NBC Rhetoric vs. iTunes Increases

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com)

Just prior to unveiling the public beta of the joint venture Hulu.com (http://www.macrumors.com/2007/10/29/nbcs-itunes-alternative-launches-private-beta/), NBC CEO Jeff Zucker had some hot words for Apple's iTunes (http://www.msnbc.msn.com/id/21533515/) (via MSNBC).

"We know that 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," Mr Zucker said at a breakfast hosted by Syracuse's Newhouse School of Communications.

The rift between NBC and Apple came to a head earlier this year when NBC announced it would be pulling its content from iTunes (http://www.macrumors.com/2007/08/31/apple-to-stop-selling-nbc-television-shows/), and recently some music labels have also been loosening ties with iTunes (http://www.macrumors.com/2007/10/25/warner-music-considering-not-renewing-long-term-itunes-contract/).

While the rhetoric does not necessarily represent any new development in the saga, it has seen increasing attention around the Mac web over the past 24 hours. To be fair, it appears that Mr. Zucker's comments were not aimed at diminishing iTunes' role in saving a dying music business, but rather aimed at the increasing influence Apple has gained over the pricing of content... a trend that has made NBC and other content creators uneasy.

Article Link (http://www.macrumors.com/2007/10/30/nbc-rhetoric-vs-itunes-increases/)

[ejbenjamin]

I agree-- iTunes has given the labels cover to massively overcharge for albums online.

Wait, that's not what he meant?

[chr1s60]

Lol. I think this guy is on drugs.

[VoodooDaddy]

"Mr Zucker also suggested Apple had rejected requests to share revenue from its sales of iPod devices, which are far more profitable than the digital media store."

And why would Apple share their revenue of the iPod??? Jeff Zucker is an idiot.

[A is jump]

I agree-- iTunes has given the labels cover to massively overcharge for albums online.

Wait, that's not what he meant?

no doubt... its not like the record industry shot themselves in the foot a long time ago.
but suddenly Apple is responsible because the industry is full of greedy bastards with hearts that pump dust.
apple is most likely saving the industry. and has the upper hand really... so good luck NBC, lets see if you can screw this up like you usually do.

[Peace]

"Mr Zucker also suggested Apple had rejected requests to share revenue from its sales of iPod devices, which are far more profitable than the digital media store."

And why would Apple share their revenue of the iPod??? Jeff Zucker is an idiot.

I guess because Amazon is sharing it's profits from all the MP3 players it sells.:rolleyes:

[zwida]

You know, I think it might be fair to say that the internet destroyed the business model for record labels, but all Apple did was try to SOLVE the problem (and make some money off it at the same time). All perfectly reasonable business aims.

Sure, Zucker is pissed off. Frankly, he should be pissed off that he and his company flubbed things to such an extent that they created a stunning business opportunity for Apple...

[kkat69]

I guess because Amazon is sharing it's profits from all the MP3 players it sells.:rolleyes:

ROFL!

That would be the iZon? or the AmaZune?

[TuckBodi]

Record industry execs and movie moguls salary equals say $1 billion each. So because of them screwing the consumers time after time they lose the number of people buying their crap. BUT they have to keep up that $1 billion salary somehow so they'll continue to jack up prices until the cost of an album will be $1 billion and they'll be the only ones to afford it!

Sales go down, prices go up and so do the salaries of these clowns. I for one don't feel any pity!

[zombitronic]

Microsoft is in a profit sharing agreement with Universal for every Zune sold. Universal feels that Microsoft owes them, since people are buying Zunes to listen to Universal content...even if they're not. I actually feel kinda bad for Microsoft for going along with this retarded agreement.

Fortunately, Apple makes providers pay THEM to be privileged enough to supply content or services for their devices, (i.e., AT&T and the iPhone.) Nice try, though, NBC.

[Peace]

Microsoft is in a profit sharing agreement with Universal for every Zune sold. Universal feels that Microsoft owes them, since people are buying Zunes to listen to Universal content...even if they're not. I actually feel kinda bad for Microsoft for going along with this retarded agreement.

Fortunately, Apple makes providers pay THEM to be privileged enough to supply content or services for their devices, (i.e., AT&T and the iPhone.) Nice try, though, NBC.

I would't be saying too quickly.This whole mess has a possibility of backlashing on iTunes.

[mooncaine]

I guess, when he says "destroyed the music business", what he really meant was "shattered the illusions of the greedy suits, and showed everyone that music wasn't worth quite as much as we imagined."

Schmuck.

[longofest]

The two different sides really need to tone down the rhetoric, get into a compromising mood, and get back to the negotiating table.

NBC needs to realize how it is coming off: as a greedy corporation that doesn't give a damn about the consumer. And while efforts like Hulu.com are a good start, they really leave a lot to be desired for people who want to watch made-for-TV content on their TV.

Apple also needs to realize that as good as its products are, content really does make them shine. My :apple:TV will be worth about half what it was to me this year because I won't be able to watch the final season of Battlestar Galactica on it (one of my favorite shows... produced by NBC Universal).

[gceo]

Interpretation:

"We didn't like making money off of The Office, so now we give it away for free. Take that Apple."

What a tool.

[mooncaine]

I would't be saying too quickly.This whole mess has a possibility of backlashing on iTunes.

The thing about iPods that Zucker doesn't seem to get is that it's useful with or without his "media". In fact, I can get great use out of the thing without the Internet, too. All I need is the gear to rip my own CDs or LPs to MP3, and I've got that, so Mr. Zucker, the movie industry and the RIAA can go screw for all I care. See how much money that'll make ya, ya crybaby.

[bigmc6000]

As has been pointed out multiple times before this is just completely retarded on a pure business level. I'm willing to bet the people who are willing to plunk down $2 an episode for TV shows aren't the same people who go searching the web for content to watch in their web browsers with no ability to download or skip commercials. They potentially had 2 revenue flows but because they got greedy they lost a significant one. They seem to think all those people who paid to download the content are now going to watch it online. Umm, no. I don't get flash on my iPhone and Good Lord it would take forever! I'll just hit up one of the free torrent sites and download a hi-quality version that might even already be in mp4 format and put it straight on my iPod/iPhone. I really wonder what crony they hired to come up with this brilliant idea...

[Ha ze]

Apple does walk a line though, between hardware builder and retailer.
However, it is not their responsibility to keep people from pirating, it's the content creators job. Apple has done an absolutely amazing job of providing an easy and consistent experience in the iTunes store. If companies like NBC pull out, fine, but remember we were all purchasing FREE content for $1.99 when it was in the store. and if NBC "only made $15 million" and they were 40% of iTunes, that would mean iTunes has only sold $37.5 millions dollars worth of TV shows.. that seems low to me.

[longofest]

I guess, when he says "destroyed the music business", what he really meant was "shattered the illusions of the greedy suits, and showed everyone that music wasn't worth quite as much as we imagined."

Schmuck.

