Apple iTunes Store to stop selling NBC television shows

[AppleInsider]

Apple on Friday afternoon issued a press release confirming that it will indeed halt sales of NBC television shows through its ubiquitous iTunes download service beginning with the upcoming television season.

The move, the company explained, 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.

“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.”

Apple’s agreement with NBC ends in December. Since NBC would withdraw their shows in the middle of the television season, Apple has decided to not offer NBC TV shows for the upcoming television season beginning in September.

NBC supplied iTunes with three of its 10 best selling TV shows last season, accounting for 30 percent of iTunes TV show sales.

[ View this article at AppleInsider.com ]

[bryand]

So I wonder if NBC has someone else willing to pay more, or if they think they can do better selling direct?

[GQB]

OK, I need someone to enlighten me as to why I would spend 1.99, let alone 4.99 for an episode of crappy NBC show in the first place.

I've run the math, and it seems to me that even at 1.99/show, if I watch 2 shows per day, that comes out to about 60 bucks per month, and zero flexibility.
My cable with HBO is 60/month including DVR.

Someone want to 'splain the brilliant economics of this model to me?

[M.O.S.T]

"...retail price to consumers increasing to $4.99 per episode........."

[minderbinder]

It's hilarious how one press release can totally change perception of an issue.

When the first announcement hit, there was a ton of apple bashing for not playing ball, and dire predictions.

Now that it has been revealed that NBC wanted to double prices, they are getting slammed as the greedy corporate bad guy.

Apple's PR department sure knocked this one out of the park.

[biggsjm]

Originally Posted by GQB

OK, I need someone to enlighten me as to why I would spend 1.99, let alone 4.99 for an episode of crappy NBC show in the first place.

I've run the math, and it seems to me that even at 1.99/show, if I watch 2 shows per day, that comes out to about 60 bucks per month.
My cable with HBO is 60/month with DVR.

Someone want to 'splain the brilliant economics of this model to me?

The ninja move here is to do the following:

1. Buy an "HD" antenna - which is just a regular UHF antenna
2. Buy a Series 3 HD TIVO ($299 - $399)
3. Buy an Apple TV
4. Drop Cable / Dish and love every minute of it. You'd save $720 a year minus your inital outlay of cash for the hardware and the amount you spend on iTunes.

How can you do this?

Use your TIVO to record Free Network Shows. It also allows you to rent movies via Amazon's movie service. Use iTunes or other services (i.e. Bittorrent) to get the remainder of the content you need.

The only thing you might miss out on is Live Sports programming. . . but isn't that what Bars are for?

[solipsism]

It's obvious that NBC Universal has other pans to offer it's media online. It will probably fail miserably as it won't include the iTunes convenience and its fair DRM. I predict they will come back to iTunes within 6 months.

[djmalik]

If x + y = 1.99, 2x + y = 4.99. That suggests Apple was losing money. So it's gotta be more than 2, but less than 3? Jeez, NBC!

[MacTel]

I'm sure they'll make the deal and come back. It is just sad that they have to use the media in their negotiations.

[Animaniac]

Talk about owned.

Apple just handily bested NBC Universal. Not only does NBC look like complete assholes for wanting three times wholesale, but now NBC's fall season has taken a huge setback. Shows like The Office and Heroes were popularized by (at least in part) by iTunes. Given that NBC is launching significantly more shows than usual this upcoming season, Apple just hit NBC right where it hurts. NBC was hoping they could take advantage of their shows being available on iTunes through December to build audiences for their new programming, but now NBC is left out to dry. NBC's fall programming builds on the success of shows like The Office and Heroes targeting a similar audience. Without iTunes, NBC stands to suffer greatly this fall.

Well played, Apple. Well played.

[netdog]

Originally Posted by bryand

So I wonder if NBC has someone else willing to pay more, or if they think they can do better selling direct?

The question is whom do they have lined up to pay $4.99 per show? Count me out.

[GQB]

Originally Posted by biggsjm

The ninja move here is to do the following:

1. Buy an "HD" antenna - which is just a regular UHF antenna
2. Buy a Series 3 HD TIVO ($299 - $399)
3. Buy an Apple TV
4. Drop Cable / Dish and love every minute of it. You'd save $720 a year minus your inital outlay of cash for the hardware and the amount you spend on iTunes.

