After a tiff with Apple over pricing, NBC announced today that they would not renew their iTunes contracts for their TV shows. As their contract ended in December, they would plan to stop offering new shows on iTunes at the end of the calendar year. Why? NBC wants to raise prices above the current $1.99 per show (up to as high as $4.99) and bundle shows as packages. They also wanted more restrictive copy protection. Apple thinks their pricing is too high and wants unifromity. Hence the spat. The other major networks and many cable channels offer material on iTunes, which allows viewers to purchase ad-free shows for viewing on their computers or iPods. Apple fired back that they will not offer any of the new season of NBC shows starting in late September.

These may all be public negotiating tactics and we may well see a new deal before next month is done, but it highlights a problem in the industry’s transition to online entertainment. Traditional studios are still unsure of the market and are still feeling out the limits of what people are willing to pay to have downloadable copies of their shows. The insistence on restrictive digital rights management (DRM) copy protection highlights this. The copy protection aims to limit the number of devices the shows can be played on, but in practice only hampers the honest users. Most shows are readily available (albeit illegally) on internet sites, often in higher quality than what Apple offers. People use iTunes because it’s convenient (they don’t need to scour the net for their shows), because the ads are already trimmed out, and because the shows are pre-formatted for their iPods. I expect that NBCs move will end up driving more people toward piracy.

Part of the problem, though, is a result of Apple’s success. They are essentially THE online media marketplace at the moment, and this makes studios uneasy. It’s up to Apple to ensure they don’t abuse their power, but ultimately I think they are in the right on this one. $1.99 is already fairly steep for a single episode of a TV show, and prices of $4.99 are simply ridiculous. Perhaps NBC should stick with offering ad-supported shows on iTunes for free until they can figure out a business model that works.

This entry was posted on Friday, August 31st, 2007 at 9:51 am and is filed under tech. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.