I am curious if there is an industry average of how much money a show yields the Network in the form of ad revenue
I saw a definitive quote on that last year: US ad revenue totaled $47 Billion dollars for the year (a recession year). There are about 310 million adults in the U.S. (who could make up for that ad revenue in the new commercial-free model). Each household is made up of about 2.59 people on average.
So, in the new commercial-free internet model, we just need every adult in America to pay $151/yr to wash out the revenues from commercials, or each of about 120 million households to pay about $392/yr to wash out the commercial revenues.
The big challenge is that many of "us" dream of the $30/month all-you-can-eat, iTunes subscription package. But the math to wash out just the commercials doesn't work: $392/12 = $32.67 month. That's before Apple would take their cut.
These content producers just want to make more money this year than they made last year- just like Apple... and just like whatever company we each work for. We can rah-rah about how greedy they are and how Apple is our savior all we want, but in the end, if we arrive at a world where Apple owns video like it practically owns audio, someone will have to make up for the revenues vs. the current model. In that world, the someone is either Apple or us. Who do you think will foot the bill?
As others have posted, the correct solution is for Apple to get out of the dictator business and let the marketplace find the right prices for this content. If a company is too greedy they won't sell many shows- especially if the quality of their product is poor. On the other hand, superior quality programming probably deserves superior pricing as a reward. The quality of all shows is not identical; does it really make sense that all shows should be priced at $1.99, or $.99, or $.49, or some other flat fee? If all shows end up at $.X9 each in that world, do you spend the big production budgets for top-rated scripted programming, or do you cheap it out with reality programming, or less? There's no reason to make a summer blockbuster movie if it is going to be priced exactly the same as 2 hour movie of something like Kate+8. The latter will prove to be more profitable content if they both are going to be priced the same. Making up for it on volume is going to take an awful lot of volume to do so.
I saw an article about Netflix yesterday in which it described the early days of Netflix. The movie industry didn't like Netflix because they made a lot more money working with other players. Netflix needs their content to grow their business. So more recently Netflix has won them over. How? By paying the big bucks for the content so that they get on par with some of the other sources. Apple could easily do this too, but instead Apple is pushing them to perceptually cheapen their product. If Apple would make up the difference out of Apple's pocket, more of the content owners would want to play ball with Apple. Instead, companies like Netflix has figured out that to win that ball game, you have to pay up for the content. And Netflix seems to be winning the streaming game, don't they?
And those posting they'll just steal the shows instead. Even 1 cent per episode will still be infinitely higher than the price you are choosing.
