit sharing and price flexibility aside (I'll refrain from sharing my own opinions regarding those issues), the conclusion I find most interesting in this saga is that Zucker's figures (along with figures Apple has reported in the past) back up what many analysts have been saying all along: demand for television content via iTunes is pretty underwhelming. Think about it, NBC says they made only $15 million in revenue off of media sold via iTunes last year; even in the softening TV on DVD market (where the cost per episode is on average, the same, for the consumer), that's peanuts compared to retail revenues of those same shows.

Additionally, if NBC represents 40% of all iTunes video sales, and assuming that the other media companies have a similar revenue split agreement with Apple, that would put total revenues by the content providers for the video/TV sector of the iTMS at approximately $38 million. Strictly looking at the situation in those terms, I can understand why media companies might be reticent to offer up their programming on iTunes. I mean, really, what's the point? If the content is going to be essentially given away, web-based services like Hulu make a lot more sense.

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