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NBCU Back On iTunes; Return Announced At Today’s Apple Event

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imageUpdated: NBC Universal’s (NYSE: GE) return to the U.S. Apple (NSDQ: AAPL) iTunes store will be was announced at the Steve Jobs show just getting under way in San Franciscio, paidContent has learned. NBCU gets its variable pricing with rates ranging from $0.99 for deep library to $1.99 for new shows and $2.99 for HD shows. NBCU plans to provide 25 series in HD to start and will also sell compilations that can be variably priced. Sales start this afternoon. This deal falls in to the classic win-win column: Apple gets a source of popular content for iTunes and NBCU stands a chance of increasing its take, especially with HD shows at a wholesale price around $2.

More after the jump

A year ago, NBCU served Apple with notice that it was exercising the opt-out in its contract after the two disagreed on pricing — NBCU wanted variable pricing, Apple claims NBCU wanted a major wholesale price hike. NBCU kept delivering shows from that contract until early December. At the time, NBCU accused Apple of pricing shows to sell its own devices “at the expense of those who create the content that make these devices worth buying.” NBCU CEO Jeff Zucker said the company made $15 million from iTunes, where it usually had shows in the top 10 and represented roughly 40 percent of iTunes sales.

Despite the continuing exchange of sharp words, NBCU insisted it was still negotiating with Apple. At the same time, NBCU, which was already on Amazon (NSDQ: AMZN), joined a variety of other download services and started its own, flawed NBC Direct service for ad-supported downloads.

7 Responses to “NBCU Back On iTunes; Return Announced At Today’s Apple Event”

  1. Steve Mage

    Stacie Kramer:
    You and I can still buy The Office or any other new NBC show at $1.99, just like we could last year. Don't let the spin people fool you. NBC did NOT get what it really wanted. But the variable pricing scheme (for HD and older shows) sure helps make Mr. Zucher LOOK like he saved a little face, doesn't it? And Apple is classy enough to not give him a public black eye, and let him keep some of his pride and even have his day in the spotlight, too. They know people can see where the cards really lie. What goes on behind the scenes is far different than what we see play out in the press.

    Jamie Poitra:
    (I am related to a lot of Poitra's that came to the United States out of Quebec. Maybe we're cousins?)
    Anyway, you're right – partly. My post wasn't as clear as I would have liked. Apple unceremoniously pulled all of NBC's 2007 NEW fall season content. They allowed people with season passes on previous content still in play to remain until December. The move ultimately really hurt NBC's season last year. Just check out the Nielsen ratings. Ouch! But Apple's financial reports showed only great news all year last year. You decide who won.

    But here are a few quotes you should digest first:

    Angela Bromstead, president of NBC Universal, which owns and produces The Office had this to say: "I'm not sure that we'd still have the show on the air. The network had only ordered so many episodes, but when it went on iTunes and really started taking off, that gave us another way to see the true potential other than just Nielsen. It just kind of happened at a great time."

    Famous Jeff Zucher Quotes:

    "Apple sold millions of dollars worth of hardware off the back of our content, and made a lot of money," Zucker said. "They did not want to share in what they were making off the hardware or allow us to adjust pricing." – NBC Universal chief executive Jeff Zucker, Oct. 29, 2007

    Can you imagine, no cut for NBC from Apple's iPod & iPhone profits??? Of all the nerve!

    “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.”
    –NBC Universal chief executive Jeff Zucker, Oct. 28, 2007

    I think GE needs to make sure Zucher sits down with a public relations professional…say every Wednesday at 11:00 from here on out.

    “We’ve said all along that we admire Apple, that we want to be in business with Apple. We’re great fans of Steve Jobs.”
    –NBC Universal chief executive Jeff Zucker, Jan. 20, 2008

    What is this? Schizophrenic Economics? Or the public apology of someone who realizes he has made a serious miscalculation.

  2. Jamie Poitra

    I don’t actually remember it the way you do Steve. In fact I remember that shows that were on iTunes were actually not removed until the original contract with NBC for those shows was already up. It would have been stupid for them to unceremoniously remove shows when people had already paid for season passes to many of them.
    I do agree though that it was posturing for the most part. Yes, NBC has a “sort of variable” pricing system now because of the HD content but I wouldn’t call that a 100% win on their part. More of a compromise.
    Also while NBC did a horrible job with their download store. They (in partnership with Fox) have done a bang up job with Hulu.

  3. Staci D. Kramer

    Steve, that's certainly an intriguing theory but the upshot here is NBCU was willing to go offline with iTunes to get what it wanted and today's it's back on terms that match the stated goals all along.

  4. Steve Mage

    Here is the bottom line: NBC's SEASON suffered last year. That is at least partly attributed to not being on iTunes. And while profits for Studios from iTunes are not CURRENTLY anything that warrants a second glance, fast forward a few years when 50 million or more Americans have iPhones or iPod touches… This landscape is changing fast, and NBC knows it.

    Let's recap last year, shall we? Jeff Zucker made a complete IDIOT of himself when he threatened (unfortunately for NBC, very publicly) to remove all NBC content from iTunes by the end of the year. Apple, instead of cowering in dismay, did Mr. Zucker one better: They immediately and unceremoniously removed all NBC content post haste (Early Sept. 07).

    Here is the word on the street: Apple made the decision to completely ban NBC content from the iTunes store for a period of exactly one year. That is why even though Apple and NBC appeared to "make nice" in January, you haven't seen NBC content back on iTunes until now (Early Sept. 08).

    Apple approached this issue in this way in order to send a message to the other networks that might be contemplating doing the same. "You're free to leave whenever you want, but chose wisely, because it isn't so easy to come back once you decide you want back on the gravy train."

    Apple's financial reports never registered even the slightest blip from a missing NBC over the last 12 months. In fact, their growth has been unprecedented and their profits have been Apple's largest in history.

    NBC made a massive miscalculation. End of story.