August 31st, 2007
iTunes showdown brewing: Content owners vs Apple
Update: Apple and NBC Universal confirmed Friday that NBC shows will not be sold on iTunes.
In a statement, Apple didn’t mince words:
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, which would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99. ABC, CBS, FOX and The CW, along with more than 50 cable networks, are signed up to sell TV shows from their upcoming season on iTunes at $1.99 per episode.
Apple then jabbed a bit more:
“We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase,” said Eddy Cue, Apple’s vice president of iTunes. “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”
As noted in my original post, the NBC move could become a big issue for Apple. And judging from the tone of Apple’s press release Cupertino is miffed to say the least.
Original post from 4:41 a.m. PDT follows:
NBC Universal’s television shows won’t be on Apple’s iTunes after December if the two sides don’t come to a deal.
According to the New York Times, NBC Universal couldn’t come to an agreement with Apple on selling its shows on iTunes. This news comes just a few weeks after Universal Music Group said it wouldn’t renew its iTunes contract and sell its tunes at will. A deal could still be reached between NBC Universal and Apple.
The NBC Universal move also comes as the General Electric unit is launching Hulu, a video joint venture between NBC and News Corp. NBC Universal was reportedly seeking better piracy controls and wanted Apple to allow it to bundle videos. The newly named Hulu, which will launch a private beta in October gives NBC Universal leverage.
Content companies are miffed that Apple has so much control over pricing. The game plan for these media giants has been to develop rivals, join other ventures from Apple rivals and place bets with startups such as Joost. While many of these new video ventures are designed to thwart Google’s YouTube Apple is also a big target.
If these defections–CBS and News Corp. have iTunes deals–become a stampede Apple could have a few issues. NBC Universal owns popular shows such as “Heroes” and “The Office.” In fact, the only iTunes deal that would be 100 percent safe is Apple’s deal with Disney. Via the Pixar acquisition, Steve Jobs is on Disney’s board.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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