NBC says bye to iTunes
NBC says bye to iTunes, hello to piracy and lost revenue | Webware : Cool Web apps for everyone:
In news that comes just weeks after iTunes' loss of Universal Music Group, NBC has officially canceled its contract with iTunes, citing the need for stricter piracy controls and higher pricing that Apple was unwilling to provide. That said, NBC will still continue to sell its programming on iTunes until its contract runs out in December.
I'm not quite sure what any of these companies are thinking. First, Universal Music Group steps away from the third-largest music retailer in the world because it thinks iTunes is suffocating it, then NBC walks away to make more money and stop people from stealing its media. But what both companies don't understand is that they need Apple far more than Apple needs them.
I think people aren't looking at the bigger picture here: Apple isn't just the market leader here, or the market dominator -- it is, effectively, the market. This means that it calls the shots, and the studios hate being in a position where they get dictated to.
This is really all about -- in the long-term -- trying to make Apple more responsive to the studio. To take Apple down a notch. One could argue that a little more competition for iTunes would be good for the industry and consumers, but in this case, what the studios really want is what the studios see as good for them, and one thing Apple's been very committed to is doing what they think is good for the end user.
So far, of course, nobody's really come up with anything that remotely threatens Apple, and nobody significant has walked away from iTunes, only threatened to. Apple has to walk a bit of a fine line here, maintaining that customer-centric view, but not to the degree that it finally does cause the studios to walk. The studios, obviously, won't really be happy until they're in charge and people do it their way; it's not about money or piracy, it's about who's the alpha, and right now, that's Apple, and studios always believe they deserve to be the alpha. THAT is the essential struggle here.
Update:
Michael Gartenberg's take on this:
Michael Gartenberg - NBC leaves iTunes - First Take:
Bottom line? Apple's looking good here, championing users. NBC is making a mistake, $4.99 is way too high per episode (no word on what the deal is for other venues that sell NBC stuff like Amazon Un-Box) and this is the type of move that pushes users to look for other places to get the content (like in hi-def for free over BitTorrent). Legal paid content drives consumers to do the right thing, take it away and nature will abhor the vacuum it creates.
Sometimes I think God put video content guys on the planet to make the music guys look progressive and visionary.
Boy, it's going to be a long, slow, painful journey from "hey, you'll take this and like this because you have no choice" for these guys, isn't it?
Update 2: why do I get the distinct impression that somewhere in the NBC executive offices there's a person who's yelling at the walls "what do you mean they called our bluff?" -- and finding out the hard way that Steve Jobs is a rotten person to play all-in with in business poker....
NBC made a gambit to try to push the revenue number up a huge amount (one can only wonder whether the increased price would make up for the drop in unit sales, but that's not MY problem.... and I wonder if NBC even cared about it after this turned into a "who's in charge" game?) and now, their revenue number is zero. And their chance of replacing that revenue from other online sources is, well, zero. And that means if that guy in the NBC studios has financial targets to make, his chances of making them are -- zero.
And yet they clearly thought they could pressure Apple into compromising with what was clearly a designed leak by NBC to put some public pressure on Apple. Instead, of course, Apple simple said "fine, bye". Which, when you're really the only player in the market, you can do.
I still think there's a good chance NBC will find some way to come to an agreement with Apple on this, but any chance they thought they had of getting Apple to bend on pricing's gone. This is, frankly, a stupid move by NBC for trying to force Apple into a move when they had no negotiating leverage. But what else is new when it comes to the studios?



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