... just be careful when you just quote him saying that iTunes "destroyed the music business", because he did specify that it was from a pricing point of view.

Some folks have been running wild with that quote snippet and saying things like "uh... i thought iTunes SAVED the music business". Yes, but he was speaking to the abilities of the companies to price their content, not to the health of the companies in general. therein lies the dangers of taking quotes out of context.

That being said, yes, I see that you understand what he meant (and you obviously disagree with him, which is OK :) )

[killerrobot]

I would't be saying too quickly.This whole mess has a possibility of backlashing on iTunes.

I tend to agree. What all these Music and TV companies are pissed off about is that Apple was making lots of money through their "products". I think a lot of them are finally waking up and thinking that if Apple got iTunes to be profitable, why can't they set up something themselves and keep all of the profit instead of sharing it with a third party (hmm.... sounds like a general business practice).

I think the Hulu thing is a good idea - not the best, but a good start. It's free to watch when I want to. Also, I'm sure they get paid bigger bucks by companies for advertisements than what they were getting from the 1.99 downloads.

And as far as everyone complaining it won't work on their iPhone, maybe Apple should actually get Flash to work on it since it seems more and more developers are heading that way.

[bigmc6000]

I tend to agree. What all these Music and TV companies are pissed off about is that Apple was making lots of money through their "products". I think a lot of them are finally waking up and thinking that if Apple got iTunes to be profitable, why can't they set up something themselves and keep all of the profit instead of sharing it with a third party (hmm.... sounds like a general business practice).

I think the Hulu thing is a good idea - not the best, but a good start. It's free to watch when I want to. Also, I'm sure they get paid bigger bucks by companies for advertisements than what they were getting from the 1.99 downloads.

And as far as everyone complaining it won't work on their iPhone, maybe Apple should actually get Flash to work on it since it seems more and more developers are heading that way.

The point is I don't want to have to go on to some website to watch it. What about when I'm on a plane? I should open 3 Safari windows and load them all up before I board so I can watch them in the air? The download and the watch in my web browser people are different. There are a few people who do whichever but by and large the people who want to have their content whenever they want and be able to put it on portable devices aren't the same people who are content to sit there in front of their computers and watch TV shows while they are at home.

And no, I seriously doubt they will be making more than iTunes was giving them for each show considering it required basically 0 extra cost on their behalf other than providing apple with a single digital copy of the show. It was FREE REVENUE!!!! Only morons pass that up and they have now bit the hand that's been slipping them cookies on the side...

[TruffleHound]

We are talking about an industry (music, movie and television studios) that have a long ingrained history of having absolute control over their product, its distribution, and how much they can charge for it. These industries move at the speed of continental drift, and change directions like oil tankers.

The people at the top are hugely powerful and wealthy, and think quite highly of themselves. They don't leave money on the table easily, demonstrated by the fact that movies you and I would think of as blockbuster hits have yet to show a "profit" under their accounting practices. The fact that Apple has the influence it has in "their" industry is undoubtedly a source of resentment and jealously, and you can bet they will fight any expansion of that control.

As consumers of music, movies and television, it is in our interest to get better product, cheaper and in delivery formats that offer the greatest flexibility. In terms of music the iTunes Store hit home runs on almost all counts. For video content, they does not deliver as well on quality and price, and the film and television industries aren't exactly struggling. They recognize that they need to be in the internet delivery market, but they are undoubtedly searching for a model in which they control that market, not Apple. And $10-15 million a year of lost revenue is nothing in the grand scheme of things when you are talking about controlling an industry that can generate billions in revenue.

[Mykbibby]

Yah, they won't let NBC overprice their videos, so in order to rip people off, they have to go elsewhere.

As soon as hulu flops, The Office's ratings dip, and the writers strike, NBC will come back begging for mercy

[Virgil-TB2]

The point is I don't want to have to go on to some website to watch it. What about when I'm on a plane? I should open 3 Safari windows and load them all up before I board so I can watch them in the air? The download and the watch in my web browser people are different. ...Another downside to this same scenario...

Hulu content is USA *only.*

Up in Canada we can't see anything at all and the same goes for the rest of the planet. So when the plane took off (or even before) the screen would go black anyway.

Ironic that at the same time Apple is desperately trying to expand into a world-wide operation, (not doing a very good job either), ... NBC is headed the opposite way. :p

Judging by what I read on the forums here and on the news sites, the *major* users of downloaded TV Shows are actually international users. Australians and UK citizens who don't *get* NBC TV shows are the ones downloading all the TV Shows, not Americans.

NBC just cut off their biggest digital markets with this move.

[roland.g]

Sorry Z(S)ucker, but NBC content is FREEEEEEE. All I need is a TV, and an antenna. It's thrown into basic cable and everything else. And $1.99 an episode is great considering that. But I have a DVR so I never buy TV shows. So Apple got you money you weren't getting before and then you complain that it isn't more.

Idiot.

[Cleverboy]

Apple needs to come out with a DVR/Cable card set-up, and ditch the noise.

iTunes has destroyed NOTHING, even from the "pricing" perspective. Digital sales of television shows, by NBC's own estimation... are a pittance. CBS said exactly the same thing. It is simply another promotional avenue (a significant one that confers VALUE to content rather than perpetuating an impression that the content is FREE), and provides a means of stymieing piracy, by providing content in easy digitally form... allowing users who wish to acquire digital content legitimately, to DO so. Moreover, many users have found highly convenient, even effortless ways of transferring content between different formats regardless of the existence of iPod or Apple.

The bottomline is NOT pricing flexibility OR control... its the attack of the green eyed-monster. Its about nothing less than sheer unadulterated, unfiltered, unbridled CORPORATE JEALOUSY.

Remember the corporate executive that spontaneously blurted that Steve Jobs doesn't want anyone else to make any money? It was pathetic. When Apple first came to them, it was a wasteland in the digital music arena (http://www.rollingstone.com/news/story/5939600/steve_jobs_the_rolling_stone_interview).

ROLLINGSTONE: Of course, music theft is nothing new. Didn't you listen to bootleg Bob Dylan?

STEVE JOBS: Of course. What's new is this amazingly efficient distribution system for stolen property called the Internet -- and no one's gonna shut down the Internet. And it only takes one stolen copy to be on the Internet. And the way we expressed it to them is: Pick one lock -- open every door. It only takes one person to pick a lock. Worst case: Somebody just takes the analog outputs of their CD player and rerecords it -- puts it on the Internet. You'll never stop that. So what you have to do is compete with it.

At first, they kicked us out. But we kept going back again and again. The first record company to really understand this stuff was Warner. They have some smart people there, and they said: We agree with you. And next was Universal. Then we started making headway. And the reason we did, I think, is because we made predictions.

We said: These [music subscription] services that are out there now are going to fail. Music Net's gonna fail, Press Play's gonna fail. Here's why: People don't want to buy their music as a subscription. They bought 45's; then they bought LP's; then they bought cassettes; then they bought 8-tracks; then they bought CD's. They're going to want to buy downloads. People want to own their music. You don't want to rent your music -- and then, one day, if you stop paying, all your music goes away.

