DailyTech - Adding Insult to Injury: NBC Moves to Amazon

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Internet Adding Insult to Injury: NBC Moves to Amazon
Jason Mick (Blog) - September 5, 2007 9:00 AM

53 comment(s) - last by Baked.. on Sep 10 at 2:17 PM

(Source: NBC)

NBC has found a new home for its TV content: Amazon.com.

It may be nearing the end of summer, but last week proved particularly heated, as media giants Apple and NBC Universal exchanged terse statements.

The dispute began when NBC Universal decided not to renew its contract to sell its TV content on iTunes. DailyTech reported on Friday, that the two parties were parting ways, and that after the contract's expiration in December, iTunes would no longer sell NBC's TV programming, including the popular shows, "Heroes," “30 Rock” and "The Office."

NBC openly admitted that much of the dispute was over pricing, as well as NBC wanting the ability to package content together as it chose.

The split was not the first between Apple and a major media provider. In June, the Universal Music Group of Vivendi (UMG) announced that it would not be renewing its contract with iTunes, and would no longer sell its music on iTunes. The move was thought to be partially instigated by Apple's slow adoption of DRM-free music technology. UMG's artists included pop, rock, and rap acts such Akon, Rhianna and U2.

NBC was the first major television content producer to drop iTunes, though. ABC, CBS, FOX and The CW, along with more than 50 cable networks still provided shows with iTunes. Further, NBC was one of iTunes' largest content providers, providing 30% of iTunes sales of TV content.

DailyTech recently chronicled the next episode in the Apple and NBC saga, with the breaking news that the conflict heating up, following the release of a statement from Apple. Apple claimed in its statement that NBC had demanded an astronomic 150% price increase from $1.99 per episode, to $4.99 episode. Further Apple decided to drop NBC's content early, in September, before the start of the next television season.

iTunes VP Eddy Cue is quoted by DailyTech as saying, "We are disappointed to see NBC Universal leave iTunes because we would not agree to their dramatic price increase, we hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers."

Now there is more headline news in the evolving drama between Apple and NBC, with the entry of a new player: Amazon.com. CNNMoney.com reports that NBC plans to sell its content through Amazon's Amazon Unbox service, in a "variety of packages".

Pricing and terms were not disclosed, but many speculate that Amazon.com offered some of the concessions in price increases that iTunes would not. Also, the announcement clearly indicates that Amazon is willing to provide NBC with the ability to control its show's content, something Apple would not do. The article also states that NBC had been unhappy with Apple's failure to provide stronger anti-piracy measures.

While NBC did not specify prices for episodes under the new agreement, it did mention that there would be discounts to customers purchasing entire seasons of NBC TV shows. Also pilot episodes will be available to download free of charge.

Fans of NBC programming can be happy to know that they will be able to download the TV shows--from someplace--though they may have to pay more for it.

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RE: Apple

By MPE on 9/5/2007 3:49:02 PM , Rating: 2

1 & 2 - And? It does not change the fact that iTunes main purpose is to serve the iPod economy. Anything beyond that - like Windows desktop playback - is the side effect of expanding the iPod economy.

3. So? Bad DRM in one company does not justify or make Bad DRM from another company 'good'.

4. No one said MS is good.

Yes complain about Apple.

The reality is, in order to expand digital distribution capitalistic forces must kick in. Apple having a strangle hold on the major content will not help.

NBC's price change is a short term downside. In the long term, natural market forces (demand and supply) will regulate it. Apple controlling pricing for content they do not provide in order to serve their HARDWARE economy is a myopic.

Without outside pressure (independent labels, consumers and artist) you think Apple would have offered no DRM music?

Stop defending Apple. Other company's stupidity is no justification.

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RE: Apple

By plinden on 9/5/2007 4:23:10 PM , Rating: 1

quote:
1 & 2 - And? It does not change the fact that iTunes main purpose is to serve the iPod economy. Anything beyond that - like Windows desktop playback - is the side effect of expanding the iPod economy.

