Tech News

NBC and iTunes trade blows in pricing battle

By Stevie Smith Sep 3, 2007, 17:49 GMT

Apple Inc. this week continued to swap corporate handbag swipes with American television network NBC ahead of Apple’s much talked about ‘special event’ which is planned for this coming Wednesday. The current bout of backbiting between the two giants comes amid rumours suggesting that Apple’s midweek event is to include news of yet more video-related content for the iTunes Store – though, on the evidence of this news, probably not courtesy of NBC.

The latest twist in the ongoing content pricing standoff between Apple and NBC has seen California-based Apple announcing that no new episodes of NBC television shows will be made available via its hugely popular iTunes Store. Apple has intonated that new episodes of returning shows such as Heroes and The Office will no longer appear on its portal for download, which NBC is duly contesting on the grounds of contractual obligation.

Beyond any possible obligatory constraints, Apple’s move could still prove significantly costly to NBC with regard to the exposure of new autumnal content such as "Bionic Woman" and "Chuck" both of which are touted as being high-profile additions to its line-up.

Both shows have now fallen foul of Apple and NBC’s continuing tussle concerning the latter’s drive to increase the per episode download rate on iTunes from its flat $1.99 USD rate. NBC is apparently looking to make downloads of its more popular shows higher than the flat rate, while also potentially dropping below the flat rate during special promo periods.

According to a New York Times article, Apple has duly refused to alter the flat download rate of its video content, which has already led to NBC announcing that it will not be renewing its iTunes contract when it expires in December of this year. Furthermore, Apple has also ventured that NBC’s desire to increase the existing $1.99 USD per episode rate up to $4.99 USD is both greedy and an attack on the interests of consumers.

While expressing hope that NBC will "change their minds" concerning the contract renewal refusal and thus return network content to the download portal’s "tens of millions" of customers, Apple VP Eddie Cue offered that Apple and iTunes "are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase."

Apple’s refusal to carry NBC’s new autumn headliners is likely to come as somewhat of a gut punch to the network in terms of the sizeable marketing benefits it acquires from exposure via iTunes. However, Apple’s decision also carries a degree of self-inflicted harm seeing as NBC accounts for some 30 percent of the TV sales passing through iTunes.

NBC spokesman Cory Shields commented that Apple’s low $1.99 USD flat rate exists to "drive sales of Apple devices at the expense of those who create the content that make those devices worth buying." Amazingly, despite the business bile presently being spewed from NBC and Apple, Shields still indicated that both parties are hoping to reach a mutual resolution that will result in a new contractual agreement.

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