Millions upon millions were flocking to Napster and Morpheous to download illegal music screaming, "This is GREAT!" Wasn't that a tad more detrimental to the music business than selling music digitally without any manufacturing overhead, well above cost?

In floundering to some form of better solution, they been trying to push Apple into a subscription model, and Apple has remained skeptical, even while clearly conducting tests and examining the possibilities in private. In order for digital subscriptions to not be a bankrupt model, it counts on millions upon millions of people either making one of two choices... #1.) Subscribing to a monthly fee they do not fully take advantage of. #2.) Subscribing to a monthly fee they completely take advantage of. #3.) Subscribing to a monthly fee they routinely take advantage of, by downloading music and immediately dissassociating it from its DRM system in order to get "free" music they can keep forever.

If iTunes were to become a nexus for subscription content, I can guarantee you... and by the interview clip above, Jobs KNOWS this... that most people will use the subscription for option #3. One person per household or group, will have a subscription that is used regularly to strip DRM from downloads, and the purchase model will evenutally go bankrupt.

This is not going to end well. At all. Apple needs to start giving control back to consumers and calling it a day on the studios that can't hack it.

~ CB

[spookje]

Let's see so Apple doesn't want to share revenue of the iPod devices with the video/music industry. But AT&T and fellow mobile operators have to share revenue to be allowed to use the iPhone. Somewhere this doesn't sound fair.

[bigmc6000]

Let's see so Apple doesn't want to share revenue of the iPod devices with the video/music industry. But AT&T and fellow mobile operators have to share revenue to be allowed to use the iPhone. Somewhere this doesn't sound fair.

Don't let that simple fact fool you. NBC/ABC/CBS/FOX/et al are making hordes of EXTRA money off of iTunes. It's revenue that was previously 0 or ad supported (really not that much - especially compared to $2 an episode). The big deal here is NBC is closing it off to all the international people who Apple has been working hard (or hardly working depending on who you ask ;) ) to get TV content to the International Audience and now NBC says screw you. Not only do we not want your money we don't even want you watching our shows. Umm, what??

And don't be fooled - AT&T is making a significant profit out of being cingular (pun intended ;) ) provider of the iPhone in the US. If they were really loosing that much cash do you think tMobile and O2 would be signing up for the same type of deal?

[exodus]

Ok, when is the TubeTV of Hulu gonna come out. Ambrosia's SnapzPro movie capture does the job, but you gotta wait for it to play.
-Ex

[JNB]

Old media is pig cr@p.

Old media heads are pig vomit.

They're not even worth the sweat it would take to horsewhip them.

Just one more confirmation of why I despise the nets.

[shamino]

NBC/Universal is working overtime to make themselves irrelevant, with or without iTunes.

They've already driven me away from three of the four NBC shows I used to always watch. They moved two Law & Order shows to incompatible time slots (one of them going against the Fox Sunday cartoons, and the other going against ER, on a different channel), and have simply ruined the third L&O show (using it as a soapbox for political rhetoric instead of telling a good story.) And their Sci-Fi Channel division is working overtime to cancel or destroy most of the other shows I like to watch.

Given the fact that their lousy programming decisions are rapidly driving me to watching little more than Fox cartoons and Discovery Channel documentaries, I really couldn't care less about their threats to Apple. If they want to go, fine. Good riddance to bad rubbish.
Apple needs to come out with a DVR/Cable card set-up, and ditch the noise.
That would be ideal. Right now, it would take only minor modifications (tuner hardware and some new software) to add PVR functionality to an Apple TV.

A Mac mini, if equipped with a third-party tuner/recorder package already has all the remaining components, thanks to FrontRow's ability to play any video clip on your hard drive.
This is not going to end well. At all. Apple needs to start giving control back to consumers and calling it a day on the studios that can't hack it.
Fortunately, consumers already have control. Apple simply needs to make it more obvious to those who haven't figured it out.

On the music front, there are several DRM-free download solutions (including two that carry major-label material), plus CD ripping, plus audio-capture/radio tuner hardware (for those who want to record broadcasts), plus file sharing (illegal in most countries, but popular nonetheless.)

On the video front, there are multiple PVR solutions, and DVD ripping (illegal in many places, but still popular) in addition to iTunes. So Apple's hardly in control here either.

And, as with audio, there's nothing stopping third parties from selling video on their own. It will be iPod/Apple-TV compatible as long as it is DRM free. And even third-party DRM-wrapped content can be played on a Mac, if they are willing to ship a player (or at least a QuickTime plugin).

Ultimately, however, control will reside with the copyright holders. I predict that if the major studios don't get on the ball, they'll be marginalized just like the record labels are.

Which reminds me of something I heard a few months ago

This year, at Dragon*Con (http://www.dragoncon.org/), Richard Hatch (of Battlestar Galactica fame) made a very interesting observation. It costs about $3M to produce an episode of Galactica (other Sci-Fi shows are similar. Shows without special effects tend to cost less.) A 4-episode DVD, therefore, costs about $12M to produce. If sold at $10 direct to customers (a bit more if sold retail, of course), it would require about 1.2-1.5 million purchases to break even. At its worst, Galactica's ratings have indicated 3-5 million viewers, and at its best, much more.

He mentioned this after observing a phenomenon WRT Galactica. The Nielsen ratings have declined over the first three seasons, but the fan response has been growing exponentially. This is because fans are buying the DVDs, they're making PVR recordings, and they're sharing their recordings with each other - none of which show up in the ratings. Even PVR recordings don't count unless the recording is watched within 24 hours of the broadcast, because the networks choose to look at overnight statistics and not long-term aggregates.

If a show like this is showing Nielsen ratings of 3-5M (which may not be enough to keep a show on the air), then it is likely that there are actually more like 7-10M actual viewers. More than enough to buy enough DVDs to keep a direct-sales show profitable. This is a golden opportunity for a production company to bypass the networks.

I'm not a businessman, but I think this model has merit, and I think we'll see a few production companies try it (at least as an experiment) in the near future. If the networks don't get on the ball by then, they'll be marginalized, just like the record labels are.

[Porco]

Yawn, another suit who doesn't get it. Add him to the list. Next!

[LeviG]

Ok my take on this (I'm british so this might be a bit off) :)

NBC produce the series which they flog on free tv and make all their money by adverts and by selling dvds or to other countries for their viewing - cost of production remains constant whether theres an online store or not.

NBC sends same film/series (most likely already in a digital format) to apple who then convert the film to desired format for itunes.

NBC make an additional $15million for doing absolutely nothing apart from sending a file to apple, apple make small profit after overheads.

NBC pull out of itunes due to pricing issues and decide on going free with adverts (probably the same as shown on live tv) or without - has to do own processing to flash format for web only viewing.


