NBC has decided that their new strategy for making money off of their content will be to remove it from the most popular, low-operational-cost, and globally effective distribution network ever built. Yup, according to the New York Times, NBC is pulling its content from the iTunes music store.
This is just an awful idea. I think I’m a pretty typical customer of iTunes content – I’ll buy maybe one or two albums a month, and a few TV episodes a month. Check out the photo I’ve linked to the iTunes NBC page – it lists their 4 most popular shows. Here are the ways iTunes has enhanced my consumer relationship with NBC, and why NBC’s choice to pull their content is an awful idea.
Discovered it on the BBC, love the NBC version even more, but I’m not home to watch it when it’s regularly scheduled. Instead, I grab episodes online. I only follow one or two shows this way, so it’s cheaper than getting a TIVO.
I followed this show on TV, but would occasionally miss an episode. How to get them? iTunes, of course! I jumped online and downloaded the episode the day after it aired.
I liked this show when it first came out, and then it got … what’s the word … stupid. I don’t follow the show at all anymore, but I wanted to watch some of the early episodes again. Rather than waiting for them to roll around on the syndication schedule, I jumped online and got them from iTunes.
This is the real tragedy of NBC’s choice. This show is probably the best new show they’ve developed in the last, let’s say, 39 years. How did I discover this show? They gave away an episode as a free download on iTunes. I downloaded it, loved it, am now a fan. Now, when I happen to be flipping channels and see it on TV, I stop flipping and watch the show. They earned a viewer for their broadcast network because of their use of alternate distribution channels.
The NYTimes article gives one real reason for the decision. Allow me to interpret:
The decision by NBC Universal highlights the escalating tension between Apple and media companies, which are unhappy that Apple will not give them more control over the pricing of songs and videos that are sold on iTunes.
NBC … wants Apple to allow it to bundle videos to increase revenue, the person familiar with the matter said.
Remember back when we made you buy an entire CD, with one great song and 12 filler pieces of crap? Oh man, we made so much money with that. Wasn’t that awesome? We think Apple should let us do the same thing with videos! Less consumer choice means more freedom for everyone! And by freedom, I mean money! And by everyone, I mean us!
Apple has shown, by virtue of their success in promoting music, that increasing the choices for consumers is a stronger model for building a distribution channel. People return to points of commerce where they feel empowered and valued. iTunes does that with it’s pricing and non-bundled policies. NBC, apparently, can’t understand that.
The Real Threat
I’m having a really hard time believing that the NBC executives are taking such a short-term view of their relationship with iTunes. The article states that they are limiting their distribution with iTunes out of concern for piracy. They should be concerned about piracy, but not for the reasons they give.
What they seem to not realize is that iTunes is not in competition with Hulu.com, or any other silo solution. The only real competition for iTunes media content is illegal downloads.
This is the brilliance of the iTunes price point, and the reason it has seen such explosive growth: $1.99 per show is exactly the point at which it becomes an easier choice to buy a show from iTunes than to go through the hassle of finding a torrent, loading it into a bit torrent client, waiting for it to download, hoping it’s high quality, and then sitting huddled in the dark hoping the RIAA doesn’t drop a lawsuit on your butt.
If NBC takes away the $1.99 iTunes option, people will not flock back to broadcast TV, they will not go hunt down the show at hulu.com, they will simply download it illegally, for free.
Check out how much of my value as a consumer NBC loses by ending their relationship with iTunes:
- The Office: This isn’t a time-sensitive show, so if I can’t get it through iTunes, I’ll wait and download the entire season at The Pirate Bay.
- Heroes: If I miss a single episode, I can pop over to isohunt and track it down. Again, the competition for the $1.99 iTunes Media Store is the Free Illegal Downloads Store.
- Scrubs: This was always a whim. If I don’t have easy access to previous episodes, I just won’t bother. The alternative to NBC selling me a show for $1.99 is … me doing nothing. Easy.
- 30 Rock: if NBC severs ties with iTunes, I don’t even find this show. I never watch a single episode. When it comes on broadcast TV and I’m flipping channels, I flip right past. NBC loses both an online purchaser and a broadcast viewer.
This is an awful, awful business move for NBC. They are alienating themselves from a whole population of potential consumers.
UPDATED: Nov. 25th
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