NBC's iTunes Pricing Flexible, Just Like Jeff Zucker's Memory
I got into a pretty public fight with Steve Jobs about our TV. We were the market share leader at iTunes, we had 35 percent of the market share at the iTunes store. What we said to Steve and his team was that we wanted there to be some variable pricing. There’s no example in the world of where the retailer sets the price–there’s no example, except at Apple. We’re very conscious of what happened in the music industry. … We offered do a test with one show, you pick the show, I don’t care, and charge $2.99 for that and everything else at $1.99, and in fact we’ll give you the whole library at $0.99, and they didn’t want to do it. Granted none of it is as mobile and successful as iTunes. … We agreed to put up our film stuff on Apple just a few weeks ago and the reason we did that is variable pricing.”
Apple today announced that it will not be selling NBC television shows for the upcoming television season on its online iTunes Store. The move follows NBC’s decision to not renew its agreement with iTunes after Apple declined to pay more than double the wholesale price for each NBC TV episode, which would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99.”
We’ve said all along that we admire Apple, that we want to be in business with Apple. We’re great fans of Steve Jobs.”
Apple has destroyed the music business–in terms of pricing–and if we don’t take control, they’ll do the same thing on the video side.”
Nearly a year after being eighty-sixed from Apple’s iTunes store over a pricing dispute, NBC Universal is returning to the service, Apple CEO Steve Jobs announced Tuesday. Beginning immediately, NBCU programs in standard definition will be available from iTunes at a price of $1.99 per episode, programs in high definition for $2.99 per episode. Catalog titles will be sold for 99 cents.
It’s not entirely clear what led to the warming of relations between the two companies, though NBC Universal CEO Jeff Zucker said the new cooperation was due to a concession from Apple (AAPL). “What happened a year ago is we got into a dispute over pricing and thought there should be flexible pricing on the television content in the iTunes store,” he told CNBC. “They didn’t want to, we withdrew our content. The fact is, we have flexible pricing, and the programs will be on there at the 99 cents price point, $1.99 price point, and for HD episodes of the program, that will cost $2.99. So basically we were able to achieve our goal that not all contents should be of the same value. When we achieved that, we were happy to be on iTunes.”
That’s certainly an interesting re-imagining of NBCU’s recent negotiations with Apple. But it’s not entirely accurate. Because while Apple did agree to flexible pricing for NBCU (GE) programs on iTunes, it didn’t really agree to the flexible-pricing scheme the network was seeking. NBCU wanted flexible pricing based on popularity. What it got is flexible pricing based on video definition, which Apple had already agreed to with other networks. NBCU wanted complete price variance. It didn’t get it. The company also wanted Apple to double the wholesale price it pays for each TV episode sold on iTunes. And it clearly didn’t get that either, because if it had, “The Office” would be priced at $4.99 per episode instead of its current $1.99./$2.99–according to Apple, anyway.
So sure, NBCU got flexible pricing. But it got it on Apple’s terms, which presumably started looking quite a bit more attractive when the network’s other online video distribution deals didn’t prove to be as successful as it had hoped.