How can you do this?

Use your TIVO to record Free Network Shows. It also allows you to rent movies via Amazon's movie service. Use iTunes or other services (i.e. Bittorrent) to get the remainder of the content you need.

The only thing you might miss out on is Live Sports programming. . . but isn't that what Bars are for?

Well, if I were to do that, then I'd hook some sort of EyeTV set up to DVR the OTA to my MAC.
My problem is that don't get any decent OTA where I live.

[dancm2000]

All networks will eventually offer their programming stright from their site. And why not? iTunes get a royalty that is passed onto us. If they can cut that out and keep our prices low, then great. One less middle man to pay.

Now the catch to that is that eventually the networks will get cut out in the same way. Eventually the studios will no longer need the networks and they'll offer their shows to us directly.

If the shows remain $2 on NBC, it wont change a thing for me. Heck, especially if NBC offers an HD download. But I'm with the rest of you. $5 is ridiculous for 20 minutes of video.

[skipthedog69]

I'm a private contractor with NBC/Universal, and since NBC took over Universal, things are going down hill over there. Accounting was moved to India to cut corners, so it used to be a 45-day wait for the payment, but now it is an unbelievable 90-day wait to get paid if you work with them as a contractor. And it's not unusual to be notified saying "there was an accounting error, therefore your payment will be delayed for another 4-8 weeks." In a mean time, those no brain executives over there are getting paid every month on time. I'm not surprised with this news, since they are so desperate to make more money, but all they are doing is just choking their own neck. This is a very good example of bad management...

[bloodstains]

Originally Posted by GQB

OK, I need someone to enlighten me as to why I would spend 1.99, let alone 4.99 for an episode of crappy NBC show in the first place.

I've run the math, and it seems to me that even at 1.99/show, if I watch 2 shows per day, that comes out to about 60 bucks per month, and zero flexibility.
My cable with HBO is 60/month including DVR.

Someone want to 'splain the brilliant economics of this model to me?

The big savings is in the fact that most shows are not on all year round, but you're paying for cable year round. Other benefits include, no commercials, and "owning" the media (ie. if its a show you would have bought on DVD that is no longer necessary, unless you want the bonus features)

So for example:

Lost Season Pass: $34.99
Ugly Betty Season Pass: $34.99
CSI Season Pass: $44.99
CSI: Miami Season Pass: $39.99
House Season Pass: $42.99
24 Season Pass: $44.99
Top Chef Season Pass: 28.99
Daily Show Multi-Pass(= 1 Month) $9.99 * 12 = $119.88

Total: $391.81/year

Now I don't know what your cable bill is, but mine is $70.27 a month, so
$70.27 * 12 = $843.24

Now I don't know what shows you watch, but you can see how this could result in significant savings if you can do without Live TV, and channel surfing.

[anantksundaram]

I predict NBC will be back, tail between legs on orders from GE (and some NBC manager's job will end up in the can).

Echoing a previous comment, brilliant PR move on Apple's part.

[waytogobuddy]

1. That's some dirty laundry
2. I actually might smell Hubris (form both parties)
3. nothing cures Hubris like Bittorrent
4. I guess we know Apple's percent cut now..

[BostonMH]

Let see $1.99 for each episode times 24 episodes is $47.76 and I sure like the music companies they got at least 75% of the gross for $35.82. That not bad considering people could record it free using a VCR or EyeTV. But $4.99 for each episode times 24 episodes is $119.76 are they insane!

[JeffDM]

Originally Posted by GQB

OK, I need someone to enlighten me as to why I would spend 1.99, let alone 4.99 for an episode of crappy NBC show in the first place.

I've run the math, and it seems to me that even at 1.99/show, if I watch 2 shows per day, that comes out to about 60 bucks per month, and zero flexibility.
My cable with HBO is 60/month including DVR.

Someone want to 'splain the brilliant economics of this model to me?

You are leaving out the fact that there are no ads in the paid download. If that has no value for you, then that's fine, but I think there is some value there, even if it's just not having to skip the ads. Most of the support for most of those channels you get through cable is through the ads, not your subscription fee.