So what? Apple is in the business of making money. If their plan is to expand the "iPod economy" why does it bother you? If it makes good business sense, why not? If it gives the consumer a better experience, why not? It doesn't change the fact that you don't have to buy Apple hardware to view video bought on iTunes. But you have to buy Windows to view Unbox content.

quote:
3. So? Bad DRM in one company does not justify or make Bad DRM from another company 'good'.

I sense you're missing the point. Things have just got a hell of a lot worse for consumers. And it's not Apple's fault.

quote:
4. No one said MS is good.

And I didn't say MS was bad. Again, you miss the point that you can no longer watch NBC video on Macs or iPods (70% of the portable player market). How is this Apple's fault again?

quote:
Yes complain about Apple.

Because they refused to roll over and agree to NBCs draconian demands? Sure, Apple's not doing it out of the goodness of Jobs' heart, but if it makes good business sense for Apple to provide a better consumer experience, how is that bad again?

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RE: Apple

By wupta on 9/6/2007 8:19:44 AM , Rating: 3

Content providers can and should decide the price that they want their product sold for. Consumers can decide to purchase or not. Apple is interested in selling it's products which are expensive and if it can provide cheap content well then it has succeeded in it business model.

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RE: Apple

By MPE on 9/6/2007 11:14:08 AM , Rating: 2

quote:
If their plan is to expand the "iPod economy" why does it bother you?

Because you are letting a HARDWARE company dictate CONTENT pricing. That makes as much sense as letting Texas Instrument dictating the price of movie ticket.

quote:
Things have just got a hell of a lot worse for consumers. And it's not Apple's fault.

You are myopic. When one company controls the hardware AND content pricing it is not good for the consumer in the long term. Never has. This gives one company too much power in the industry and the extended economy.
What happens if Apple decided to launch a Super iPod for $700 and in order to keep it attractive wants $.25 pricing for music? Which intern means less money for artist, producers, record label receptionist, assistant just out of college and all the people involve in to producing and delivering music. Again, you fail to see beyond your iPod and $.99/dl needs.

quote:
And I didn't say MS was bad. Again, you miss the point that you can no longer watch NBC video on Macs or iPods (70% of the portable player market). How is this Apple's fault again?

Because APPLE IS DICTATING PRICE FOR WHAT THEY DO NOT CREATE. They are using their hardware muscle to strong arm the content industry.

Let me put it this way. What if EA controls 80% of the video game market. Now they want to charge $200 per game. But to keep it attractive, they want all companies computers and consoles that play EA games to price the console at $20. Great for the consumers but totally fucked for the rest of the industry.

Low price is great but it must be viable to the business. And Apple is not the only business.

quote:
Because they refused to roll over and agree to NBCs draconian demands?

Yea but Apple had exclusive agreement of NBC content.
Not like Apple had to distribute NBC product only. Basically, NBC and others are sick of the one way street pricing. Apple can make millions from their hardware without any limitation while NBC and the rest cant.

And if you did not know by now - CONTENT is what really sells hardware.

Would you have bought a $500 8800 GTX card if the only game you can play was Pong?
Would you have bought a new 1080p LCD if you can only watch Home Shopping Network?
Would you have bought an iPod if you can only play Celine Deion in it?

The industry knows is has always been 'its the content stupid'. Apple just use a sleight of hand to make not so while undermining the content industry. I say screw them. Play the same game as the rest of the hardware industry.

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RE: Apple

By plinden on 9/6/2007 1:10:30 PM , Rating: 1

Yes, in theory, content providers should decide their own prices and DRM policies. I understand DRM. I work for a company that delivers online video content from third party content providers. We cannot get any contracts from content providers unless we offer DRM.

But it's FUCKING ridiculous the things they ask for.

Studio A will ask for their content to be downloadable and playable on only one PC, but with no expiration. Channel X will allow syncing to multiple windows mobile devices, but want a one week expiration, except for premium content which will expire in 24 hours.

Let me repeat: it's FUCKING ridiculous.

So what happens when Dick and Jane fly to Europe and want to bring some stuff to watch while they're on the plane?

