NBC Rhetoric vs. iTunes Increases

[MacRumors]

Just prior to unveiling the public beta of the joint venture Hulu.com, NBC CEO Jeff Zucker had some hot words for Apple's iTunes (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, and recently some music labels have also been loosening ties with iTunes.

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.

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[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]

Originally Posted by ejbenjamin

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]

Originally Posted by 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.

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

[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]

Originally Posted by Peace

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

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]

Originally Posted by 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.

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 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]

Originally Posted by Peace

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]

Originally Posted by 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.

... 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]

Originally Posted by Peace

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]

Originally Posted by killerrobot

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]

Originally Posted by bigmc6000

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.

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.

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