So in my view NBC are idiots, there is no reason they couldn't combine HULU with itunes, there are a lot of itunes/ipod users, alot of which are getting savy with torrents etc. And they made $15million (I suspect it was higher) which they would not have made without itunes.

People who are paying for content from itunes are not likely to do in browser viewing and the ones who don't pay aren't bothered either way.

My take on NBC is they want more money, fair enough but I wouldn't pay more than the current asking price for a tv series which is in a) a low resolution, b) not really suitable for anything other than ipod/itv viewing c) free if you have a recorder in a media pc and d) has no physical medium (ie no dvd).
If I want something to keep, I'll wait for the cheap priced dvd to come out, spend a bit of my time ripping the file and then have a movie and something to physically hold onto.

[tjcool18]

"Mr Zucker also suggested Apple had rejected requests to share revenue from its sales of iPod devices, which are far more profitable than the digital media store."

And why would Apple share their revenue of the iPod??? Jeff Zucker is an idiot.

On the same note, I think that TV manufacturers should begin to share their profits with NBC as well. I sure wouldn't buy a TV if it couldn't pick up NBC.

[Anorion]

I keep trying to think of anything on CBS that I actually watch, but I can't think of anything, so nuts to them and their crappy programming.

[killerrobot]

The point is I don't want to have to go on to some website to watch it. What about when I'm on a plane? I should open 3 Safari windows and load them all up before I board so I can watch them in the air?

I think you answered your own question by saying the web people and downloading people aren't the same.

The download and the watch in my web browser people are different. There are a few people who do whichever but by and large the people who want to have their content whenever they want and be able to put it on portable devices aren't the same people who are content to sit there in front of their computers and watch TV shows while they are at home.

I'd probably say that the majority of those that want to be able to put it on portable devices either use torrents or their tivo to save their files and then put it on anything they want to.

And no, I seriously doubt they will be making more than iTunes was giving them for each show considering it required basically 0 extra cost on their behalf other than providing apple with a single digital copy of the show. It was FREE REVENUE!!!! Only morons pass that up and they have now bit the hand that's been slipping them cookies on the side...

No it wasn't FREE REVENUE!!!! They had to pay Apple. What part of overhead comes out free? And if they weren't making enough money off of advertising then how do they even put shows on the air? How does google make all of its money? Hmmm.... go to hulu.com, get plastered with ads that are paying NBC to be on the website and that gets rid of the overhead to Apple, and probably a lot more money - once again considering google as the ideal here.

Like I said before, its not the best solution for NBC, but I think they've realized that torrents are huge, tivo/dvrs are more and more common, so sooner or later less and less people are going to pay 1.99 for something that is free on TV. I personally think its going to hurt Apple, however minimal, more than its going to hurt NBC.

[Rodimus Prime]

I think it is a 2 way street. Apple refused to give any control over the pricing. NBC has deside in the long run they would rather not let apple get that much power. They want some of the control. Plus it all supply and demand. They more than likely believe that some of the shows where rightfully so worth more than 1.99 other might be worth a little less but apple refuses to let them have any control over the pricing.

People complain about NBC not sharing control but apple is a control freak and one of the worse in that matter. They refused to let any one else really have much control over anything to do with there products.

[Football1maniac]

To take this another perspective about Apple paying money to music labels that they receive from iPod revenue...

So, next time you go out and buy a fridge, are you going to pay money to the different companies that might stock your fridge with food? No.

Stupid NBC, like the stupid Hulu will do anything, please:rolleyes:

But hey, only a matter of time until re can put those videos onto any iPod.:D:apple:

[GSMiller]

no doubt... its not like the record industry shot themselves in the foot a long time ago.
but suddenly Apple is responsible because the industry is full of greedy bastards with hearts that pump dust.
apple is most likely saving the industry. and has the upper hand really... so good luck NBC, lets see if you can screw this up like you usually do.

Ah, this is proof that content providers always play the blame game. Nothing is ever their own fault. That's how it's always been and how it always will be. By the time they catch up with the digital age of now, we'll be in the digital age of tomorrow and they'll still be out of touch.

[X38]

Wow, NBC are even more stupid than I thought.

Here's the fundamental problem for NBC that they just don't seem to get; my entertainment habits aren't limited by budget, they're limited by time. Like everyone else, I'm busy to begin with and in this modern internet world, there are more opportunities for free entertainment than I will ever be able to explore. The one thing I am not is bored. The only way that commercial distribution of entertainment (online TV show re-runs especially) will ever be able to compete with the flood of free entertainment is to be so cheap that I don't care about the money.
NBC is acting like the world is the same as it was when I was a kid; the largest cities had at most five or six TV channels (which went off the air overnight and included black & white shows), no cable TV, no VCR's, no cassette tape recorders, & certainly no internet. TV business models from those days are less than irrelevant in today's world.

Jobs was right to hold his ground. There is no way I will ever buy TV shows for $2.99 an episode. Even $1.99 is too much. I bought a couple on a lark when iTunes first got TV shows just to try it out, but I only watched them once and essentially it was just wasted money.
If they want to try making money from online distribution, they need to REDUCE the price of TV shows. At most, they should be $0.99 an episode and I might think about it. Realistically, if they really want me to buy a lot of shows, they are going to have to sell them for no more than $0.50. Given that the cost of reproduction and distribution is essentially zero, if they can't make a profit at 50 cents, then they are stupid and need to go out of business to make way for somebody who knows what they are doing.

As for NBC getting a cut of ipod sales, what kind of drugs did Zucker have to get stoned on to think that one up?! That makes as much sense as demanding a cut from the TV manufacturers, or say the oil companies demanding a cut from the car companies.

As for Zucker's thoughts on the music business; cry me a river. So what. Again, Apple has made reproduction and distribution costs negligible and even lets the record companies keep the vast majority of income (often said to be $0.70 per track sold). If they can't make a profit at those prices, they are just as stupid and just as deserving of failure as NBC.
I had gotten so frustrated with the worthless content and absurd prices and bundling practices of the music industry that I had essentially quit buying music at all for many years. The only reason I returned to buying music was the iTunes store and it is the only place I shop for music. Any price increase or any decrease in buying options at iTunes will guaranteed stop my music buying cold once again. While I do buy some stuff at $0.99, if the music companies had even half a brain, they'd cut the price to $0.50 and I'd buy far more than twice as much.
While they are at it, movie prices need to come down to $5 or less if they want me to buy.

Somebody needs make it clear to the media companies that their days of insane profits are over. They can make money and can compete in the world of vast and pervasive free entertainment and super simple piracy, but they are going to have to live with profit margins more in line with other industries. If the media moguls can't learn to live on lower margins, they are going to die, simple as that. Maybe Steve Jobs is the guy to tell them.

