NBC Pulling Its Shows Off iTunes

source: applegazette

The President and CEO of NBC Universal, Jeff Zucker recently announced that NBC would not renew its contract with iTunes when it ends at the end of this year. NBC was used iTunes to sell its shows online. The reason for ending the contract was the amount of revenue generated by NBC through iTunes, which according to the CEO was very less. NBC earned $15 million in just the last year on iTunes alone. But it seems Jeff Zucker is still complaining.

Jeff Zucker wanted to raise the price of its shows on iTunes which was not allowed as iTunes has a fixed-pricing policy for all shows. With the price increase NBC was suggesting it would have cost a customer a total more than it would cost to buy the DVD for that season. On part of iTunes this was a good decision as if one company is allowed to do such an experiment and if it is even successful, the rest of the companies providing such services through iTunes would also end up doing the same. In short each company would be able to decide its own price and the competition with each other would just keep on going. The customers then might end up not buying the shows that are priced higher than others. This would obviously not have a good effect on the companies.

NBC also wanted iTunes to share its revenue that it earned through video iPod sales. NBC’s videos account for only about 40% of all downloaded on iTunes. This was the most outrageous reason to give for ending the deal with iTunes. There is no confirmed knowledge that the iPod a person is buying is going to be used mostly for NBC shows. They could also then demand that computer manufacturers should share revenue with them also as other than iPods, people also watch shows on their computers. So for iPod to share its revenue from iPod sales would not be beneficial. Other companies would also demand the same especially in the music industry, the record companies. There are also plenty of other ways to watch the shows especially for the people who download them illegally for free through P2P protocols such as BitTorrent. According to the article of Mathew Ingram, the manufacturers of TV sets do not share the revenue with the companies who own the various channels, nor have they ever done so in the past. So in the end this is a loss for NBC itself as $15 million for online sales that is other than the revenue it generates otherwise, is better than nothing or anything less for that matter.

Steve Jobs Of iTunes Takes A Jab At NBC


Sources and References:
[1] http://www.theglobeandmail.com/servlet/Page/document/v5/templates/blog?pastWeeks=200710&hub=WBmingram&x=23&y=13
[2] http://www.applegazette.com/ipod/apple-responds-to-nbc-by-dropping-the-new-fall-season-of-nbc-shows/