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Summary:

This is beginning to sound like a Jane Curtain-Dan Akroyd skit … NBC Universal (NYSE: GE) never asked to double the wholesale price and in…

This is beginning to sound like a Jane Curtain-Dan Akroyd skit … NBC Universal (NYSE: GE) never asked to double the wholesale price and insists NBC shows will be sold by the iTunes Store through early December. Firing back at Apple (NSDQ: AAPL) with a statement from Cory Shields, EVP-Communications, NBCU said the dispute centered on a “request for flexibility in wholesale pricing, including the ability to package shows together in ways that could make our content even more attractive for consumers.” Shields said the company also wanted Apple to do more about piracy “since it is estimated that the typical iPod contains a significant amount of illegally downloaded material.”

NBCU contends that Apple’s pricing is more about hardware than content: “It is clear that Apple

  1. NBCU doesn't get it. They're talking to us like we're their customers. We're not–I don't make a transaction with them, I make it with iTunes. That's whose customer I am. Don't you dare act like you're doing this for my benefit somehow! Right now you are trying to mess with the experience I've opted into with Apple, so you need to have a damn good reason to be mucking with it, up and beyond some lame relic of the big box stores like "bundled purchases": Hey, here's two crappy DVDs for the price of one, yippie!
    Oh, and keep treating your viewers like thieves and that's just what they might become. This nonsense about piracy, what, they want it to *only* support DRM? That somehow iPods are the root of the privacy problem since they support open formats and have big hard drives. Good riddance to these fourth-place losers, sounds like they deserve the backlash they're about to get.

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  2. I agree NBC is being very stupid and short sighted. If I was one of the other Networks I would use this opportunity to provide more and better content on the device of choice for millions of millions of customers. In other news NBC wants you to watch thier content on a Zune, yeah, right, take a hike!

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  3. "flexibility in wholesale pricing" = price increase

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  4. Words won't work. They need to be entertained to get the message:

    <a href="http://mikecane.wordpress.com/2007/09/01/a-post-itunes-fable-for-nbc/">A Post-iTunes Fable For NBC</a>

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  5. So most iPod owners are thiefs and pirates? or did I read the above incorrectly?

    Now thats just rude.

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  6. It is very arrogant of NBC to say that Apple sales iPods "at the expense of those who create the content that make these devices worth buying.” Apple iPods have sold extremely well since their introduction well before any TV Shows were available on iTunes. iTunes was the first if not only successful legal download site for digital media that is acutally making money for the artist. NBC has some nerves and I hope they learn a lesson with their crappy hulu site. (The name hulu is actually obscene in over half a dozen languages; what a joke.) (http://www.techcrunch.com/2007/08/29/hulu-translates-to-cease-and-desist-in-swahili-oh-the-irony/)

    The people running NBC are so stupid and greedy they actually pose a threat to any company who partners with them. I hope the issues don't get resolved just so that Apple stays away from NBC unless the current idiots running NBC resign.

    Apple can make up that 30% with other networks. I buy music, movies and TV shows from iTunes and have never bought any of the NBC shows. I think Apple will be better off without NBC.

    Time will tell.

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  7. Apple likes simple pricing models but they have abandoned that requirement on the music side with differential album pricing and with DRM-free music.

    I believe Apple should let the content providers (such as NBC) have some freedom in their pricing and let them (e.g., NBC) bear the consequences in the marketplace. Higher prices for NBC shows will lead to lower demand — perhaps such lower demand that total revenue to NBC actually drops.

    The only catch is that the wholesale price should be the same across all vendors, i.e., ad-free shows should cost the same whether on Amazon or on iTunes.

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  8. Why would any media download store sell content for twice the price at which the very same content is selling for on DVD. This is insane!

    I believe that NBC has ulterior motives in trying to ruin the iTunes buying experience to make their own site succeed. There is a gold rush going on since TV as we know it today is changing radically. See link…

    http://seekingalpha.com/article/46004-google-s-vp-predicts-end-of-tv-as-we-know-it-hd-video-at-apple-special-event

    Apple should treat NBC like all the other studios. If one show is more popular than another, it will simply sell more. NBC can choose to take the deal or leave it as they have chosen to do. We'll see how well they do with their site and partners.