It was rumored some time ago that Apple iced its DVR project to appease NBC specifically in order to get their cooperation with the iTunes store. If Zucker is going to at like a crying baby because the market will no longer respond to his every greedy whim, then time for Apple to add DVR functionality to their lineup and give everyone the ability to watch NBC's content whenever & wherever they want without sending any money to NBC. I'll hold out a little while longer for that, but if it doesn't happen soon, it's Elgato for me. No matter what though, until NBC drops their prices to something I'm willing to pay, I'm not going to do business with them and for all I care they can go bankrupt. If they do, there's still way more entertainment out there than I can ever take in.

[X38]

Apple also needs to realize that as good as its products are, content really does make them shine. My :apple:TV will be worth about half what it was to me this year because I won't be able to watch the final season of Battlestar Galactica on it (one of my favorite shows... produced by NBC Universal).


If Apple integrated a DVR into iLife / iTunes/ AppleTV, you'd be able to watch it just fine regardless of where NBC wants to sell its re-runs and you wouldn't even have to pay NBC...
(Of course, you can do that already with Elgato.)
If Apple really wants to do it right, they'll make it super simple to delete the commercials and move & reproduce the recording anywhere you like. Then Zucker will really have something cry about.

Apple has the upper hand here and they should stick to NBC had enough that Jobs can just buy up the remnants of NBC for pennies on the dollar and run it himself.

[pjarvi]

I won't use Hulu.com simply because I don't like the name of the site. :cool:

[chicagostars]

Would be great if the parties could work this out, but Zucker sounds like the latest in an ever-lengthening line of media execs who can't see beyond they're own greed and pride.

I'm interested to see how this all shakes out. I think Zucker may overestimate the importance of NBC content at the iTMS, especially with Apple's special relationship with the Disney family. NBC would be missed, but may feel they're missing something on hulu.

[chicagostars]

Ok my take on this (I'm british so this might be a bit off) :)

NBC produce the series which they flog on free tv and make all their money by adverts and by selling dvds or to other countries for their viewing - cost of production remains constant whether theres an online store or not.

NBC sends same film/series (most likely already in a digital format) to apple who then convert the film to desired format for itunes.

NBC make an additional $15million for doing absolutely nothing apart from sending a file to apple, apple make small profit after overheads.

NBC pull out of itunes due to pricing issues and decide on going free with adverts (probably the same as shown on live tv) or without - has to do own processing to flash format for web only viewing.


So in my view NBC are idiots, there is no reason they couldn't combine HULU with itunes, there are a lot of itunes/ipod users, alot of which are getting savy with torrents etc. And they made $15million (I suspect it was higher) which they would not have made without itunes.

People who are paying for content from itunes are not likely to do in browser viewing and the ones who don't pay aren't bothered either way.

My take on NBC is they want more money, fair enough but I wouldn't pay more than the current asking price for a tv series which is in a) a low resolution, b) not really suitable for anything other than ipod/itv viewing c) free if you have a recorder in a media pc and d) has no physical medium (ie no dvd).
If I want something to keep, I'll wait for the cheap priced dvd to come out, spend a bit of my time ripping the file and then have a movie and something to physically hold onto.

a lot of sense here, a lot of sense. please share with nbc. :)

[JNB]

Jobs can just buy up the remnants of NBC for pennies on the dollar and run it himself.


As the largest individual shareholder of Disney, which owns ABC, I'd say he already has a network to play with...:p

[Mackan]

Let's see so Apple doesn't want to share revenue of the iPod devices with the video/music industry. But AT&T and fellow mobile operators have to share revenue to be allowed to use the iPhone. Somewhere this doesn't sound fair.

Yeah, the whole iPhone situation is a perfect example of Apple's greed, I would say. Which is a trait of all companies. It is a tough market, companies have to survive and strive to expand, think of how to maximize profit, at almost all costs...

Regarding iTunes, I do understand the record labels. I think I have no problem paying different price for different songs/albums/videos, as long as they stay reasonable. That is pretty natural...

[MacPhilosopher]

First, they are just upset because the consumers have finally broken the stranglehold the record industry had on the entertainment business. These fools have been forcing us to listen to garbage for years, and now with the internet, the best music can find its way to consumers. As a matter of fact, digital technology has nearly destroyed the greedy scam studios have been profiting from for decades. Indie producers can sell their music on iTunes, and even get a majority of the .99 cent cost back. The studios have never paid a writer/producer/performer that high of a return. As for NBC expecting part of the revenues of the iPod, they are getting revenues. They are selling more music. This is the same relationship that Apple has with AT&T. They develop technology that sells more music (or cell contracts) and Apple gets some of the revenue. What did NBC have to do with developing the iPod? Music has been around a lot longer than NBC. They didn't invent it. They do not even produce most of their shows. They buy them from production companies and the creative writers and producers that think them up. The Office, like many of the best shows, came from Public supported BBC producers and writers. NBC couldn't "create a hit if their lives depended on it.

[ekdor]

There is a saying, used in the Matrix and Star Wars for starters...

"What do men with power want? More power."
which also translates into...
"What do men with money want? More money!"

It's about wanting more power and more money.

Also not every CEO or director etc. actually knows what he/she is doing and to me it's showing in this case. It seems obvious. They want their products sold on iTunes Store at a greater price and Apple wont increase the price. So they remove it so they can sell it else where at that higher price without competing.

The effect is their distribution method has to be as successful as iTunes Store because they can't depend entirely on supply and demand. The reason would be that not all products (generally) are desired by all consumers. So they would have to increase the number of items available that are desired. because at some point the consumer makes a decision about whether to purchase a product at a particular price, or not, is it worth the money.

For example, I might not be able to get "Battlestar Galactic" at Apple iTunes Store but I can get other sci-fi cheaper. So NBS have do what Apple do and start signing products up to increase content. But if those products are signed up with Apple as well and Apple sells cheaper they are in direct competition. So they still have to reduce price or depend on consumer loyalty, other unique features and unique content to convince the consumer to buy from NBS at a higher price. I think for most of us, unless we have to because of the advantages of some feature or unique content, would purchase form the cheaper source.

I would think NBC would do much better to provide as much content as they can to Apple iTunes Store and just make as much money as they can. They can still sell their content else where for what ever price. For instance I don't buy shows from iTunes because I LOVE having disks. So I pay a bit more for the disk.

I'm sure there is also a bit of jealousy because the management at Apple have demonstrated to all of us, a steady climb in many different industry. They can make a successful product in many industries and demonstrate a growth on that. Yet these other greedy companies struggle to do so in just one or two... Probably because they are greedy and uncooperative.

Just hope Apple can weather these tantrums and continue to provide us with the outstanding level of quality they have done so far.

[ikir]

"Mr Zucker also suggested Apple had rejected requests to share revenue from its sales of iPod devices, which are far more profitable than the digital media store."

And why would Apple share their revenue of the iPod??? Jeff Zucker is an idiot.


Ah ah i agree! But probably it is not an idiot after all, he is only trying to paint Apple bad, lot of companies and even a lot of users are doing it. And it is an important weapon, sadly.

