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Saturday, September 01, 2007
THE NBC/iTUNES SKIRMISH 

Louis Hau has a solid piece in Forbes on the current skirmish between GE/NBC/Universal and Apple's iTunes. If you're not up on it, NBC has notified Aplle that it will no longer sell its television shows over the iTunes store. (It has also announced its own streaming and download site, Hulu.)

Hau notes that NBC's notice of termination occurs while negotiations are continuing and that, in the end, a deal may be worked out even as the network's long-term strategy may be away from the pay-to-download model:

Apple wants as much video content as it can get to continue driving sales of the iPod, especially given the company's struggles to get more than a handful of film studios to provide movie downloads.

Moreover, if you believe the rumor mill, Apple Chief Executive Steve Jobs is expected to unveil a new line of video iPods during a press conference next Wednesday. Even though iTunes' video downloads are dwarfed by its music sales, they remain an important selling point for Apple's most important product.

Meanwhile, NBC wants to remain on iTunes because Apple has proved to be the only major online vendor capable of selling video and audio downloads in any significant quantity. Even Google gave up on paid video downloads earlier this month. The market-dominating position of iTunes also explains why Universal Music continues to sell songs there despite its much ballyhooed decision in July not to renew its annual contract with Apple.

While TV networks have a vested interest in remaining on iTunes, the online store will likely end up being less important to them over time. Rather than focusing on selling downloads of their programming, the strategy being pursued by NBC, News Corp.'s Fox, CBS, Disney's ABC and Viacom's MTV and Comedy Central is increasingly emphasizing the sale of advertising to keep their content free.


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# posted by Scott Macaulay @ 9/01/2007 03:06:00 PM
Comments (2)

 
"Hulu" has actually been in the works for at least 6-8 months--last week they finally got around to putting a name to site. Pardon the skepticism, but on the face of it, the Hulu project seems destined for the scrap heap of failed old-media "experiments" like CBS' Innertube or Sony's Connect music store. If NBC's extended DRM demands are true--that it wants iTunes to "spy" on users-- it will only hasten it's demise. NBC might want to ask Sony how that worked out.
# posted by Anonymous Scott Johnson @ 9/02/2007 2:13 PM  

 
It also strikes me that the networks are missing the tide - as they so often do with new media. I think to the difference between JetBlue and the major airlines. The major airlines are convinced that we are interested in "packages" and "deals" that involve complete irrelevancies like Saturday night stays and dozens of fair classes, some obvious, some less so. Jetblue, on the other hand, says what a leg costs and says what the return leg costs. It's the same for everyone and is totally exchangeable.

NBC is claiming it wants to offer packages and promotions that are more "attractive" to it's audience but what is more attractive than paying for just what you want? Ok, a season pass perhaps but what NBC wants is to figure out complicated pricing schemes which somehow force you to watch their junk shows when all you want is 22 minutes of "The Office".

Apple should resist this. They have created a system that is reasonable to most people, $.99 for a song, $1.99 for a show. You can do season passes for things like "The Daily Show" and that's fair.
# posted by Anonymous Noah @ 9/03/2007 8:52 PM  


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