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Claire Bennet and the rest of the Heroes gang may be leaving iTunes
NBC Universal says "good-bye" to iTunes

Apple is very protective of its iTunes store and the pricing model used to distribute music and video. That tight grip over pricing has caused NBC Universal to break ties with Apple.

NBC Universal will not renew its contract with Apple to sell TV shows on iTunes. Popular NBC Universal shows made available on iTunes include "Heroes," “30 Rock” and "The Office." In fact, NBC Universal is currently the number one provider of video downloads on iTunes and accounts for 40 percent of video downloads (roughly 1,500 hours or programming).

NBC Universal's two-year contract ends in December, so content will still be available on iTunes until that time. Apple and NBC Universal could still come to an agreement before the end of the contract, but it appears -- for the moment at least -- that neither side is willing to budge on the matter.

NBC Universal feels that it should receive a larger cut of iTunes downloads and have the ability to package content together. Apple on the other hand has stood its ground with regards to pricing and contends that packaging video content would lead to confusion for buyers and decrease demand.

This isn't the first time that Apple has run into pricing issues with one of its content providers. In July, Universal Media Group decided not to renew its iTunes contract over similar pricing concerns.



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RE: About time!!
By wupta on 8/31/2007 12:43:43 PM , Rating: 2
Very intelligent point. I did exactly as you say I have a Digi site in the works? Back in the day I used to buy 45's for the singles and I used to pay over a buck, which back in my day was more then 5 bucks if we go by the MCdonald scale. I didn't buy a song because it was cheap I bought it because I wanted that song, I had to have that song. This is why people buy songs not because of price.

For small companies like mine we used to thrive on selling as few as 10,000 units. This allowed for a lot of indie music to get out there. Lets do the math again even at $.75 a hundred thoudasnd downloads give you gross $75,000 for lets say a single. Now lets do the cost for that song, to hire PR for a band costs on average 15k, to get college radio promotions another 3k, to get art and a song mastered another 3K. Studio time 5k, websites and staff, office and softcosts like promo items stickers etc. another easily another 10k. Video on the cheap 5k. Tour support which can run into big $$$ at least $45k. The artists won't be signed for a single they have to do more then one track the artists want an advance lets say it's about 5 to 7k. Now add a little more for mastering and studio another 15k. To achieve a 100,000 fans for a group is enormous the money I just spent is nothing this won't give you 100,000 fans it may give you perhaps 14k to 20k fans, they don't all run out and buy the music. This is only part of the expense and the risk it takes 3yrs on the minimum to develop and artist and act and at least 15-30 songs and maybe maybe then you can have 100,000 downloads which gives you a gross of 75k. I can continue but you get the point.

I am not interested in price fixing. To invest in artist and music is a great risk and requires enormous $$$ resources the return should also be commiserate to the risk.


RE: About time!!
By fic2 on 8/31/2007 1:15:46 PM , Rating: 3
Interesting that you only count the revenue off of one song, but the expenses for many songs. At least I am guessing that you don't hire PR for one song @ $15k, college radio for one song @ $3k, etc.

Also, most bands I know have songs/CDs that they did on their own, PR own their own, etc before any label, indie or otherwise, would touch them. Unless you are actually creating the band then I would expect most bands are coming to you with some kind of fan base otherwise you wouldn't touch them.

There is no way in hell I would pay $3 for a song. Your comparison to buying a cup of coffee is stupid. If you can get a band to make a personalized song for ME then I would pay $3 for it.


RE: About time!!
By jtesoro on 8/31/2007 2:08:54 PM , Rating: 1
I sympathize with your situation but the market is changing and everyone will have to deal with it. I agree that piracy is having a negative impact on major and indie labels but I wouldn't point the finger at Apple. In my view, without iTunes and its ilk, there'd be even less money to go around the music industry.

You want freedom to do what you want with your product and sell it at the price you believe is fair. You do have this freedom. You can actually price songs at $2.99, but you'd have to do it at your own store. After all, no-one is forcing you to go to iTunes.

I also don't like your comparison to expensive coffee. Like you, they should be able to price it the way they want. If people find the coffee too expensive they simply wouldn't buy it. But people do buy it for some reason in spite of availability of super cheap coffee they can make at their own homes. The onus is on you to make your product desirable at the price point you want.


RE: About time!!
By MaulBall789 on 8/31/2007 2:29:03 PM , Rating: 2
And I think you just made my point better than I did. I've been through all of this before and you are absolutely right, it takes a lot of dough to front a new act especially on an indie label. But you have to remember that your first priority is to get the artist as much exposure as humanly possible, not to make a profit. If they are talented enough when they perform live and get their name/brand out to the public you give away free cds, t-shirts, etc. to get those initial 14k-20k fans and hopefully their word of mouth creates some real interest. But in the beginning you have to be able to give it away for nothing. Is it worth it? Most of the time, no. But if they hit, then heck yeah.

As for those old 45s (yes I'm old enough to remember them), there was a B side with a potentially hidden gem, so a little more content for your money. Not to mention that the poor performers were not kept on shelves for very long, and as there was no other outlet, that single was essentially dead. So if you were to actually charge $5 per digital single dl, like a 45 adjusted for inflation, there would certainly be a few die hards who would pay anything for their favorite band, but a grand majority would be a lot less thrilled. $50 for an album of 10 songs wouldn't fly now or then, adjusted back. (I seem to remember the majority of entire albums back in the 60s being $2.99 to $3.99) Give it away for free and just about anyone who stumbles across them will at least give it a listen, and generally create some buzz, good or bad.

I don't know this for sure, but I pretty sure that iTunes is charging you a premium on your digital catalog because you are more of an unknown quantity. I would be very surprised if a Universal doesn't get a much better rate of return on their catalog as they have far more leverage to get a bigger slice of the $0.99. Maybe a big label insider can fill us in.

In conclusion, running a small label is tough. I admire you for doing it. There isn't an antacid strong enough keep me in that job. But you take that risk knowing that one big hit can make it all worthwhile. THEN negotiate your own bigger slice of the pie! Or get bought out by a major.


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