THE NBC/iTUNES SKIRMISH
Louis Hau has a solid piece in Forbes on the current skirmish between GE/NBC/Universal and Apple’s iTunes. If you’re not up on it, NBC has notified Aplle that it will no longer sell its television shows over the iTunes store. (It has also announced its own streaming and download site, Hulu.)
Hau notes that NBC’s notice of termination occurs while negotiations are continuing and that, in the end, a deal may be worked out even as the network’s long-term strategy may be away from the pay-to-download model:
Apple wants as much video content as it can get to continue driving sales of the iPod, especially given the company’s struggles to get more than a handful of film studios to provide movie downloads.
Moreover, if you believe the rumor mill, Apple Chief Executive Steve Jobs is expected to unveil a new line of video iPods during a press conference next Wednesday. Even though iTunes’ video downloads are dwarfed by its music sales, they remain an important selling point for Apple’s most important product.
Meanwhile, NBC wants to remain on iTunes because Apple has proved to be the only major online vendor capable of selling video and audio downloads in any significant quantity. Even Google gave up on paid video downloads earlier this month. The market-dominating position of iTunes also explains why Universal Music continues to sell songs there despite its much ballyhooed decision in July not to renew its annual contract with Apple.
While TV networks have a vested interest in remaining on iTunes, the online store will likely end up being less important to them over time. Rather than focusing on selling downloads of their programming, the strategy being pursued by NBC, News Corp.’s Fox, CBS, Disney’s ABC and Viacom’s MTV and Comedy Central is increasingly emphasizing the sale of advertising to keep their content free.