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.
Why does everyone keep saying "double"? Apple's press release says "Apple declined to pay more than double the wholesale price for each NBC TV episode"--that could be anywhere from 2.01 to even something like 2.7 (I, for one, don't like to exaggerate, so if it is 2.7, I wouldn't say "nearly three" or something, particularly on a touchy subject). I highly doubt Apple would cause this trouble for a few dimes per show, when iTS isn't a money generator for Apple but something mainly strategic.
EDIT: Haha, I guess like seven people beat me to it
NBC is going to need to react - and react before the season starts. COmpanies producing their shows are gong to be pi$$ed, as will the actors.
I doubt if the end price would have been $4.99, but I'm delighted that Apple made it clear that NBC wanted too much money and that the golden standard of $1.99 would have been lost. It also lets the other networks know how fast and how public Apple will respond if they decide to play games.
Simply put, NBC is now in a position where they cannot get their shows onto iPods and will have to charge a higher price for downloads to other users - it would be too embarrassing if they ended up charging only $1.99.
So, basically this means for the 5 Season Passes I would have bought this week, I am now going to have to get the shows for free?
In better quality?
With no DRM?
Sorry NBC, I have and was willing to pay for the convienence when I don't need to. It's easy to get this content for free--even excluding the P2P sites.
But if I am not going to have the simple convienence of a show automatically appearing on my computer and iPod, and I have to do some work each week, I'm going to chose the free option.
And, if by odd chance, someone from market research for these content companies is reading this, it does not mean I am threatening to steal. I can easily get these off my cable connection to my iPod. (And I am not a techie-nerd type. It's just really easy nowadays.)
This will go down in business history as the New Coke of this decade.
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.
This right here is exactly why I don't have NBC HD on our Charter Cable. God dang NBC thinks they should charge the cable companies a premium for having their HD feed. Charter says never so no NBC HD for us in the near future.
So now I can't have The Office in HD or portable, excellent job NBC, way to screw your customers. Bittorrent's here I come. And I bought Season 1-3 off of Itunes.
Although it looks like it, this is not about money but about the distribution of video, TV shows but especially Movies.
Apple owns the music industry download business and the music moguls hate it but there is nothing that they can do about it.
The TV/movie companies don't want to be in the same position as the music industry and are trying everything possible to weaken Apple.
But at the same time they don't have a clue on how to get the download business organised in a way they keep control over it. They are just messing around.
I know that the whole TV and Movie industry absolutely hate Apple and yes, there will be more to come or better NOT to come (like in no more new movies on iTunes)
All in all Apple has nothing to loose, if there is no more video on iTunes, they just update the software on the iPod and any type of "free" downloaded video can be played... making the iPod even more popular.
iTunes have a business model that the broadcasters do not want, regardless of whether the consumers agree or disagree, it is their business and their content. Many people here have got some strange impression that iTunes sales actually mean anything to NBC, selling shows on iTunes is more a token gesture than it is a business model. Apple need the broadcasters much more than they need iTunes.
Did anyone catch the news this week from Comedy Central? That announcement itself was a warning shot to iTunes. South Park have signed a deal to show all their shows for Free on the South Park website, this of course is funded through advertising.
NBC do not make any money from iTunes sales, certainly not enough to even be a significant revenue stream to the business. They probably make more money selling West Wing merchandise!! NBC need the advertisers, there business would collapse without them. There is not a market yet for revenue for downloaded shows to replace advertising revenue and i doubt there ever will be. The advertisers do not want to see more and more viewers switch to other means of watching shows, they will walk away from broadcast TV altogether if more content is viewed this way. This will kill NBC, they are under far too much pressure to not let this happen.
iTunes may well have a place however, i still feel there is a market for a premium ad-free product but NBC will need to get the model right for them before anything like iTunes is seriously considered.
You can't blame Apple for the greenback being worthless..
Quote:
Originally Posted by solsun
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.
Nevertheless, a weak Dollar would NOT drive up the price in Pounds. In fact, if that was the issue, A weak Dollar would drive the Pound price down, not up, as it would take fewer Pounds to pay the same amount of Dollars back to Apple.
I agree with Solsun, I don't think that it is an exchange rate issue. But if it was it would have the opposite effect.
Nevertheless, a weak Dollar would NOT drive up the price in Pounds. In fact, if that was the issue, A weak Dollar would drive the Pound price down, not up, as it would take fewer Pounds to pay the same amount of Dollars back to Apple.
I agree with Solsun, I don't think that it is an exchange rate issue. But if it was it would have the opposite effect.