[boer]

ROFL!

That would be the iZon? or the AmaZune?

Nobody claimed Amazon was making mp3 players just selling them. To get the difference please refer to a dictionary.

Amazon currently lists about 1900 items in their "mp3 players" category.

[Kirkmedia]

As has been pointed out multiple times before this is just completely retarded on a pure business level. I'm willing to bet the people who are willing to plunk down $2 an episode for TV shows aren't the same people who go searching the web for content to watch in their web browsers with no ability to download or skip commercials. They potentially had 2 revenue flows but because they got greedy they lost a significant one. They seem to think all those people who paid to download the content are now going to watch it online. Umm, no. I don't get flash on my iPhone and Good Lord it would take forever! I'll just hit up one of the free torrent sites and download a hi-quality version that might even already be in mp4 format and put it straight on my iPod/iPhone. I really wonder what crony they hired to come up with this brilliant idea...

Brilliant. You have put everything into perspective.

[Kirkmedia]

Let's see so Apple doesn't want to share revenue of the iPod devices with the video/music industry. But AT&T and fellow mobile operators have to share revenue to be allowed to use the iPhone. Somewhere this doesn't sound fair.

Good point. Apple has to be careful not to look like a hypocrite.

[bigmc6000]

No it wasn't FREE REVENUE!!!! They had to pay Apple. What part of overhead comes out free? And if they weren't making enough money off of advertising then how do they even put shows on the air? How does google make all of its money? Hmmm.... go to hulu.com, get plastered with ads that are paying NBC to be on the website and that gets rid of the overhead to Apple, and probably a lot more money - once again considering google as the ideal here.


I guess I'm a little out of the loop here but the only thing I've ever heard was a rumor that NBC was paying apple to carry their stuff. Could you link to an article or something? I must have been on vacation when that was a big issue.

Thanks! (and judging from other posters comments they seem to the think that same thing in terms of "free revenue")

But really - business wise is still makes 0 sense at all. They should have hired a company to do a comprehensive survey before they made this monetarily idiotic move. I mean, good Lord, iTunes video sucks right now and people STILL buy it. Imagine when they finally sack up and make it 720p - it'll really be selling like hot cakes.

[mr.666]

Sorry Z(S)ucker, but NBC content is FREEEEEEE. All I need is a TV, and an antenna. It's thrown into basic cable and everything else. And $1.99 an episode is great considering that. But I have a DVR so I never buy TV shows. So Apple got you money you weren't getting before and then you complain that it isn't more.

Idiot.

^^^^ yup. TV is paid for (many times over) by advertising!!!!! if this moron thinks he's got a clue about tech. he obviously doesnt have a DVR or know how to use one... or maybe a slingbox if i wanna steam anytime.

[ilogic]

I think all of you guys make some really good and valid points.

Apple wont include TV Tuners to record to their Apple TV because at this stage in the game its much more profitable to make a constant flow of revenue through episode sales.

NBC looks like their shooting themselves in the foot, by not making money with iTunes, and offering the episodes for free via very low quality flash formats. But its not true, they are looking to make even more money than they do with iTunes.

Their hope is not to make a flow of revenue like Apple and especially not with Apple, but to get people to buy DVD Box Sets, that is where their big money is. These Box sets are expensive and very much desired if the best quality you can get on your PC is flash.

If Apple continues to makes sales you have less and less potential DVD Box Set buyers. And, if NBC is up and arms right now, its because those 15 Million they made with Apple is quite miniscule to what they could have made with DVD Box sets.

Their 40% content provision point is just another excuse, and has very little to do with the true reason for their iTunes cut back.

And if you think about it, if advertisement companies pay only for advertisements watched, (like they're planning to) the networks would be up in arms about that and in all fairness, it should be that way, but the point is, these guys are greedy old school fat cats, nuff said.

Also, if Apple, with their influence and control seek to lower the prices of these episodes to .99 then it nets Apple more money, and NBC and the like lose a greater majority of possible DVD Box sets when people have no problem with spending .99 for a good episode.

And from NBC Stand point, it makes sense. But from the customer's view point, NBC wants our money, more of it. And nothing makes it clearer than observing other Network's relationship with iTunes, like Fox, or CBS who express contentment with their Apple partner. They even put shows on their for free, why, because they're trying to get more popular, where as NBC is the real juggernaut and the true competition.

The music aspect is a bit different only in the sense, there are no realy CD Box Sets when buying a single album. So Universal doesn't have a cannibalizing effect to be concerned about, and they too have to resort to selling music on the internet. However they just want your money... they want to charge as much as it makes them happy. Their efforts will fail though I won't buy any song for more than .99 and I definitly won't buy anything through any other service than iTunes, why, because iTunes wants music to be cheap.

What does it all mean, it means exactly what you guys have been saying! These guys are jealous that Apple makes money off of them. So they're trying to be independant with Apple, trying everything in the book. I for one will stick with iTunes.

Jeah!

[mozmac]

The record industry makes it sound like they don't have enough money to put food on the table. Are they serious? They could charge $4 an album and still make good money. Sure the rappers wouldn't be able to drive four Bentleys, they would be limited to one. But since when do people who make music deserve to live OUTRAGEOUS lifestyles, while others with more "mundane" jobs are perfectly happy with the salary they make?

The whole media industry makes me sick.

[shamino]

Their hope is not to make a flow of revenue like Apple and especially not with Apple, but to get people to buy DVD Box Sets, that is where their big money is. These Box sets are expensive and very much desired if the best quality you can get on your PC is flash.
Actually, most DVD box sets cost less than iTunes.

A season typically costs $30-50 and contains 22-26 episodes. For a per-episode cost of $1.15-2.27. From this retail price, you have to subtract out retailer mark-up, manufacturing and distribution costs. A studio is unlikely to make more than $1 per episode from DVD sales.

In contrast, iTunes sales are $2 each. I don't know what percentage Apple takes, but I would expect the studio to get at least $1.50 from each episode purchased.

Yes, there are some box sets that are very expensive, but most are as I described.
If Apple continues to makes sales you have less and less potential DVD Box Set buyers. And, if NBC is up and arms right now, its because those 15 Million they made with Apple is quite miniscule to what they could have made with DVD Box sets.
It's not.

They're upset about losing any source of revenue. They haven't gotten it through their skulls that the new medium is more profitable than the old.

Ultimately, it's about control, not money.

[Rodimus Prime]

I can see a lot of logic in this from a business point of view. NBC is not going to allow apple to dictated the cost of the shows. In music Apple already forced the price on the record companies and as other points out some music is worth more than others yet apple charges the same amount.

NBC pulling out now is going to be a heavier blow that part of Apple business because now they have a much higher risk of the other networks doing the same thing. I think getting part of the money off iPod sells could of been talk out but apple refused to really work out a deal. NBC wanted to try a flexible pricing system on ONE show just to see how it worked. Apple could even pick it but apple refused to.