Anyway, I have an EyeTV that can record NBC prime time in HD, so I can get better quality through a device that's already paid for, rather than pay $1.99 or $4.99 an episode. It has ads, but I can deal with that.

[bdkennedy1]

$4.99 an episode is absolutely f*ing insane. What overhead can they justify over the DVD box set when they don't have to press DVD's and create packaging? A whole season at $4.99 would cost over $100.

[Bageljoey]

Originally Posted by GQB

OK, I need someone to enlighten me as to why I would spend 1.99, let alone 4.99 for an episode of crappy NBC show in the first place.

I've run the math, and it seems to me that even at 1.99/show, if I watch 2 shows per day, that comes out to about 60 bucks per month, and zero flexibility.
My cable with HBO is 60/month including DVR.

Someone want to 'splain the brilliant economics of this model to me?

I don't buy regularly, but if I missed a Heros episode I would usually buy it to catch up before everyone talking about it at work ruined it.
Furthermore I have been known to buy Galactica episodes (ok the whole season) on impulse. I don't even know if it was more expensive than buying the DVDs but it was available much faster and all on my laptop

[sarangiman]

$1.99, let alone $4.99, is much too much to pay for standard definition TV shows. Especially when I can get them for free in HD by paying Comcast $12/month for basic cable which includes network channels in HD. Add an EyeTV for $180, and I can even record HD shows.

Only problem being shows with overlapping times

[bloodstains]

Originally Posted by sarangiman

$1.99, let alone $4.99, is much too much to pay for standard definition TV shows. Especially when I can get them for free in HD by paying Comcast $12/month for basic cable which includes network channels in HD. Add an EyeTV for $180, and I can even record HD shows.

Only problem being shows with overlapping times

Damn. Comcast wont give me any HD without the "Digital Basic" which is $50-$60 before the equipment charges and fees.

[flinch13]

Let's see. How will I watch the office now? Oh yeah, I'll get commercial free, hd-quality downloads just as quickly and FOR FREE by using bittorrent. You lose, NBC. I bought the last three seasons. I won't stand for this shiznit.

[ascii]

No one will pay $5 per episode. I'm sure NBC know this and it's just gamesmanship. Hopefully they will start to feel the result of their gamesmanship in their back pocket.

[ecking]

Universal's heads are smoking crack rocks, they seriously believe that that consumers are begging for their music, tv shows and movies and will pay any price, wow.

Apple had to say no, if they said yes every company would follow suit and the new prices.

[bdj21ya]

Originally Posted by GQB

OK, I need someone to enlighten me as to why I would spend 1.99, let alone 4.99 for an episode of crappy NBC show in the first place.

I've run the math, and it seems to me that even at 1.99/show, if I watch 2 shows per day, that comes out to about 60 bucks per month, and zero flexibility.
My cable with HBO is 60/month including DVR.

Someone want to 'splain the brilliant economics of this model to me?

I used the service whenever my DVR would miss a show (scheduling conflicts, power outages, or DVR errors). Well worth the $2 to quickly, conveniently, and legally get a show of decent quality that I could watch on the TV with my wife.

[aegisdesign]

Hmmm. Apple won't stomach $4.99 an episode yet they're charging almost $4 an episode in the UK. Double standards perhaps?

[mowenbrown]

Originally Posted by BostonMH

Let see $1.99 for each episode times 24 episodes is $47.76 and I sure like the music companies they got at least 75% of the gross for $35.82. That not bad considering people could record it free using a VCR or EyeTV. But $4.99 for each episode times 24 episodes is $119.76 are they insane!

Not insane, but perhaps even dumber than the record labels...

[mowenbrown]

Originally Posted by aegisdesign

Hmmm. Apple won't stomach $4.99 an episode yet they're charging almost $4 an episode in the UK. Double standards perhaps?

You can't blame Apple for the greenback being worthless..

[salvation666]

Greedy f*(&#n bastards. f*(k em.

Apologies to the squeamish.

[netdog]

Originally Posted by BostonMH

Let see $1.99 for each episode times 24 episodes is $47.76 and I sure like the music companies they got at least 75% of the gross for $35.82. That not bad considering people could record it free using a VCR or EyeTV. But $4.99 for each episode times 24 episodes is $119.76 are they insane!

Hell, that's broadband for somebody to download whatever torrents they want for six months.