*end economics police*
But it is in part an exchange rate issue but not the way people have suggested. Allot of US companies have a fixed price for products in the UK, nobody likes a price that changes everyday with exchange rate fluctuations. So what they do is fix a price that is higher than it would be if a true exchange rate so that even if the rate changes by 10% they do not lose out financially.
People grossly over exaggerate the difference in price for Apple products in the UK, If you look at this example, you see the difference is not so great..
The high end MBP in the US = $2799 US Dollars
The high end MBP in the UK = $3,062 US Dollars (based on 2:1 XR and excluding VAT).
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.
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 have cable (nor do I want it - too much anti-Christian junk I'd be wasting my money on ). I want to get the show(s) I want when I want and not have to channel surf or schedule a time to sit down and watch a show or record it for later viewing. I like that I can find what I want to watch on iTunes, download it, and not spend $40-$60 a month. On average, I probably only spent $6-$8 a month over the last 12 months watching the shows I wanted to watch.
This right here is exactly why I don't have NBC HD on our Charter Cable. God dang NBC thinks they should charge the cable companies a premium for having their HD feed. Charter says never so no NBC HD for us in the near future.
So now I can't have The Office in HD or portable, excellent job NBC, way to screw your customers. Bittorrent's here I come. And I bought Season 1-3 off of Itunes.
I just wanted to point out that you are not NBC's customer. You are their product. They are selling your eyes to the advertisers. The advertisers are their customer. Traditionally, anyway. If you buy their content sans ads, (ie. from iTunes) then you have become the customer.
*Shrug* I won't be buying it, but I thought it was a popular show. I will only be ordering about 4 of those shows, but I thought my point would have more impact with more shows.
Without the shows going via iTunes, you've lost that guarantee it will be Mac friendly.
I can't wait to see the windows media/ proprietary/ garbled mess of DRM-ed videos these companies are going to churn out... and guess what, a great new source for pirated video once their DRM is cracked within a few weeks.
Quote:
Originally Posted by aplnub
I guess ths includes Battlestar Galactica???? This sucks!!!
Yup, I look forward to great anticipation to Season 4 on BitTorrent. I work for a startup so our 2mbit symmetric is unrestricted at the moment. I might have got an iTunes US$50 gift card but well, looks like NBC/Universal doesn't want my money.
Comments
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........
Read it more carefully. The article says ".....more than double......"
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.
Why does everyone keep saying "double"? Apple's press release says "Apple declined to pay more than double the wholesale price for each NBC TV episode"--that could be anywhere from 2.01 to even something like 2.7 (I, for one, don't like to exaggerate, so if it is 2.7, I wouldn't say "nearly three" or something, particularly on a touchy subject). I highly doubt Apple would cause this trouble for a few dimes per show, when iTS isn't a money generator for Apple but something mainly strategic.
EDIT: Haha, I guess like seven people beat me to it
I doubt if the end price would have been $4.99, but I'm delighted that Apple made it clear that NBC wanted too much money and that the golden standard of $1.99 would have been lost. It also lets the other networks know how fast and how public Apple will respond if they decide to play games.
Simply put, NBC is now in a position where they cannot get their shows onto iPods and will have to charge a higher price for downloads to other users - it would be too embarrassing if they ended up charging only $1.99.
In better quality?
With no DRM?
Sorry NBC, I have and was willing to pay for the convienence when I don't need to. It's easy to get this content for free--even excluding the P2P sites.
But if I am not going to have the simple convienence of a show automatically appearing on my computer and iPod, and I have to do some work each week, I'm going to chose the free option.
And, if by odd chance, someone from market research for these content companies is reading this, it does not mean I am threatening to steal. I can easily get these off my cable connection to my iPod. (And I am not a techie-nerd type. It's just really easy nowadays.)
This will go down in business history as the New Coke of this decade.
3. nothing cures Hubris like Bittorrent
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.
This right here is exactly why I don't have NBC HD on our Charter Cable. God dang NBC thinks they should charge the cable companies a premium for having their HD feed. Charter says never so no NBC HD for us in the near future.
So now I can't have The Office in HD or portable, excellent job NBC, way to screw your customers. Bittorrent's here I come. And I bought Season 1-3 off of Itunes.
Apple owns the music industry download business and the music moguls hate it but there is nothing that they can do about it.
The TV/movie companies don't want to be in the same position as the music industry and are trying everything possible to weaken Apple.
But at the same time they don't have a clue on how to get the download business organised in a way they keep control over it. They are just messing around.
