NBC chief says Apple 'destroyed' music pricing
NBC Universal chief executive Jeff Zucker on Sunday urged colleagues to take a stand against Apple's iTunes, charging that the digital download service was undermining the ability of traditional media companies to set profitable rates for their content online.
"We know that Apple has destroyed the music business -- in terms of pricing -- and if we don?t take control, they?ll do the same thing on the video side," Zucker said at a breakfast hosted by Syracuse?s Newhouse School of Communications.
His comments Sunday were the most aggressive yet since NBC informed Apple last month that it had decided not to renew its contract to sell digital downloads of television shows on iTunes after this year.
NBC originally claimed to be seeking more control over the pricing of songs and videos that it was selling on iTunes, in addition to better piracy controls and more flexibility to bundle video content in an effort to increase revenues.
For its part in the bitter feud, Apple responded by saying NBC was asking for a twofold increase in the wholesale price of its TV show content, which would have resulted in the retail price to iTunes customers increasing to $4.99 per episode from $1.99.
Answering questions at the breakfast Sunday, Zucker offered substantially more color on the iTunes matter, explaining that it was ?a relatively easy decision? for NBC to walk away from the Apple download service because it had only earned about $15 million from the service last year in spite of accounting for about 40 per cent of the videos sold on the store.
He said NBC routinely propositioned Apple to breach its standard pricing model and experiment with higher pricing for one hit show such as ?Heroes? by raising the price from the iTunes standard $1.99 to $2.99 on a trial basis.
?We wanted to take one show, it didn?t matter which one it was, and experiment and sell it for $2.99,? he said. ?We made that offer for months and they said no.?
The NBC chief also revealed that in addition to more pricing flexibility, his firm was also seeking a cut of Apple hardware sales -- such as the iPod and iPhone -- which were capable of viewing content downloaded from the iTunes Store.
"Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money," he said. "They did not want to share in what they were making off the hardware or allow us to adjust pricing."
Zucker's comments also arrive just as NBC and NewsCorp. are launching their joint online video venture, Hulu.com, which aims to compete with iTunes by offering streaming TV and other commercial video content to viewers under an ad-supported model.
He said that 50 million streams of TV shows accessed on NBC.com during the month of October are proof that there is a demand for traditional TV series on the web.
?It?s extraordinary,? he said. ?It?s like a small cable channel in our universe that is becoming very successful.?
"We know that Apple has destroyed the music business -- in terms of pricing -- and if we don?t take control, they?ll do the same thing on the video side," Zucker said at a breakfast hosted by Syracuse?s Newhouse School of Communications.
His comments Sunday were the most aggressive yet since NBC informed Apple last month that it had decided not to renew its contract to sell digital downloads of television shows on iTunes after this year.
NBC originally claimed to be seeking more control over the pricing of songs and videos that it was selling on iTunes, in addition to better piracy controls and more flexibility to bundle video content in an effort to increase revenues.
For its part in the bitter feud, Apple responded by saying NBC was asking for a twofold increase in the wholesale price of its TV show content, which would have resulted in the retail price to iTunes customers increasing to $4.99 per episode from $1.99.
Answering questions at the breakfast Sunday, Zucker offered substantially more color on the iTunes matter, explaining that it was ?a relatively easy decision? for NBC to walk away from the Apple download service because it had only earned about $15 million from the service last year in spite of accounting for about 40 per cent of the videos sold on the store.
He said NBC routinely propositioned Apple to breach its standard pricing model and experiment with higher pricing for one hit show such as ?Heroes? by raising the price from the iTunes standard $1.99 to $2.99 on a trial basis.
?We wanted to take one show, it didn?t matter which one it was, and experiment and sell it for $2.99,? he said. ?We made that offer for months and they said no.?
The NBC chief also revealed that in addition to more pricing flexibility, his firm was also seeking a cut of Apple hardware sales -- such as the iPod and iPhone -- which were capable of viewing content downloaded from the iTunes Store.
"Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money," he said. "They did not want to share in what they were making off the hardware or allow us to adjust pricing."
Zucker's comments also arrive just as NBC and NewsCorp. are launching their joint online video venture, Hulu.com, which aims to compete with iTunes by offering streaming TV and other commercial video content to viewers under an ad-supported model.
