NBC Universal has fallen out with Apple over the pricing of their products on iTunes with the result that Apple will not be offering any new material for sale from the company via its store. That means no new seasons of Heroes, Battlestar Galactica or The Office – three series that have sold very well on iTunes in the past.
For the most part, people are looking at NBC and thinking that they must be mad. Why would they make it harder to legitimately get hold of downloaded versions of programming when users can just download a torrent of the same programme without any payment.
But I’ve got to say that actually I think that NBC should be able to price their programming as they see fit. Some reports suggest that under NBC’s proposed pricing structure and suggest that costs might rise from the current $1.99 an episode to as much as $4 or even $5 an episode. Well, that’s really for them to determine. If they charge too much, then they won’t sell any programmes, and that’s the nature of a free market.
Apple’s insistence in controlling pricing doesn’t allow for product differentiation. Heroes is a premium NBC product just now and perhaps can command a premium, whereas an old episode of some eighties detective show might only be 50c. Yet on iTunes it’s $1.99 and there’s no flexibility. Why shouldn’t some of the forthcoming new series be sold at greatly reduced prices to garner interest?
If I walk into my local HMV, or scour the virtual shelves of Amazon, DVD box sets are sold at vastly different price points. I mentioned in my piece a couple of days ago about the launch of the television section on the UK iTunes store that season tickets for series are sometimes more or less expensive than their physical DVD equivalents.
There are many reasons for differentiating prices – sales, old programming or stock, promotions. It’s for the retailer and distributor to determine what a series can be sold for.
Similarly, music should have differential pricing too. We’re all used to picking up classic albums relatively cheaply. Yet compare a few classic albums on Amazon and iTunes and there can be a vast differential:
Highway 69 Revisted – £9.99 on iTunes, £4.97 on Amazon
Bridge Over Troubled Water – £7.99 on iTunes, £4.97 on Amazon
Parallel Lines – £7.99 on iTunes, £2.97 on Amazon
Yes – Blondie is exceptionally cheap! But old songs and albums really shouldn’t be that expensive. And iTunes needs to be able adapt to variable pricing.
Of course, iTunes single price means that Brits pay 79p a track compared with 99c in the US. At the current exchange rate that should be more like 50p. Similarly TV programmes are all £1.89 a show (irrespective of whether they’re a 22 minute South Park episode made for peanuts, or 42 minute episode of Grey’s Anatomy made for millions of dollars an episode), compared with $1.99 a show in the US.
A lot has been made of Hulu, the new Fox/NBC destination to watch streaming programming. It’s basically an attempt to break YouTube’s stranglehold. But it’s going to stream shows, not let you download them to your iPod or PSP. I wouldn’t be surprised if within days of it launching somebody hasn’t built a tool to snatch a file version of the stream as you can with YouTube.
In other news, it was interesting to note in HMV today that you’ll be able to buy the pilot episode of Heroes for £2.95 on Monday. I can’t see them releasing the whole series this way, which makes it an odd experiment. Why not either give it away, or make it a covermount on something like SFX magazine if it’s just to drive DVD sales?
iTunes/NBC Universal Dispute
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2 responses to “iTunes/NBC Universal Dispute”
Adam you argue your own point. You say that NBC and other content providers want to charge more for “premium content” vs. and older episode of a program. NBC should be happy that consumers are willing to pay for old shows (Munsters, Miami Vice, Alfred Hitchcock, etc.) that Apple has made easy for consumers to access. These shows would be gathering dust had it not been for Apple and iTMS refining this market. You can’t have everything. Content providers need to get a clue. Consumers have spoken and they love the iTMS business model. Others have tried and failed to build a better mouse trap. NBC is wrong and unless they are totally clueless they need to back down.
I disagree. I can have everything. There’s nothing to stop Apple selling an episode of the Munsters for, say 50c, while selling an episode of Heroes for $2.99.
The retail of DVD boxsets works in exactly that way. Older less valuable fare tends to be cheaper than hot new shows. I might try to charge a premium for my Munsters boxset season 1, but that’s a choice I, as the owner of the content, can make. Alternatively, I might believe that it’s more likely that I’ll make back more money by making it a lot cheaper, and appealing to a broad nostalgia market. It should be my choice.
The fact is that a new episode of Heroes is the more valuable of the two.
Now you might argue that Apple is trying a new revenue model, with everything costing the same. But I really don’t believe that can work in the longterm. Perhaps it might on some kind of subscription basis, but we all make individual choices.
And since iTunes has quickly become the de facto standard for buying music and video, they have a lot of power.
I imagine that CBS, Disney and others are sitting back and watching the fallout from this carefully. If they pull their content, then it actually does mean trouble for Apple – the Apple TV device and video playing capability of the iPod of significantly lessened.
The one trump card that Apple has, of course, is that it doesn’t licence its DRM technology.
It remains to be seen how Hulu works, but if I was NBC, I’d simply sell that content from my website, DRM-free, making sure that a significant proportion of my content was significantly cheaper than Apple’s price-point. And they’ll be able to sell video formats that work on other devices too, like the PSP.