I know that the whole TV and Movie industry absolutely hate Apple and yes, there will be more to come or better NOT to come (like in no more new movies on iTunes)
All in all Apple has nothing to loose, if there is no more video on iTunes, they just update the software on the iPod and any type of "free" downloaded video can be played... making the iPod even more popular.
Did anyone catch the news this week from Comedy Central? That announcement itself was a warning shot to iTunes. South Park have signed a deal to show all their shows for Free on the South Park website, this of course is funded through advertising.
NBC do not make any money from iTunes sales, certainly not enough to even be a significant revenue stream to the business. They probably make more money selling West Wing merchandise!! NBC need the advertisers, there business would collapse without them. There is not a market yet for revenue for downloaded shows to replace advertising revenue and i doubt there ever will be. The advertisers do not want to see more and more viewers switch to other means of watching shows, they will walk away from broadcast TV altogether if more content is viewed this way. This will kill NBC, they are under far too much pressure to not let this happen.
iTunes may well have a place however, i still feel there is a market for a premium ad-free product but NBC will need to get the model right for them before anything like iTunes is seriously considered.
You can't blame Apple for the greenback being worthless..
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.
Nevertheless, a weak Dollar would NOT drive up the price in Pounds. In fact, if that was the issue, A weak Dollar would drive the Pound price down, not up, as it would take fewer Pounds to pay the same amount of Dollars back to Apple.
I agree with Solsun, I don't think that it is an exchange rate issue. But if it was it would have the opposite effect.
*end economics police*
Nevertheless, a weak Dollar would NOT drive up the price in Pounds. In fact, if that was the issue, A weak Dollar would drive the Pound price down, not up, as it would take fewer Pounds to pay the same amount of Dollars back to Apple.
I agree with Solsun, I don't think that it is an exchange rate issue. But if it was it would have the opposite effect.
*end economics police*
But it is in part an exchange rate issue but not the way people have suggested. Allot of US companies have a fixed price for products in the UK, nobody likes a price that changes everyday with exchange rate fluctuations. So what they do is fix a price that is higher than it would be if a true exchange rate so that even if the rate changes by 10% they do not lose out financially.
People grossly over exaggerate the difference in price for Apple products in the UK, If you look at this example, you see the difference is not so great..
The high end MBP in the US = $2799 US Dollars
The high end MBP in the UK = $3,062 US Dollars (based on 2:1 XR and excluding VAT).
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.
Yeah, but Ugly Betty?
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 have cable (nor do I want it - too much anti-Christian junk I'd be wasting my money on ). I want to get the show(s) I want when I want and not have to channel surf or schedule a time to sit down and watch a show or record it for later viewing. I like that I can find what I want to watch on iTunes, download it, and not spend $40-$60 a month. On average, I probably only spent $6-$8 a month over the last 12 months watching the shows I wanted to watch.
This right here is exactly why I don't have NBC HD on our Charter Cable. God dang NBC thinks they should charge the cable companies a premium for having their HD feed. Charter says never so no NBC HD for us in the near future.
So now I can't have The Office in HD or portable, excellent job NBC, way to screw your customers. Bittorrent's here I come. And I bought Season 1-3 off of Itunes.
I just wanted to point out that you are not NBC's customer. You are their product. They are selling your eyes to the advertisers. The advertisers are their customer. Traditionally, anyway. If you buy their content sans ads, (ie. from iTunes) then you have become the customer.
Nevermind. I guess I've proven your point.
Yeah, but Ugly Betty?
*Shrug* I won't be buying it, but I thought it was a popular show. I will only be ordering about 4 of those shows, but I thought my point would have more impact with more shows.
Without the shows going via iTunes, you've lost that guarantee it will be Mac friendly.
I can't wait to see the windows media/ proprietary/ garbled mess of DRM-ed videos these companies are going to churn out... and guess what, a great new source for pirated video once their DRM is cracked within a few weeks.
I guess ths includes Battlestar Galactica???? This sucks!!!
Yup, I look forward to great anticipation to Season 4 on BitTorrent. I work for a startup so our 2mbit symmetric is unrestricted at the moment. I might have got an iTunes US$50 gift card but well, looks like NBC/Universal doesn't want my money.
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!
I'll do the math for you based on your propositions there.
if x + y = 1.99 and
2x + y = 4.99 then
y = 1.99 - x
2x + 1.99 - x = 4.99
x + 1.99 = 4.99
x = 4.99 - 1.99
x = 3
y = 1.99 - x
y = 1.99 - 3
y = -1.01
OMG my high skool math classes actually came in handy!! Or not...
Hmm.. can somebody check my algebra above?