NBC chief says Apple 'destroyed' music pricing

Posted Oct 30, 2007 by Chris V. Thangham
NBC Universal chief executive Jeff Zucker says Apple’s iTunes is destroying the music industry and wants others to take a stand against Apple. They claim Apple is restricting them from making decent profits.
Jeff Zucker gave a speech at the Syracuse’s Newhouse School of Communications where he said Apple has destroyed the music business in terms of pricing. He said if no actions are taken against Apple, it will do the same for the video industry.
This is following an NBC announcement last month when they when they decided to withdraw their TV shows from iTunes due to contract disputes. NBC demanded a high price and Apple said the new higher prices would be prohibitive for customers.
NBC originally claimed it wanted to take more control over the pricing set at iTunes and wanted to bundle songs and videos together. They also demanded better piracy controls. But Apple said it would distribute the same way it always has for other songs and wanted to maintain the flexibility it offered to its current customers.
NBC demanded $4.99 for every episode, but Apple said no, as the company sells all other videos from other major broadcasters for $1.99 per episode.
Zucker talked about this feud and said with iTunes, they made only $15 million, including video sales. So, it was easy for them to pull away from iTunes.
He also said NBC wanted to try one show, Heroes, on a trial basis at an increased price of $2.99, but Apple said no.
Zucker also tried to demand a cut of Apple Hardware sales of iPods and iPhones. He gave the following reasoning in his speech:
"Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money…They did not want to share in what they were making off the hardware or allow us to adjust pricing."
NBC and News Corp started a new online video venture named Hulu (known in Swahili language as Cease and Desist) which will broadcast many of its shows with ads built in. He is fully confident it will be a big hit and compete against iTunes successfully.
In my opinion, Zucker and NBC just don’t understand the download business. Electronic downloads hardly cost anything for distribution, yet they are trying to charge as much as a physical DVD or CD versions. NBC pulled video from iTunes, and then shortly after the company started selling on for a lower price. If profit is a concern, why sell at a lower price than iTunes?
I believe NBC and others just want to dominate the market and sell at a high price. Thanks to iTunes, NBC's Office had a huge following and many downloaded from iTunes, I doubt they will sell as much elsewhere.
Thanks to NBC and News Corp. practices, I bet we will see more piracy instead of legitimate downloading from iTunes.