Print 61 comment(s) - last by SavagePotato.. on Nov 3 at 12:26 PM

"So that's a 'No' on a cut of the iPod hardware sales? Well, I had to ask."  (Source: NBC)
New allegations emerge which indicate more possible causes for the NBC and Apple split.

The story of NBC and iTunes' breakup is well known to DailyTech regulars.  Back in August DailyTech first reported the split.  It then went on to cover Apple's decision to prematurely drop its contract with NBC, which would have last until year's end. 
The coverage included a blast at NBC in which Apple alleged that the split resulted from NBC's greed $4.99 per episode pricing demands.  NBC fired back, finding a new home at Amazon's new Unbox download service.

NBC previously stated that it wanted to be able to offer free pilot episodes, control the packaging of content and have more flexibility in pricing.  It also wanted additional protection from piracy.  It stated that Apple was unwilling to work with it on these issues.

Now new allegations have emerged, which may provide shocking testimony to NBC's audacity, if they are true.

NBC President Jeff Zucker, according to a report in Variety, allegedly shared with The New Yorker's Ken Auletta during a benefit for former football powerhouse Syracuse University that NBC had wanted a cut of every iPod Apple sold as part of NBC's negotiations to renew their contract. 

Zucker is quoted as saying, "Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money.  They did not want to share in what they were making off the hardware or allow us to adjust pricing."

This revelation is being met with incredulity in the media industry.  After all, NBC was not alone in most of its complaints against Apple -- for example, iTunes’ fixed price of $1.99 per episode.  However, no other television network would dare make as audacious a demand as a cut of hardware revenues.

More surprising is how little money NBC was really making for Apple and itself.  In the first year of its contract Zucker is quoted as placing its iTunes revenue $15 million USD.  In comparison to the $16 billion USD in revenue that NBC Universal, this is only 0.3 percent of the company's total revenue.

It was noted that NBC Universal's theme park business did $100 million USD in revenue. On the other hand, this does mean that iTunes sold approximately 7.5 million NBC TV episodes.

It seems relatively obvious that such demands were the realm of fantasy.  Otherwise every television maker from Sony to LG would have to pay a slice to NBC, Fox and the other studios.  The “iDevices” would have to pay cuts to Fox, ABC and many more.  This is obviously an untenable business model, considering the drive for low cost expensive hardware that often is only slightly profitable at best.

Other networks such as FOX and ABC have not dared make such demands.

NBC has a chance to prove itself on its own with the new HULA service it is starting with FOX (coverage later today at DailyTech), its deal with Amazon Unbox and its NBC Direct service, reported about at DailyTech earlier this month.

However, until NBC shows a far larger business volume, its demands may appear undeniably like gold-digging of a hardware giant.

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RE: Chuck
By SavagePotato on 10/31/2007 2:22:15 PM , Rating: 1
That is exactly the point. Theres no reason the customer can't learn something by taking their computer in. Much in the way of giving them advice on how to avoid problems in the future so they won't have to bring it back in.

Furthermore it often times is neccesary to correct them in the process of clarifying the problem. "Theres something wrong with my hard drive." Just doesn't cut it, eventualy you are going to have to ask them if they are refering to the actual hard drive or some other general problem and to be specific about what it is.

I would love for every customer that gets dealt with to come away smarter and knowing more about their computer. If it means I don't have to clean vundo off it every two months because they learned to avoid it for example that's a good thing.

I can imagine if I went to a mechanic and told him there's something funny with my engine when my brakes were squeaking I would be getting corrected somewhere along the line. It is just the wall of ignorance comes up when dealing with a computer and a total air of wanting to be babied.

RE: Chuck
By borismkv on 10/31/2007 2:39:55 PM , Rating: 2
So the fact that they keep calling it a hard drive even after you've corrected them doesn't make you realize that you're doing it wrong?

There is a big difference between saying, "Actually, the hard drive is an internal storage device" and saying, "I'm sorry, I'm a little confused, do you mean that there is a problem with your internal hard drive or with the whole computer?"

RE: Chuck
By SavagePotato on 10/31/07, Rating: 0
RE: Chuck
By borismkv on 10/31/2007 5:27:37 PM , Rating: 2
Yes, because I didn't feel like going back to re-type everything you said. Everyone who's following this thread knows what you said, my paraphrase takes them back to it. It isn't *what* you say that is my point, it's *how* you say it that I'm arguing against. Anything you say, "Actually" to someone, it belittles them, and makes them think that you feel like you are better than them. A simple change of wording can make an incredible amount of difference when dealing with people.

RE: Chuck
By SavagePotato on 10/31/07, Rating: 0
"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer
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