NBC Bites Apple

Filed in archive Apple , Business , Companies , Industry on September 4, 2007

Hollywood has longed resented Apple's distribution power. iTunes is so dominant that Apple has been able to set pricing and terms.

The entertainment industry is fighting back by supporting other online services. First Universal Music Group changed its deal with iTunes from a long-term contract to month-to-month. Now stablemate NBC Universal has taken the next step. It's pulling the plug on supplying its TV programming. In response Apple immediately removed the shows. NBC is also working with News Corp. on a co-owned video service called hulu.

NBC Universal is the largest video supplier to Apple with over 30 percent of its video sales from series like "Battlestar Galactica," "The Office" and "Heroes." Apple charges $2 per TV episode and has said that NBC wanted to double its price, which would increase the retail price to $5. Apple refused the increase.

The prevailing media response, and mine, is that NBC's move is foolish and only reinforces the entertainment industry's anti-consumer image. Apple pricing is reasonable and has made a dent, albeit small, in unauthorized downloading and sharing. Pulling content and increasing prices only incents people to return to P2P.