Details of Apple, NBC Squabble Emerge
Details of Apple, NBC Squabble Emerge
by , 1:20 PM EDT, October 25th, 2007
NBC is obtaining far less than one percent of its TV renevue from iTunes, according to a Washington Post report on Thursday that revealed new details related to the squabble between Apple and NBC.
In the course of describing the current state of the conflict between NBC Universal and Apple over pricing control, Frank Ahrens provided some previously undisclosed details.
First, NBC Universal has confirmed that it sent a letter on October 9th asserting that Apple is in breach of contract. However, it is doubtful NBC will pursue legal action. The negotiations have ground to a halt, according to the report, and there is no resolution in sight.
Second, NBC claimed that before the breakup, its shows accounted for 40 percent of all the television programs purchased on iTunes. Apple said the number was more like 30 percent.
Also, while music companies depend on iTunes for 15 to 20 percent of their revenue, it is far less in the case of TV shows. In contrast, citing anonymous sources, the reporter said that iTunes revenues represented "far less" than one percent of NBC Universal's revenues -- only about $15 million.
Finally, regarding the core disagreement on pricing, the report provided details on the pricing proposals. According to another confidential source, Mr. Ahrens wrote that NBC proposed a range of prices for shows and packages on iTunes ranging from 99 cents up to $2.99. Apple declined that offer and later said in a press release that NBC wanted as much as $4.99 for some shows. NBC denied that, Mr. Ahrens reported.
Who has more to lose is the current question. Tim Bajarin of Creative Strategies pointed out that the sales of the Apple TV have suffered as a result. However, he also pointed out that NBC's action was a "mistake."
Observer Comments
Quotedaemon wrote:
$15 million is all NBC was getting from iTunes? No wonder they cut the cord.
Thats only about $15 million more than what they currently get from pirated shows, which is where I guarantee the vast majority of their former iTunes customers are getting their shows now. Some percentage of something is better than a greater percentage of nothing.
This is also a bit of a red herring, as notice they said it was less than 1% of NBC/Universal's profits, a corporation that sells far more than just TV shows. If they pared it down to just revenue from TV show DVDs and advertising, I'm sure it would look far more respectable.
We'll see, if people are really short sighted enough to think that supporting NBC's service is worthwhile, and switch to using that, then maybe NBC will seem to have had some sort of point, otherwise its the same "Consumers should pay us more!" argument they've been making, in which case they can attempt anatomically impossible copulation with themselves, for all I care.
Edit: Further, I don't quite see the correlation between this and AppleTV sales, I think the lack of progress on getting HD on iTunes and the continuing lack of online movie rentals/downloads direct to the aTV are far more likely culprits.
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