Biting the Hand that Feeds You

August 31, 2007

Some stunning developments in the world of net delivered entertainment today. First came a salvo from NBC that said it was opting out of their contract to sell its television shows via the iTunes store starting this December. NBC reportedly wanted more control over content bundles as well a “flexible” pricing structure. No doubt bolstered by Universal’s recent decision to go month by month in their contract with the iTunes store, NBC attempted to gain the upper hand with Apple and publicly announce that Jobs & company weren’t playing fair. Apple’s insistence on simplicity and a single price meant the network would have to remove its programs from the largest online media store in the world.

It didn’t take long for Apple to fire back. The computer company issued a press release that in effect said NBC was insisting on raising prices by a whopping 250%, making episodes that were once $1.99, now $4.99. So rather than force consumers to pay almost $5 for anything from a 1/2 hour episode of The Office, to a full hour long drama like Heroes, Apple decided to not wait until December, but pull the “plug” now. I love this bit:

“Apple’s agreement with NBC ends in December. Since NBC would withdraw their shows in the middle of the television season, Apple has decided to not offer NBC TV shows for the upcoming television season beginning in September.”

So in other words, NBC’s not going to get shit. Apple won’t post any episodes from the upcoming season of such fan favorites as Heroes, Battlestar Galactica, The Office and 30 Rock. Never mind the fact that the iTunes single-handedly prevented NBC from canceling The Office in the first place, or that you can TiVo these shows for free now, or even that higher-quality versions of all of these shows are available hours (not days) after they are aired via bit torrent. No, NBC thinks it knows what’s best for their customers and it has demanded that Apple start charging more than double for something that just frankly, isn’t that good.

This move will do nothing to help NBC and everything to give Apple even more bargaining power with other content providers in the days ahead. I can’t wait to see NBC try to sell an episode of The Office for $4.99 on NBC.com or even via Amazon Unboxed. I’d sooner save my pennies and buy the DVDs for a fraction of the cost than pay over $100 for a low quality, DRM locked season of Heroes. Who wouldn’t?

Jeremy Horwitz of iLounge has written an open letter to NBC concerning their arrogant strategy. He hits the nail directly on the head, and I sincerely hope the suits at NBC read it and take it to heart. We’ll get our shows via DVR or torrent for free, piracy will increase, and NBC will lose millions in revenue because the peacock didn’t know when to shut up and smile. Sounds like a fair trade to me.

UPDATE: An interesting side note. NBC will be launching its own video website in October named Hulu. What’s Hulu you ask? Although just a fun, rhyming name to us, Hulu actually means “cease” and “desist” in Swahili. Speaks volumes about NBC and their level of competence in this entire affair.

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10 Responses to “Biting the Hand that Feeds You”


  1. […] Biting the Hand that Feeds You » This Summary is from an article posted at gedblog on Friday, August 31, 2007 Some stunning […]

  2. flammable Says:

    Technically, are they losing anything?

    If I just watched the shows when they air on TV, have they earned any more money? I think iTunes is a sweet deal – people pay NBC to watch their (free, over broadcast television) shows, and NBC removes the commercials and lets people download whenever they want.

    And, as you pointed out, they enforce DRM on these shows.

    If the people who post The Office on BitTorrent didn’t bother removing commercials, I bet NBC would be up in arms about torrenting.

    Why do these people consistently have to learn by screwing up, first?

  3. flammable Says:

    Whoops. Am rereading my comment again, and I should clarify – I don’t like DRM. If anything, the DRM should drive the price down.

    And, I was trying to make a point about how keeping the commercials intact when torrenting would probably not be enough to appease NBC, because they just don’t “get it.”

    NBC’s intentions continue to elude me. Well, unless it’s just greed.


  4. […] Reading NBC Will Not Renew iTunes Contract (NYT) Apple’s Response (Press Release) Biting the Hand that Feeds You (Gedeon Maheux) What Did Apple’s Five Fingers Say to NBC’s Face? SLAP! (Cult of Mac) NBC wants […]

  5. Phillip Ryu Says:

    LOL at the ‘cease and desist’. It’s almost as if they realized too late that this was a lost cause, and in an attempt to fix it, named their service with a joke name. Except NBC has no sense of humor, and the joke falls flat.

    Eh, I take that back. The name is hilarious, but the Swahili meaning must’ve been unintentional, right? Which makes it funny but at the same time, pretty sad.

    At this point, I’m just hoping NBC doesn’t completely self destruct, because they do have some really good shows that they’ve been holding on to despite low ratings, and this could be the straw that breaks the camel’s back for shows like My Name is Earl and 30 Rock. Now that would be tragic.

  6. David Says:

    I had the iTunes season pass last year for Heroes in part because we don’t have any recording device (VCR, TiVo, etc.). Also, it was challenging to watch the whole episode at the airing time with two kids at bedtime. I’d usually miss the first 5-10 minutes, but then could watch it the next day on my iPod. I think I also watched a few episodes on NBC.com before getting the pass. Anna’s brothers and parents all have EyeTV, so I may see if they can record it this season.

    There were 24 episodes last year, which cost $42.99 (mostly paid with gift cards!). At $4.99 this year, that would be almost $120!! Not even the HD-DVD Season 1 set costs that much, and that has all the extra features. It currently sells for $79.98 on the NBC site.

    I don’t think too many people will be buying many shows at that cost. I’m interested to see what happens. Power to the people!

  7. Ged Says:

    Dave,

    Min & I bought season one of Heroes at Best Buy for $36. That works out to $1.50 per episode. Less than the original iTunes price and FAR less than the new NBC proposed price of $4.99. NBC is fooling themselves and destroying their potential revenue at the same time.


  8. […] every episode of the office from iTunes last season. Come to think of it, as Ged has mentioned on his blog, I would probably not be watching The Office if not for iTunes. I also bought a Season Pass for […]

  9. Vonster Says:

    I wonder how many people are out there like me who never watched Hero’s on TV for free and only watched it via iTunes? I bet a lot and the fact they just think they can offer it on lame branded psuedo site called ‘Hulu’ and everything will remain the same and they’ll make more money? Sorry but I want all my content flowed through one system I don’t want to hop around the internet and have to download from multiple sites.

    Not only that how much you want to bet the format on ‘Hulu’ won’t be iPod compatible or will be something inane like MS Player or RealPlayer crap?

    It’s simple I won’t watch Heros this year. Screw NBC.

  10. Shenanigans Padunkadunk Says:

    Jeff Zucker and the Vivendi/GE combo of death makes me SICK! They’re the perfect example of CORPORATE F*@king GREED that is rapidly transforming the world through the Butterfly Effect to a place of complete misery. We should all fear these MOFO’s, they’re going to be our demise as they sit in their lap of luxury, sneaking around the corners sucking the blood of anyone who crosses their path and who they have no use for. Jeff Zucker is one of the biggest worms of all!


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