What happens when a major content producer like NBC tells a major digital content distributor like iTunes that it wants more money per episode? If you guessed contract negotiations devolve into a hissyfit, you're right.NBC says it will not renew its contract to sell television shows through iTunes when that contract expires in December. And Apple says that's fine by them, even though NBC is the top supplier of video content for iTunes, with popular shows like The Office, Heroes, and Battlestar Galactica.
NBC wanted to charge more for downloads and also wanted improved anti-piracy measures. Apple has responded by saying NBC essentially wanted to more than double the wholesale price of certain episodes, which would result in videos being sold for $4.99 per episode instead of $1.99. And since NBC would wind up pulling its shows in mid-season if they cancel their agreement in December, Apple has decided not to offer NBC shows at all this fall.
Of course, if it was that black and white, we imagine that Apple would have let NBC go ahead and have its way. After all, customers probably won't buy episodes if they're priced that high, and NBC would be forced to lower their prices. There are still a few months before the contract expires, which leaves plenty of time for the two companies to resolve their differences.
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Reader Comments (Page 1 of 1)
8-31-2007 @ 3:27PM
Jen said...
$4.99? Seriously? For a full season of 22 episodes (since most are 22-24), that'd be $110. They don't even try to sell dvd sets for that much, unless it's like the entire series...
I can understand wanting to increase the anti-piracy measures (although it really won't help), but raising the price that high is ridiculous.
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8-31-2007 @ 3:27PM
Akbar Fazil said...
Oh it's worse than that. Apple has already said "fine... we dont want to play anymore"
http://www.theglobeandmail.com/servlet/story/RTGAM.20070831.wgtnbc0831/BNStory/Technology/home/
They are going to pull all NBC content from itunes before the year end contract is up.
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8-31-2007 @ 3:50PM
austin_moreland said...
How can you increase DRM on iTunes videos? Have the content expire? That is my guess on what is meant by stronger anti-piracy measures. That or not allow them to be streamed to Apple TVs or the other computers activated on a HOME network.
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8-31-2007 @ 4:11PM
Jim said...
Who knew?
Hulu.
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8-31-2007 @ 4:17PM
John DunB said...
Obviously we haven't heard the details or NBC's side to this story yet. But even if Apple is exaggerating when it claims the episodes would cost $4.99, it sounds like the bottom line is that NBC wanted the price raised and Apple was unwilling to budge. Add the fact that a season of a TV show on iTunes already costs roughly the same as it does on DVD (and oftentimes more considering the deals you can get on DVD sets sometimes) to the fact that you get better video and audio quality on DVD, it seems like NBC is just being greedy. Granted, I don't know what percentage of a DVD set price goes into NBC's pocket compared to an iTunes download, but it still seems like they're just trying to line their pockets instead of having any respect for the consumer. Now they might argue that the extra cost could be justified for the convenience of getting the commercial free episode immediately instead of waiting a year for the DVD's, and who knows, maybe it is to some people. Personally, I'm glad Apple is sticking to their $1.99 price. I have a feeling NBC is going to cave on this one, and I hope I'm right.
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8-31-2007 @ 4:34PM
CaliberSRT4 said...
That's just stupid. NBC should be happy that their shows are even being sold on iTunes. I wouldn't even pay $1.99 myself because I can watch it on tv for free. Besides, most people have some kind of DVR that they can save their favorite shows on it. AND NBC has most of their popular shows on demand for free on their website.
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8-31-2007 @ 4:37PM
brad said...
I still find it ridiculous to even charge $1.99 for an episode. Why don't they put commercials in the videos and put a nominal price on the thing to cover the bandwidth? The pirate groups are releasing files with vastly superior quality and no commercials. Sure, what they're doing is illegal, but for $1.99 I should own a personal license for the content which means I should be able to download it in any format to any device I own and I shouldn't have to pay again when the DVD is released.
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8-31-2007 @ 4:42PM
Sam said...
@#5: Engadget had a post a long time ago stating that $1.44 of every $1.99 goes back to the media company supplying the content.
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8-31-2007 @ 6:52PM
Dave said...
Akbar, re-read what Apple said carefully. They will not offer anything from the new season. I imiagine they HAVE to keep the current content out there until th current contract expires in December.
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8-31-2007 @ 6:53PM
Brian said...
When will these companies realize that no matter what you do to try and protect your content, people will always, always, always find a way around it.
Always.
It's more certain than death and taxes...
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8-31-2007 @ 6:53PM
Mel said...
Awww. And my dad just got a Video iPod too.... I guess that's no watching Heroes on roadtrips for me.
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8-31-2007 @ 6:58PM
Akbar Fazil said...
Right Dave, they are going to stop adding new content very soon (no official date) so they wont be adding any shows from the upcoming fall season. Nothing official has been set but knowing how Apple likes to think about itself, I imagine all NBC properties will be coming down.
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9-01-2007 @ 8:02AM
Borat said...
Apparently NBC wanted $4.99 for each episode...which is totally ridiculous.
It's NBC's loss...people who were watching the shows on iTunes may turn to illegal methods (Bittorrent).
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9-01-2007 @ 8:02AM
Usama said...
Mel,
If you can download Heroes via Torrents in .avi format, you can use Videora to convert those episodes to iPod format. If you have a computer with an Intel Core 2 Duo processor they take about 12-min to convert. Not too bad.
Of course, I'm not promoting this, just giving you an alternative. To be on topic, I always felt $1.99 was a bit too much if you look at it in a season-perspective, and pretty much for the same reasons as was listed by John DunB: DVDs provide better quality. Also DVDs give extras and the fact that it's a physical medium I can hold and store and lend to people is nice too!
I don't want to pay $1.99 for JUST an episode. Episodes air for free on TV.
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9-01-2007 @ 8:02AM
Bob Mc said...
NBC will not only not get my $1.99 for each show, but I will now steal them without commercials.
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9-01-2007 @ 8:02AM
f Ron said...
NBC will eventually back down from this one is my guess. They make a lot of money from Heros and Battlestar on iTunes. They don't dare walk away from that money.
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9-01-2007 @ 9:45AM
Bash said...
*snicker* 4.99$ an Episode. In the age of TiVo and PVRs.
Leno said that cinemas raked in 4 billion $ this year - with movies like the 5th Potter, the 3rd Spider man, the 3rd Bourne et cetera.
Is piracy still a topic? I guess not. Why? Because they finally got their grip around the pirating people so firm that they don't dare to download anymore. And now that they do they feel they can ask for ridiculous amounts of money again. It could be Hulu - but if you ask me I think this is an after-effect of the DMCA. Took a bit, but they finally reap what they sowed via aggressive lobbying.
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9-01-2007 @ 8:48PM
Timothy James McNeely CFP® said...
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.
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9-02-2007 @ 11:20AM
Jim said...
Thanks for posting Jeff Zucker's phone number, Timothy. Can you believe I called and was able to get through to him?
He doesn't seem like he's going to budge on the $4.99, but I did get him to promise to look at a script I wrote for "30 Rock." Now if I can only get myself cast in the role of Liz's new boyfriend.
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