Apple, NBC Fight Over TV Shows
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Apple is done with NBC for 2007. It's the kind of thing that happens when you make Apple CEO Steve Jobs angry.
After NBC Universal said it will not renew a contract that runs through December to sell digital copies of its television shows through Apple's iTunes store, Apple today announced it will pull NBC shows from iTunes in September.
Apple said negotiations fell through when it declined to pay more than double the wholesale price for each NBC TV episode. Apple said that price increase would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99. That's not a price Apple was willing to pay, even though it confirmed NBC supplied iTunes with three of its 10 best-selling TV shows last season, accounting for 30 percent of iTunes TV show sales.
An NBC spokeswoman told InternetNews.com she could confirm that NBC would not renew its current contract, but refused to say whether negotiations would continue with Apple.
We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase, said Eddy Cue, Apples vice president of iTunes, in a statement. We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.
This is not the first time Apple has refused to back down from its strict iTunes pricing policies.
Music studios have long complained that $.99 per song on iTunes is too little for hits and too much for older music. In July, Universal Music Group's iTunes contract expired, and the company tried to renegotiate for a pricing structure more to its liking. No go.
Van Baker, research director for Gartner, told InternetNews.com at the time that Universal and other content producers have little alternative beyond Apple.
"Apple knows they could go to [RealNetworks'] Rhapsody or Napster, but their unit volume would be 20 percent of what it is through iTunes at best. It's a 'cut off your nose to spite your face' argument," Baker said.
But contract negotiations with NBC Universal may have played out this way because NBC is already trying to build its own alternative to iTunes. In March, NBC signed with News Corp. to develop an advertising-supported Web video site. Yesterday, that site got its name, Hulu.