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"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 11/1/2007 10:25:30 AM , Rating: 2
If you are someone that enjoys having to talk to adults as if they are 2 years old, I'm honestly realy happy for you.

Back here in reality bills still need to get payed and work still needs to be done to do it. When it comes to working with computers I enjoy my job. That doesn't mean I have to enjoy talking to people that like to act like a baby when they are a full grown adult and come away from it feeling enriched somehow like you do.


RE: Chuck
By MPE on 11/2/2007 10:08:27 AM , Rating: 2
Just fix the stupid computer. That is what you are paid to do. Stop educating people who is paying you. Educate them when you are paying them. That is how the world works.

Your obsession, based on that assumes computers are simple machines, is classic nerd impotence syndrome.

Get a job of power instead of being exploited. Then again, you seem to be convinced that brain power alone makes you happy or better than anyone else. Hint: Unless you are Einstein - brain power is not enough. I'm sure even smart people from Google have realized that by now.


RE: Chuck
By SavagePotato on 11/3/07, Rating: 0
“We do believe we have a moral responsibility to keep porn off the iPhone.” -- Steve Jobs

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