I am not advocating swiping shows. Quite the opposite. That said, such pricing is going to lead to much more massive piracy. No doubt about it.

As for the UK, until prices come down, I think that iTMS TV-show sales are going to flop here.

USA per-season pricing is very reasonable.

[Shanghai]

Originally Posted by GQB

OK, I need someone to enlighten me as to why I would spend 1.99, let alone 4.99 for an episode of crappy NBC show in the first place.

I've run the math, and it seems to me that even at 1.99/show, if I watch 2 shows per day, that comes out to about 60 bucks per month, and zero flexibility.
My cable with HBO is 60/month including DVR.

Someone want to 'splain the brilliant economics of this model to me?

When I lived in Shanghai it was a godsend. Sure, TV series are available on the street for about $10/season, but then you'd have to wait until the season was fully over. We felt much more connected to be able to get Lost, 24, etc..., right in close to real-time, and even though the download speeds were awful, they eventually finished.

Back in the US? No reason to get them here, but I can see why others might like them (for reasons previously mentioned).

[solsun]

Originally Posted by ascii

No one will pay $5 per episode. I'm sure NBC know this and it's just gamesmanship. Hopefully they will start to feel the result of their gamesmanship in their back pocket.

Unless, it is Apple's intent to begin offering HD content at the event this Wednesday... IF so, Apple may want to keep the pricing the same while NBC wants to charge more..

I really can't think of any other reason as to why NBC would think that anyone would be willing to pay $4.99 for a low-res episode of a tv show.

[Squirrel_Monkey]

Press release, schmress release. I'm thrilled that Apple cut off NBC swifty. Apple wants to let NBC know exactly what the impact of pulling out of iTunes will be as soon as their Must See 2007 season begins. Good for them.

[solsun]

Originally Posted by aegisdesign

Hmmm. Apple won't stomach $4.99 an episode yet they're charging almost $4 an episode in the UK. Double standards perhaps?

I don't really think that Apple takes exchange rate into account when pricing for a particular country. They price accordingly for the country's own currency, not according to the US dollar exchange.

[AlmostBoughtaLisa]

I read somewhere* recently that Universal -- now a division of NBC -- has a department that is trying to think up new business opportunities in digital content distribution. Universal, you'll recall, has also been seeking (more aggressively than others, I'd say) to get higher prices for their music properties sold through iTunes as well. You'll also recall that Universal was one of the first on board with Zune, with the understanding that there would be "pay-for-play" provisions in the sale of said properties.

It would appear that NBC/Universal is willing to cut sales volume to the point of lowering their profits just for the sake of raising their price. Perhaps they think that the skyrocketing prices of movie tickets justifies that pursuit. Even though the number of tickets sold has gone down markedly, the net revenue for many productions seems to have gone up -- slightly.

Even so, I have to wonder if NBC's executives have seriously considered analyzing the cost/price elasticity of their TV shows. (From my point of view, even $1.99 was too expensive for their relatively trite content.) Such analysis probably seems pointless to them, given that it is more applicable to openly competitive markets and not the controlled, closed markets they have been fighting to maintain and strengthen.

In fact, NBC/Universal may well have been emboldened by the RIAA's recent success in getting Congress to structure fees that effectively eliminate any competition in Internet Radio. The new fee structure in IR requires that fees be paid by Internet Radio broadcasters on a per-subscriber/per-listen basis, something that existing broadcast stations don't have to do. With hundreds of IR stations shutting down each week as a consequence, artists won't get more royalties (which was the justifying premise for the legislation), but media corporations will have cleared away their competition in IR, leaving it open to them alone to exploit, should they choose to do so. (In other words, the new fee structure has effectively made the RIAA into a government-endorsed cartel.) I think therefore we can expect to see NBC/Universal open a sizable presence in a pay-per-play Internet Radio or Web medium (including streaming distribution to mobile phones) within the next year and a half.

What will then remain as the only other non-pay-per-play medium will be CDs. Since NBC/Universal's fellow RIAA member Sony fouled† up their attempt to introduce modest levels of control of CD plays with their surreptitiously installed root kit, public reaction has effectively halted (at least for a while) the industry's advance toward implementing pay-for-play technology in digital disks. As a consequence, I believe that we can look forward to the prices of CDs (and DVDs) going even higher than they are today, accelerating as the Internet presence of the major media companies grows. This last phenomenon could then maybe begin to affect iTunes a little bit, given that the vast majority of music that people keep in their iTunes library is ripped from CDs.

