NBC vs iTunes: The bigger Picture
The entertainment industry dropped another bizarre bombshell today when NBC announced that it was not renewing its contract with Apple to provide TV shows to the company’s iTunes store. Apple further clarified the dispute laying the blame clearly at NBC’s door claiming the company had demanded double the wholesale price for each show which would have pushed the cost of each episode to $4.99. The move by NBC is a strange one because, it is hard to believe that the network truly believes someone will pay that much for an episode of a TV show they can get over the air for free. At that price a 22 episode season of a TV show would cost $109. This would push the cost well above that of a DVD release. “Heroes” for example sells on Amazon for $36.99 on DVD or $69.99 on HD-DVD. To expect consumers to pay nearly twice that amount for a format who’s quality is less than that either of the retail offerings is insane. You would almost think that this was a deliberate attempt on NBC’s part to stifle the growing download market. It’s hard to believe that the Network executives could be so stupid, greedy, or naive to believe that consumers would pay those prices.
Then again, NBC has not exactly been firing on all cylinders of late. The company had huge success with “Heroes”, but that masked some spectacular failures on the part of the Network. “Studio 60 on the Sunset Strip” received huge critical acclaim, but as soon as the show appeared in trouble it was all but abandoned by the network, with little or no promotion and an extended hiatus in the middle of the show. While ratings appeared bad for the show, research showed a large number of people were recording it on DVR’s or downloading it. Rather than try to grow an audience the show had its life cut short by the network without any attempt to protect its investment. While some slammed the show for political reasons, it was at least once the number 1 download on iTunes, and regularly in the Top 10. Another show, “The Black Donnelys” shared a similar fate.
TV networks have had a hard time embracing the internet age. Rather than try and find ways to adapt to consumer demand they, like the music industry, have tried to fight it every step of the way. From a purely commercial point of view the behaviour of the entertainment industry as a whole makes no sense. It is the only industry in the world that goes out of its way to try and restrict the way consumers can buy their products. Take region coding on DVD for example. The archaic system of world wide distribution deals can not survive in the connected online world, but again, rather than adapt they try and use technology and legislation to force consumers to their business models rather than give customers what they want. I also believe that these companies are particularly annoyed that a technology company is dictating how the industry should move foreword.
It is easy to assume that decisions like this from NBC are based on a blind lust for money. I believe greed partly drives it, but their moves may be far more astute than they first appear, and I suspect ego plays a big part too. Companies like Apple and products like the iPod are making Networks less and less relevant in the consumption of television and this has to hurt an industry that has long operated with near monopoly status. NBC’s demands of iTunes is just another example in a string of recent posturing by entertainment companies who seem to be trying to leverage consumers adoption of competing emerging technologies to boost their own profits. All at the expense of the consumer. Just like Universal Music with its decision to not support iTunes with DRM free music and Paramount’s decision not to support Blu-Ray, these decisions seem less about the technology, or even about selling content, but rather, letting everyone know who’s boss. I get the impression that the executives at these companies seem to think that their content is so important to consumers that they can extort the dominant technology provider, when in reality, consumers care more about the way they watch or listen to their content than the content itself. People do not want to be dictated to by the entertainment industry as to how and when they watch TV or listen to music. They want their iPods and their Tivo’s more than they care about the financial wealth of companies like NBC and Paramount.
People want to consume content their way. At the end of the day it is the consumer that dictates the direction of the market not content providers. This decision by NBC will not have people turning their iPods in for some other device in their droves just to watch “Heroes.” All this move will do is drive the people who did buy NBC TV shows through iTunes to alternative sources like bit torrent. Not only that but they will feel morally justified in doing so. If the TV networks care that little about their customers, why should their customers care about them. And they wonder why there’s rampant piracy.
Perhaps the network feels that Lawsuits against teenagers and grandparents can be turned into a legitimate revenue stream.
[tags] NBC, iTunes, Apple, Entertainment Industry, TV, downloads [/tags]
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Thanks for this interesting article… just try to master the difference between “it’s” -it is- and “its” -possessive. ITS easy!!! See?
God dammit. Funnily enough I had gotten much better at that. Still, It’s a mistake maybe 50% of the population make on a regular basis. It’s not about mastering – I know the difference – it’s about breaking years of habit and then seeing the difference when you’re typing an article at 11 o’clock at night having gotten up at 6am.