Dick has to think, "Hmm, BSG is from NBC and I can play it only on one <insert name of mobile device>, but Jane has it on hers so we'll bring that. Lost is from NBC, or is it CBS? I think it's premium anyway ... better check that ... and so we'd better watch that Friday night. Aggh, we're not allowed to play that on Jane's <insert name of mobile device> so I have to bring my laptop ... crap! I left it at work. I'll have to make a detour on the way to the airport pick it up, but it's the other direction ... Sod this. I'm installing BitTorrent".

And an industry goes belly up because of the greed and shortsightedness of the content providers.

Apple are a big enough company to make a stand. We are a small company who can't, so we have to roll over, which means no one wants our stuff (I wouldn't pay for it), which makes it harder for us to get contracts. But I don't blame Apple. I blame the stupidity of the networks/studios/cable providers. They don't understand that if a consumer has to think about DRM, it's a failure. Apple does understand that, so its DRM is comparatively lax, while still offering some piece of mind to the providers.

Apple's business practices, in this case, are good for everyone, Apple included: the consumer doesn't have to keep track of an infinite variation in prices or DRM policies, and providers sell more and make more money.

In all this, I can't believe you are arguing that NBC wanting to charge 2.5x the price and demanding more restrictive DRM is good for anyone, not even NBC itself. There's no guarantee that NBC, or any other content provider, will make the connection between falling online sales and their own stupid policies, so you can't assume that NBC will make any concessions to the consumer. They think we're all pirates anyway.

The networks don't understand online business, they wish it would go away. They want you pay for viewing BSG (that's the only NBC-owned program I can think of right now) on your TV, and more for watching it on each PC, and more for watching it on an iPod/windows mobile device.

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RE: Apple

By teclis1023 on 9/6/2007 1:12:46 PM , Rating: 2

I'm not one to usually weigh in on these types of arguments, but I think I might on this one. Just a warning - I use Vista, XP, Ubuntu and OS-X. I am not really biased toward one company or the other, and sort of see Microsoft and Apple as being two sides of the same coin.

Regarding the itunes pricing thing...I have generally found iTunes' pricing to be adequate and fair. I am not anti-DRM, and do not pirate any music/software/video. Because of this, DRMs rarely affect me adversely. I understand the open-source mentality (again, I love linux) but at the same time, I feel that customers end up putting too much expectation and demand on companies to cater to their every whim and desire.

I think that NBC's desired price hike is lame, and if they go through with it, I won't purchase their shows in a digital format, especially when I can get the entire season's DVD with 30 episodes for the price of 10 lower-quality digital files! If they want to do that, then it's fine, but moving away from the Apple infrastructure is only going to hurt them (as we know from the 'tremendous success' of iTunes' competitors)

While it's true that having a hardware/software company also dictate the pricing of digital services and subscriptions is definitely sketchy, I feel that with iTunes, you're simply presented with an alternative option. If iTunes was THE ONLY way to receive TV shows and music, then it would be one thing, but I can get a DVD, or subscribe through MS, Real, Napster, etc. The reason iTunes is the best is not only because of its seamless integration with the iPod, but also because of the relatively solid software infrastructure it's built on. The bottom line is that Apple made a very smart move in creating the iTunes software package and store.

In terms of the intense apple-hate that a lot of people feel... my opinion is that if you want to bag on Apple for making profits, then just use Linux. Certainly no Windows user should be upset at Apple for their pricing...you can buy a full computer (Mac Mini) with a fully functional operating system for only $200 more than the Vista Ultimate software alone costs. Add in Microsoft's desire to make proprietary every file format and extension possible, and you've got a company hell-bent on forcing its users to continue suckling at the MS Teat for years and years.

It's definitely true that Apple computers are not cheap...but let's be honest with ourselves...sub-$1000 laptops from HP/Dell/Toshiba usually suck anyways, and they come loaded with crappy trial software, bad quality hardware and horrible customer service. Spending an extra $200 for a great laptop really doesn't seem outrageous, especially considering the massive amounts of fully functional software that comes included.

Hey, I don't care who uses which computers, but for the morons who go around bashing Apple or Linux or whoever, take a chill pill and stick to the issues. If you don't like someone's pricing...go somewhere else. In the end, that's the best way to change the market. Don't be a sheep.

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