Mac news from outside the reality distortion field
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May 13, 2008, 7:48 am

Sex and the iTunes Store

They’re there: Carrie Bradshaw. Tony Soprano. Jimmy McNulty. Jemaine Clement. Seth Bullock. Julius Caesar.

Early Tuesday morning, somebody at Apple’s iTunes Store flicked a switch and six of HBO’s most popular series became available for download for prices ranging from $1.99 to $2.99 per episode. They are:

  • Sex and the City: $1.99 per episode
  • The Wire: $1.99
  • Deadwood: $2.99
  • Flight of the Conchords: $1.99
  • Rome: $2.99
  • The Sopranos: $2.99

As widely reported on Monday, the deal is a breakthrough for both Apple (AAPL) and Time Warner’s (TWX) HBO.

For HBO, which is making individual episodes available for the first time, it’s a chance to expand viewership beyond its 30 million cable TV subscribers to Apple’s broader audience of 50 million registered iTunes users.

For Apple, it’s a strong signal that Steve Jobs has backed away from his stubborn insistence on flat-rate pricing — $1.99 for TV episodes, $.99 for songs — and is ready start a new round of deal making in Hollywood.

On May 1, Apple announced an agreement with Warner Brothers, 20th Century Fox (NWS), Walt Disney (DIS), Paramount (VIA), Sony (SNE) and others to make movies available for iTunes download the same day they are released on DVD at two price points: $14.99 for new releases and $9.99 for older films. (see Apple’s new Hollywood deal)

Could a rapprochement with NBC — which pulled its series off iTunes last December in a dispute over flat rate pricing (see here) — be far behind? The fact that NBC (GE) started streaming free episodes of two of its most popular shows, The Office and 30 Rock, to iPhones last week seems like a promising sign.

[UPDATE: Apple posted a press release this morning. HBO is "excited." Apple is "thrilled."]

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December 4, 2007, 9:04 am

iTunes video: Zucker walks, Murdoch talks

picture-24.jpgTwo developments in the wake of NBC Universal’s (GE) weekend exit from Apple’s (AAPL) iTunes store:

Ruport Murdoch’s Twentieth Century Fox (NWS) is reported to be “actively negotiating” with Apple to put new releases and catalog titles on iTunes beginning in early 2008. According to Rich Greenfield at Pali Research (link; activation required) several things have changed to break the deadlock, including growing levels of movie piracy and new flexibility on Apple’s part in terms of pricing. Greenfield’s casual speculation that Apple might be willing to charge $15 per movie download has triggered some interesting analysis (see AppleInsider and Ars Technica’s Infinite Loop) but should probably not be treated as gospel.

NBC Universal CEO Jeff Zucker placed his company’s digital strategy last on his list of priorities in a luncheon speech at the UBS Global Media & Communications Conference on Monday. Repeating an earlier claim that NBCU’s deal with Apple was worth “only $15 million” in profit, he added: “That’s nothing to sneeze at, every dollar matters. But it wasn’t the game changer for us that it was for Apple.” He pointed to NBC’s video offerings on Amazon and NBC Direct and singled out for praise hulu.com, its joint effort with News Corp.:

We’re in the beta test with Hulu and we have 60,000 users, seven major advertisers. The online press wanted to kill it, but it’s doing well. Advertisers tell us they want a safe environment. That’s what this is about. They don’t want a cat on a skateboard, but they do want The Simpsons or a film they like. (see Paid Content’s report here)

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December 3, 2007, 9:04 am

NBC pulls its TV shows from Apple iTunes

picture-22.jpgNo more ad-free episodes of The Office, 30 Rock, Scrubs or Friday Night Lights for $1.99 each.

As promised, NBC (GE) removed all its content and that of its affiliates from the iTunes Store over the weekend after its contract with Apple (AAPL) expired.

That means no shows on iTunes from Bravo, mun2, NBC, NBC News, CNBC, NBC Sports, Sci Fi, Sleuth, Telemundo or USA Network. (Some shows aired on NBC but produced by other Hollywood studios such as Viacom, Disney or 20th Century Fox are still available.)

NBC has put some of that content on NBC Direct, an ad-supported download service that runs only on Windows machines; a Mac version is due next year. Its shows will also be available on hulu.com, a joint venture with News Corp. Both services are still in beta.

NBC had been Apple’s single largest partner for digital video, with more than 1,500 hours of programming representing either 30% or 40% of iTunes video content, depending which side you believe. Talks to renew the contract reached an impasse last August. NBC wanted to be able to charge more than $1.99 for its most popular shows. Apple insisted on a flat per-show rate and claimed that the network wanted to raise prices to as much as $4.99 per episode. (See Apple to NBC: Drop Dead.)

In a recent interview, NBC Universal CEO Jeff Zucker insisted its demands were “modest” and complained that Steve Jobs was undervaluing video content in order to sell more iPods.

“We don’t want to replace the dollars we were making in the analog world with pennies on the digital side,” he said, according to Variety.

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October 29, 2007, 4:43 pm

NBC’s Zucker: Apple Turned Dollars into Pennies

picture-22.pngIt’s been two months since Apple (AAPL) and NBC Universal (GE) broke up over video pricing on iTunes, but the wounds don’t seem to have healed — at least for Jeff Zucker.

Variety reports today that NBC’s CEO let loose on Apple in a breakfast interview with The New Yorker’s Ken Auletta at Syracuse University. Zucker claims that NBC — Apple’s single largest video partner — made only $15 million in iTunes sales in the past year. That’s about 1/3 of what outsiders had estimated and far less than the entertainment giant is used to pulling in from hit properties like The Office and 30 Rock.

“We don’t want to replace the dollars we were making in the analog world with pennies on the digital side,” he said, according to Variety.

But in describing the negotiations that led to an impasse in August, Zucker repeated claims that Apple has already contradicted, specifically:

Zucker also suggested that NBC was asking for something Steve Jobs is unlikely to give any media partner: a cut of his iPod sales.

“Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money,” Zucker said. “They did not want to share in what they were making off the hardware or allow us to adjust pricing.” (link)

NBC’s iTunes contract with Apple expires in December and from the tenor of Zucker’s remarks, renewal doesn’t seem likely. “We know that Apple has destroyed the music business – in terms of pricing – and if we don’t take control, they’ll do the same thing on the video side,” he told the breakfast audience, according to FT.com.

NBC and News Corp., meanwhile, are set to launch Hulu.com, their bid to offer studio-produced video on the Web that’s supported, like broadcast TV, with advertising. Hulu is handing out beta subscriptions here, if you want to give it a try.

See What iTunes Looks Like Without NBC and Apple to NBC: Drop Dead

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Philip Elmer-DeWittSilicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
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