    Fortunately Apple iTunes is not dependant on this 30% of TV Shows to succeed. With superb service, well integrated devices and great shows from many other studios and networks including Disney, History Channel, Discovery channel and many others Apple iTunes will do well.

    NBC can go "Hulu" in Swahili after kissing iTunes' "Hulu" in Indonesian and Malay. :)

    Time will tell…

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  9. Holy cow, did NBC just call me a thief just because I own an ipod? That's sooo messed up.

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  10. Joe #1 hit the comment dead on for me. I'm tired of media outlines justifying their price hikes and need to return to the failed sales model gone past as 'consumer choice'. Much less, taking the next attack shortly after and accusing those same consumers if piracy! Look, I'm a busy business owner, I love to catch up I great shows on my time; DVR's usually have expensive or time based limits (looking right at you Comcast, my home tv is not the same as a hotel room rental), i dont want to rent, anyones who's even tried a torrent will know it takes loads of time for something that could suck… but on iTunes i log on, pick, purchase, download and get what I want with quality and ease. Piracy dies not equate to quality or convenience, and people like me would rather pay. Quit trying to force the market into what you want when your base is screaming it doesn't work that way anymore. How can you not be idiots?

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  11. This is a growing trend among media entities. I am sure more content producers will go this route. Apple does have a monopolistic position in the online media commerce.

    Also this will allow alternative business models and may make content cheaper for us consumers.

    Read more of my thoughts here:
    http://abhishek.tiwari.com/2007/09/02/growing-ihate-for-itunes/

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  12. Here's the deal for me:

    I am Apple's customer, not NBC's. I have purchased quite a few episodes of NBC content, but I won't buy one single episode that isn't available in iTunes. Instead, I'll reward networks that are smart enough to know a good thing when they see it , and NBC can kiss my ass.

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  13. I'm pretty fed up with iTunes's poor video playback on PCs. I get horrible texture tearing on every PC I play it on – pan the camera across a city and skyscrapers break in half. Fade to black and there are bands across the screen. If this means I get to buy shows that will play in a player that works properly, I'll be happier. I only put up with iTunes's poor playback because I don't have another choice.

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  14. Well it seems a lot of the comments are passionate Apple Ipod owners making a point about NBC's policies.
    The reality is that Apple makes money selling Ipods, their profit margins on an Ipod are approximately 40%.
    The Itunes store is a place holder for Apple as it does not necessarily bring in huge revenues. Apple cares to just break even with the Itunes outlet as their main source of revenues and profits for the last few years has been through the sales of Ipods.
    FOr NBC ideally they would like to be able to sell their content online so as to be available to be played on any device as long as it was protected and in doing that the user experience is lost as there has been no easy simple to use protection scheme that a consumer could accept and enjoy.
    For now neither Apple nor NBC (GE) is going to garner any more than a single percentage point of revenue from Online distribution of movies and TV shows.
    All these efforts are just place holders for the eventual juggernaut that is on the horizon. AT that point in time not only Apple and NBC will want a piece of the pie but the Cable companies, the Telcos all will want to get a piece of the pie and will claim ownership of the consumer.
    Watch and see…

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  15. Granted Apple is leveraging this to push hardware but NBC needs to take a deep long breath and realize this is just 'found money' for them. There are very little, if any, additional cost for the network in moving their television shows to iTunes. The production cost exists, with or without iTunes. Episodes are either filmed in digital or converted by NBC (or any network) for DVD distribution so there's no extra step being taken there. Obviously there are no distribution costs.

    And the slap about most iPods having pirated material on it is not the best comment to make when one is looking to explain it's reasoning for wanting to raise prices on digital downloads for no other reason than greed.

    And pot meet kettle. NBC was showing the full season of Heroes on their web site (complete with commercials every six minutes or so) and then pulled them end of July or so in order to increase sales of the season 1 DVD. Understandable, but please, don't wag your finger at Apple for pushing it's products when your guilty of doing the very same.

    It's bad form mate.

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