Honestly from a business point of view this was a good move. Short term they eat a lost but long term they keep control and more than likely are going to make more money. Also if the other networks follow suit which the chances of happening have greatly increased because one big player already had the guts to do it means other are more than likely willing to so they get a little more control over the pricing system.

[ilogic]

Actually, most DVD box sets cost less than iTunes.

A season typically costs $30-50 and contains 22-26 episodes. For a per-episode cost of $1.15-2.27. From this retail price, you have to subtract out retailer mark-up, manufacturing and distribution costs. A studio is unlikely to make more than $1 per episode from DVD sales.

I get what you're saying but take into account that, Retailers pay NBC to buy the Boxed sets and when you buy a set, you're not paying NBC, NBC has been paid. These retailers buy in massive bulk filling 100s of stores each. This is lucrative for NBC, if these Boxed sets don't sell NBC loses big time. The manufacturing cost is minimal as the NBC family of companies own their own distribution house. And I don't think the 2 dollar per episode mark is a significant measure of things because Apple wants to drop the online price to .99 cents, what does that tell you? Does it mean, apple wants to lose its cut? or NBC? Or that even at 2$ the customer is still getting ripped off?

I do agree with you about the iTunes copy being cheap, but I think what bothers NBC is that this time around NBC has to pay Apple to have their media downloadable via iTunes, something they are certainly not used to.

You're right in your line of thought though, its not that they can't be content with making money with Apple, but that they aren't and wish to make more...


They're upset about losing any source of revenue. They haven't gotten it through their skulls that the new medium is more profitable than the old.

Ultimately, it's about control, not money.

you hit it right on the head...

[fusion19]

No matter how NBC tries to spin this story, they will still come off as a greedy corporation, angry that Apple will not charge more for TV shows. I don't see how NBC can claim that they are doing what's best for the consumer. Apple is the only one in this arguement that has said that they want to offer lower prices for TV shows. This "flexible pricing" buzzword that NBC keeps throwing around is just another term for higher prices.

Don't be fooled, people.

[Cleverboy]

Fortunately, consumers already have control. Apple simply needs to make it more obvious to those who haven't figured it out.Yup, you're right. That's what I meant.

"It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them."
-- Steve Jobs, BusinessWeek, May 25 1998
All the pieces are there. Part of what prompted my "what company should Apple buy (http://forums.macrumors.com/showthread.php?t=371909)" post. And NOT because Apple needs to "buy" anyone, but timing is crucial, and if iTunes is any indication (or even the new iMovie), Apple is great at integrating outside work and folding it into its own ecosystem... especially when it has the same design aesthetics. They need to make it OBVIOUS that you can rip your existing DVDs too and play them through AppleTV (or whatever it becomes) at hidef. If necessary, set some legal precedents for fair use... although apparently the CSS nazis have closed the hole Kaleidescape (http://www.kaleidescape.com/) was prancing through.
"The products suck! There's no sex in them anymore!"
-- Steve Jobs, On Gil Amelio's lackluster reign, in BusinessWeek, July 1997
I'm sick of the waiting and the whinning. The ooos and ahhs. No more foreplay... you hear that Apple! Let's wake the neighbors. Let's hurt ourselves in embarrassing ways. You hear me? Bring on the SEX. :D

~ CB

[Rocketman]

The Jobs/iTunes philosophy is a one price purchase, BUT, across many platforms (CPU, handheld, phone, servers) and medias (burn to CD, iPod, Phones, TV/audio servers).

The main complaint of media companies is Jobs will not budge on "recent releases" having an up-charge. The variance from one-price.

Jobs ought to find some "value added feature" you get with the new release for the up-charge price.

That will appease all sides simultaneously.

BTW Steevie-poo, I want a $mill for the idea. I'll take it in Mac Minis or MacBooks. :-|

Rocketman

[Cleverboy]

The Jobs/iTunes philosophy is a one price purchase, BUT, across many platforms (CPU, handheld, phone, servers) and medias (burn to CD, iPod, Phones, TV/audio servers).

The main complaint of media companies is Jobs will not budge on "recent releases" having an up-charge. The variance from one-price.

Jobs ought to find some "value added feature" you get with the new release for the up-charge price.

That will appease all sides simultaneously.You mean upcharge like iTunes Plus, and the pricing difference between new releases and "library" titles with movies? Universal/Amazon undercut pricing with iTunes Plus in the music area, and Universal doesn't seem at all interested in iTunes movies. Meh. No satisfying some people. Value-added for new releases of TV Shows wouldn't make any sense, considering they're already available for FREE on the NBC/ABC's website. It really can't survive a surcharge operation.

~ CB

[twoodcc]

i'm liking NBC less and less nowadays.....

[-hh]

NBC needs to realize how it is coming off: as a greedy corporation that doesn't give a damn about the consumer...

Well, they are a greedy corp, so that perception is spot-on.

... just be careful when you just quote him saying that iTunes "destroyed the music business", because he did specify that it was from a pricing point of view.

Agreed. This NBC whine is about control, not money.

...As consumers of music, movies and television, it is in our interest to get better product, cheaper and in delivery formats that offer the greatest flexibility...

And given that its only my consumer wallet that can reward (or punish) the corporation, I use my wallet to vote with. I've put together a list of older albums that I want for Christmas...but also made it clear that I want them only bought off of the USED rack. Take that RIAA.

Insofar as NBC, my VCR still works fine, and the Feb '09 transition to ATSC won't be a problem.


-hh

[pagansoul]

You know, the music industry is trying to find a way to tax the reseller market. I guess CDs last too long and can pass through many hands in its lifetime. I myself have some 20 year olds. They are stuck on the concept of selling the product over and over again, made to fade, landfill in 2 years, money train. They are already loosing their stable of actors, um..musicians to the do-it-yourself/sundance/Indie types. NBCs world is coming to an end, I just hope they don't go postal and end up taking a lot of little people with them.

I remember when Hollywood used to control everything about their stars, that didn't last. NBC wants to control everything they believe they own. They see everything slipping through their fingers. Going forward the pie is going to have more slices and once its eaten, that's it.

[Unspeaked]

The point is I don't want to have to go on to some website to watch it. What about when I'm on a plane? I should open 3 Safari windows and load them all up before I board so I can watch them in the air?

Another downside to this same scenario... Hulu content is USA *only.*


Aren't these arguments similar to the folks who want to buy an iPhone and unlock it?

"But I shouldn't be forced to use AT&T!"

"But I don't live in a country where Apple sells it!"

And then all the Apple loyalists yell at them and say if they want to use an iPhone, they need to follow Apples rules; if the rules don't work for them, they should get something else; etc.

So if you want to watch NBC's content, you should follow their rules. If you don't like what they're asking, then you should watch something else.

These are their shows that they produce and they shouldn't have to cater to their distributor's whims. I don't necessarily agree with it, but I respect their right to want to have control of pricing and such. It's bad enough when companies like Walmart make record labels and movie studios create clean or edited versions of their content - "or else!"... it's no better when Apple wants to dictate pricing for things they had no hand in creating.

