[Update 31-Aug-2007: Apple has made it official, announcing it will not be selling NBC television shows for the upcoming season on the iTunes store. Apple’s current agreement with NBC ends in December, but since that lands mid-season, Apple has decided not to offer any NBC shows from the television season beginning in September. Apple claims NBC was demanding more than double the wholesale price for programming for each episode, which would have pushed per-episode prices from $1.99 to $4.99.
Apple’s iTunes VP Eddy Cue had some unusually harsh words for NBC: "We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase. We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers."
Apple says three of the ten best-selling TV shows on iTunes were from NBC, accounting for 30 percent of iTunes’ television show revenue.
Original story follows. -Geoff]
Less than two months after Universal Music decided not to enter into another year-long music distribution with iTunes Apple looks to be facing another high-profile defector from its digital media offerings: according to The New York Times, related company NBC Universal will not be renewing its deal to distribute digital versions of its television shows via the iTunes store. The pull-out would not only impact shows like Heroes and The Office from the NBC broadcast network, but also shows from NBC Universal’s sibling networks like the Sci-Fi Channel and USA, so shows like Battlestar Galactica and Monk would also disappear.
The main issue between NBC and Apple appears to be differential pricing and the capability to create arbitrary programming bundles. NBC would like to be able to charge more for recently broadcast, popular shows in order to maximize revenue, while discounting shows in its back catalog (like, say, the original season of Law & Order, which aired umpteen years ago) in order to encourage sales. Although NBC Universal does not currently offer Universal movies for sale via iTunes, the company would reportedly like to offer bundles of its TV shows with its movies.
Apple has historically favored consistent, across-the-board pricing, arguing differential pricing confuses and irritates consumers, which leads to fewer sales.
The New York Times story also claims NBC lobbied for "stronger piracy controls," although offered no information on whether it wanted Apple to deploy new or expanded DRM technology, or merely change the terms under which its video content is offered, sticking with Apple’s existing FairPlay technology.
NBC Universal programming represents some of the most popular shows for sale via iTunes, and reportedly represents about 40 percent of video sales from the iTunes store.
The two companies could still come to a new agreement before the current distribution contract expires.
An open question is where (and how) NBC Universal would sell digital versions of its television shows and movies if not throught the iTunes store. Competing services like Amazon Unbox are, of course, an option, and earlier this year, NBC Universal and News Corporation (home of the Fox networks and many other media outlets) inked a deal with Comcast which was slated to launch a digital television and movie distribution service during the summer of 2007. That effort has just been branded "Hulu," and is slated to enter a private beta in October.
