Resolving the NBC - Apple, Inc. Debacle
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September 6, 2007 - 11:00pmIf you’ve been browsing the web at all this week, you’ll no doubt have heard something of the spat that is brewing between media giant NBC Universal and iPod manufacturer Apple, Inc. The two corporations have so far been unable to negotiate a new contract for the sale of NBC shows through Apple’s iTunes video store, and this disagreement came to a head last Friday, when Apple announced that it would be blocking the addition of any new NBC episodes to the store.
Apple claims that NBC wanted to drive the price of TV shows as high as $5 per episode, from the current $1.99 flat rate. NBC quickly rebutted this, saying that it only wants flexibility to charge variable rates — either higher or lower then $1.99 — depending on the particular show and whatever promotions were running at the time.
A quick survey of the iTunes store right now shows over 20 shows from NBC and even more from other NBC-affiliated networks such as Sci-Fi and USA. According to the two parties, this content composes somewhere around 30 - 50 percent of video content on iTunes, so while allegations from NBC and Apple as to the size of the library vary significantly, the loss will certainly be a significant one for those who use the service at all.
Ultimately, however, I agree with Forbes Magazine reporter Louis Hau, who suggested that this particular fight wouldn’t amount to much. Although the online video market is very small right now, NBC would be crazy not to want to take advantage of advertising in iTunes, which has some 76 percent of online music sales, according to The New York Times.
And Apple certainly can’t be happy about the loss of, at the bare minimum, 30 percent of its TV show offerings. Just Wednesday, Apple announced an entirely revamped line of iPods, virtually all of which center around enhanced-resolution video playback features. These new iPods, along with the Apple TV, a device that streams video from the computer to the television, represent an overarching video strategy on the part of Apple. A large part of this strategy’s success will be determined by the depth and variety of content made available through the iTunes store. So, I’ll cast my lot with Mr. Hau and wager that we’ll see a resolution to this conflict very soon.
Not that it matters, anyway. NBC’s true folly here is in minimizing the number of legal channels through which people can view the network’s shows. Certainly it’s true that the lost shows will still be available through other venues such as advertising-supported playback through NBC’s website, Amazon.com’s Unbox service and the new joint NBC-News Corp. venture entitled Hulu. However, the fact remains that the more difficult it is for people to find content legally, the more prevalent illegal options will become.
On campus, getting legal TV is hard enough as it is. Even the use of legal download services such as iTunes can incur a large bandwidth bill to the unsuspecting downloader; full-length episodes can run 500 to 600 megabytes in size, or over a full 10 percent of one’s monthly bandwidth allotment on ResNet. Combining these difficulties with the fact that iTunes is truly the only well-known media download service on campus, the fight between NBC and Apple could very well drive underground those few students who had decided until now to take the high road in downloading TV shows off of the information superhighway. This represents a real, permanent loss for NBC and all content providers, both in revenue and in mind share amongst the prized college-aged demographic.