It may not be long before NBC/Universal discovers that they're cutting off their noses to spite their respective faces. Rather than finding new and attractive ways to market their content (something at which Disney excels, btw), they are accruing a large fund of bad will by restricting their distribution channels and employing new technologies principally to meter out their over-priced product in ever-smaller and ever-more-costly little droplets.

But then, they may not care about that, either. If they can simply give you content for free but sock advertisers to pay for it, then they'll continue to make the REAL money to be had in this business. This means that the final step in their business plan will be to make your personal recorders illegal or impractical. That goal can be attained through some combination of proprietary digital encoding and further contrived, cartel-supportive legislation. The first part is, of course, well underway; the second is likely to proceed in earnest after the next major election.

You can perhaps now understand why I’ve written my Congressman and Senator, asking to repeal the anti-competitive fees imposed on Internet Radio, and why I suggest that you do the same.

And by the way, Mr. and Ms. Advertiser... you might want to consider forming your own Association of Advertisers and using it as a vehicle to engage in both pro-competitive legislation and anti-competitive litigation, 'cause it looks to me for all the world like the members of the RIAA are well on their way toward getting ahold of you by your short hairs.


* - If and when I find the source again, I'll post it separately.
† - to use a more civil, though perhaps less accurate, term

[reidconti]

Cool. I just sent a long and well-thought out email to the NBC address posted in the other thread (and received an email autoreply, so the address is legit) about how $1.99 is the price point where people will buy without even thinking about price but $5 is sheer greed. I detailed my age (26) marital status (single), industry I work in, and how much money I spend on electronics ($4000 on my computer in the past year, $4500 on home theater).

I explained that I won't visit a site that doesn't support Mac users, even with my Windows system (and certainly not if they require IE6 which I don't even have installed). I furthermore went into detail about how users will refuse to pay for streaming content only, or crappy DRM, or content that relies on my trust in some fly-by-night media provider to stay in business, in order for me to continue to view what I paid for.

I also explained that everyone who used to buy their shows will now use BitTorrent, or record on their DVR and skip commercials. I fall into the latter camp, as I find most P2P to be more hassle than it's worth -- especially if the alternative was paying a mere $1.99 for my fix.

Good luck, NBC! Suckers.

[Lafe]

Originally Posted by solsun

I really can't think of any other reason as to why NBC would think that anyone would be willing to pay $4.99 for a low-res episode of a tv show.

Everyone trying to "do the math" is missing a key point of the article . . .

It's APPLE that said NBC wanted to double their cut, and that such a thing would raise the
consumer price to $4.99. NBC never said that they thought consumers would be happy
to pay $4.99 per episode (as far as we know).

Let's say at $1.99 NBC's cut was $1 and Apple's cut was $.99. Doubling NBC's $1 makes
the overall price $2.99. This is nowhere near $4.99. In fact, no matter how you
figure NBC's cut, it doesn't drive the price to $4.99.

I wonder if part of Apple's ingenious media slap-back to NBC was slightly inflating the
impact to Joe Consumer. If NBC's cut was $1.98 before, and Apple's cut was $.01
(incredibly unlikely), you still don't get up near $4.99 for the consumer by doubling
NBC's share. So . . .

Contrary to what some posters are suggesting, there's nothing in the article that
indicates NBC felt consumers would pay $4.99 for an episode.

[anantksundaram]

Originally Posted by aegisdesign

Hmmm. Apple won't stomach $4.99 an episode yet they're charging almost $4 an episode in the UK. Double standards perhaps?

1) Apple is simply pricing-to-market. Rather standard for most multinationals. Also, given what you pay (in £) for equivalent products in the UK, I am not surprised..... I was in London a couple of months ago on a visit from the US, and for many day-to-day expenses (e.g., cab rides, restaurant meals, pair of shoes, a drink....) the pricing did seem like the £-sign replaced the $-sign.

2) We don't know what Apple is being charged by the content providers for distribution in the UK.