[benpatient]

I do have to admit that the hulu videos look better than the ones you're asked to pay for on iTunes...

the iTunes video quality is not impressive at all...

[shamino]

So if you want to watch NBC's content, you should follow their rules. If you don't like what they're asking, then you should watch something else.
... and for that most part, that's exactly what I do. They're brain-dead policies (in all areas, not just with respect to Apple) have caused me to stop watching most of their shows.

Does this mean I'm not allowed to complain at the same time?

[seashellz2]

I would't be saying too quickly.This whole mess has a possibility of backlashing on iTunes.

Naw...iTunes is way too entrenched its almost an iconic term/item/action in the public consciousness.

[seashellz2]

Aren't these arguments similar to the folks who want to buy an iPhone and unlock it?

"But I shouldn't be forced to use AT&T!"

"But I don't live in a country where Apple sells it!"

And then all the Apple loyalists yell at them and say if they want to use an iPhone, they need to follow Apples rules; if the rules don't work for them, they should get something else; etc.

So if you want to watch NBC's content, you should follow their rules. If you don't like what they're asking, then you should watch something else.

These are their shows that they produce and they shouldn't have to cater to their distributor's whims. I don't necessarily agree with it, but I respect their right to want to have control of pricing and such. It's bad enough when companies like Walmart make record labels and movie studios create clean or edited versions of their content - "or else!"... it's no better when Apple wants to dictate pricing for things they had no hand in creating.

youre correct-they should be given total freedom to shoot themselves in the foot if they so choose: it still a free country....(but for how long?)

[seashellz2]

i'm liking NBC less and less nowadays.....
between DVDs, internet and cable, I almost never watch the big 5 networks ABC, NBC, CBS, Fox, WB (or that "My" channel)
Most of what they serve is garbage or lies...

[Diatribe]

Which reminds me of something I heard a few months ago

This year, at Dragon*Con (http://www.dragoncon.org/), Richard Hatch (of Battlestar Galactica fame) made a very interesting observation. It costs about $3M to produce an episode of Galactica (other Sci-Fi shows are similar. Shows without special effects tend to cost less.) A 4-episode DVD, therefore, costs about $12M to produce. If sold at $10 direct to customers (a bit more if sold retail, of course), it would require about 1.2-1.5 million purchases to break even. At its worst, Galactica's ratings have indicated 3-5 million viewers, and at its best, much more.

He mentioned this after observing a phenomenon WRT Galactica. The Nielsen ratings have declined over the first three seasons, but the fan response has been growing exponentially. This is because fans are buying the DVDs, they're making PVR recordings, and they're sharing their recordings with each other - none of which show up in the ratings. Even PVR recordings don't count unless the recording is watched within 24 hours of the broadcast, because the networks choose to look at overnight statistics and not long-term aggregates.

If a show like this is showing Nielsen ratings of 3-5M (which may not be enough to keep a show on the air), then it is likely that there are actually more like 7-10M actual viewers. More than enough to buy enough DVDs to keep a direct-sales show profitable. This is a golden opportunity for a production company to bypass the networks.

I'm not a businessman, but I think this model has merit, and I think we'll see a few production companies try it (at least as an experiment) in the near future. If the networks don't get on the ball by then, they'll be marginalized, just like the record labels are.

Now there is an idea. I'd love that but they're still generating a lot more money through ads on tv.

[shamino]

Now there is an idea. I'd love that but they're still generating a lot more money through ads on tv.
Who is "they"? The producers (and the actors and everybody else who works for the production company) get what the network gives them. Those contracts are negotiated before the show ever airs. If the show becomes popular, and can command high prices for ads, all that extra money remains with the network and doesn't go anywhere else.

Producing shows direct-to-customer solves this problem - the production company sees increased profit from a popular show. Of course, the producers can be just as money-grubbing as the networks are, but there's better odds of this money making its way to the creative talent (writers, actors, etc.) under this model than under the broadcast model.

Of course, the downside is that if the show is a dud, the production company may lose a fortune, whereas the network will absorb this loss in the broadcast model (subsidizing the duds with profits from the successes.)

[filmfx66]

"Mr Zucker also suggested Apple had rejected requests to share revenue from its sales of iPod devices, which are far more profitable than the digital media store."

And why would Apple share their revenue of the iPod??? Jeff Zucker is an idiot.

The reason why is that the itunes store and the ipod are locked together. Apple cannot sell the ipods in the numbers they do without the itunes store. The itunes store would be nothing if it were not for the content in the store. Thus there is a direct link between having the music and videos available and sales of the ipod line.

[Cleverboy]

The reason why is that the itunes store and the ipod are locked together. Apple cannot sell the ipods in the numbers they do without the itunes store. The itunes store would be nothing if it were not for the content in the store. Thus there is a direct link between having the music and videos available and sales of the ipod line.Zucker is still an idiot. Your argument (if it is even indeed his as well) is very, very flawed. Until Toshiba, Sony, and/or Hitachi pays studios simply to produce devices capable of showing their content (why buy a TV or DVD player if you have nothing to play on them), this is never-neverland argument.
When the VCR was introduced in the early 1980s, Jack Valenti, lobbying for the Motion Picture Industry Association of America, made the famous statement, or in retrospect, perhaps, overstatement that "the VCR is to the motion picture industry and the American public what the Boston strangler is to the woman alone."Maybe congress should allows studios to collect fees from all makers of electronic devices. They gotta et content from somewhere, right? --No, this is corporate penis-envy, plain and simple. It's braven, stupid, and pathetically reminiscent of the struggle embodied in Atlas Shrugged (which lately is becoming its own version of Godwin's Law).

~ CB

[pilotError]

There are two ways to get ahead in this world.

One is to be better and let your products speak for themselves.

The other way is to bash others products to deflect deficiencies in your own product.

I've seen managers that move ahead this way too...

Hulu is getting decent reviews. I understand the guys position, the advertising dollars are way higher than being able to supplement income with outright purchases and they need to protect that. I don't see any reason they can't continue to do both. Some folks want to own their shows and some would like to see the episodes they missed. I think both can be successful in their own right, but these guys want it all. Even if it kills them.

[shamino]

The reason why is that the itunes store and the ipod are locked together. Apple cannot sell the ipods in the numbers they do without the itunes store.
Not at all true. Apple sold tons of iPods before the Store ever existed. And studies today all show that most tracks on iPods come from sources other than the iTunes Store (ripped from CD, downloaded from other sources, file-shared, etc.)

If the iTunes Store were to vanish today, iPod sales would suffer a little, but it wouldn't even come close to killing the product.

Proponents of other players (players from Sony, Panasonic, Creative, etc.) like to think that the iTunes Store is keeping them from selling devices. They are hoping you won't remember the fact that they weren't selling any devices before the iPod came along either.