He said that 50 million streams of TV shows accessed on NBC.com during the month of October are proof that there is a demand for traditional TV series on the web.
?It?s extraordinary,? he said. ?It?s like a small cable channel in our universe that is becoming very successful.?
Comments
/me goes back to downloading NBC 'files' in Transmission
iTunes store sound so bad now?
Yup...Apple destroyed music pricing...and soon video.
/me goes back to downloading NBC 'files' in Transmission
Yeah. $15 million is better than nothing. If all TV content gets pulled
from the iTunes store, Apple might as well add DVR functionality to
the AppleTV.
Hey NBC: As a member of the demographic you are marketing to, I say Apple corrected pricing schemes. And that was up from zero (i.e. torrents) while taking down hyper-agressive DRM. Welcome to the age where shit media content and shit usage rights only gets you shit.
He's got it backwards - Apple's hardware (and others) has expanded the market for their content! But I see his point - $15 million profit is peanuts
Hulu will blow big time, and fail like all the rest.
?We made that offer for months and they said no.?
he makes it sound as if he were doing them a favour.
$1 a song, a CD= $10 for about 12 songs hmmmm, I guess it was supposed to be $10 = 2 good songs + filler?
Box sets for TV shows are cheaper then buying on iTunes like $30-$40 vs $40-$50, and I get a real box that costs money to make and take up shelf space, can be sold to other people thus destroying another sale and is better quality.
It's still to expensive for me to get shows off iTunes IMO, I pay ~$40 a month for cable and have Tivo (the nice old unlimited plan).
NBC is a bunch of greedy, idiots. Why the heck would they expect a percentage of iPod sales? It's like frozen food companies wanting part of the profits for freezers!
Doesn't bother me at all if I have to pirate NBC's stuff if they won't sell it to me.
Now that Apple has destroyed the music industry and everyone has to go back to stealing and pirating music again, NBC will falter and crumble.
I don't blame Zucker, really. I wouldn't be able to sleep at night either if I weren't able to wallpaper my mansion with $100 bills.
It's iTunes's pricing that brought people away from Peer 2 Peer in the 1st place.
Doesn't bother me at all if I have to pirate NBC's stuff if they won't sell it to me.
Hear, hear! *raises glass*
The funny thing is, there's a certain class of consumer who reads stories like this and thinks "Apple is horrible! They are destroying music!"
I suspect Apple--and consumers--will both enjoy a transition to multiple DRM-free stores (like iTunes and Amazon), and tons of iPod sales to play them. As the music labels wonder what on Earth is happening, and why their DRM efforts make so much less money than their DRM-free experiments.
He said that 50 million streams of TV shows accessed on NBC.com during the month of October are proof that there is a demand for traditional TV series on the web.
?It?s extraordinary,? he said. ?It?s like a small cable channel in our universe that is becoming very successful.?
So how come the article left out the pricing on the streams at NBC?
Oh, that's what I thought...
Amazing how this is comparable to sales on a third-party site (iTunes).
Does NBC dictate the cost of any show it has ever sold by VHS, DVD to anyone - including used media stores?
No wonder they are dumping their property in Burbank once Leno retires.
They can't manage what they have now, they need the money!
Also, I don't get their statements about how Apple 'destroyed' music and video pricing. Do they expect customers to pay *more* for digital content than they do for the physical media?
As it is now, the digital content comes out to being just about the same price as the physical media (maybe a tad less), and they don't have to worry about the cost associated with having the product packaged and the retail outlets taking a cut.
I just don't understand it. It seems like NBC is complaining just to complain.
What the HECK is wrong with NBC?
(...)NBC is a bunch of greedy, idiots. Why the heck would they expect a percentage of iPod sales? It's like frozen food companies wanting part of the profits for freezers!(...)
Yeah, or a cellphone manufacturer wanting a cut from the mobile provider - that would be absurd, I tell you, ABSURD!
Read "ruined the music business" as "actually giving the consumer what they want instead of relying on greed and laziness to fill my coffers with regrets."
That is one of the best translations of Big CEO talk I've Ever heard.
Doesn't bother me at all if I have to pirate NBC's stuff if they won't sell it to me.
Yep, it looks like we may have to start pulling the old file sharing programs out of mothballs.