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NBC admits asking Apple for a cut of hardware sales

updated 01:55 pm EDT, Thu May 28, 2009

NBC Apple negotiations

NBC's CEO Jeff Zucker has shed more light on the network's negotiations with Apple over iTunes content, according to an interview with Kara Swisher at the All Things Digital conference. The relationship between the two companies has been shaky at best, with disagreements over the iTunes pricing policies.

"We've always loved Steve, it's not personal," says Zucker. "We didn't think that a library copy of the Rockford Files should sell for the same price as a new copy of Battlestar Galactica."

Zucker also noted that "Apple didn't want to cut us in on hardware sales, which we asked for. That's their business, so I get it." It is unclear which hardware NBC was referring to in the negotiations.

The bitter dispute became apparent in 2007 when NBC decided not to renew the contract to keep its content on iTunes. Apple claimed it was asked to increase the pricing of shows from $2 to $5, although the network denied the allegation. "But they're the only people who get to set wholesale and retail price," Zucker said in the recent interview. "That's not the way most businesses work."

Many believe the actions could have been an attempt to stop Apple from gaining the same dominance over video media companies that it has established over the music companies. A year later, however, other major networks did not join in the protest and Apple began to allow slightly flexible pricing. NBC came back on board with many of its shows available in HD quality for $3, which now account for half of its iTunes sales.



By Electronista Staff
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  1. Bobfozz

    Fresh-Faced Recruit

    Joined: Jul 2008

    +3

    Negotiations

    In every sale there are at least two parties and for something to happen, an agreement must be reached... obvious. So then VALUE enters the picture. If nothing happens, each goes their own way. Sometimes it works and sometimes it doesn't. I doesn't look to me like NBC has a great hand to play and by playing hardball they risk not getting to play at all except with substandard services.
    When Zucker says"That's not the way most businesses work" he may be getting it. Business has changed but the old businesses haven't.
    Stop looking over your shoulder and look straight ahead with peripheral vision for the side. Because one nitwit paid something for hardware sales doesn't make Apple a nitwit for not agreeing to such. Pretty much a really DUMB idea. You buy a card without a CD player in it and decide to get one installed... why should the car manufacturer pay the CD player maker? Increase the price of the CD player... ah, that won't work. Well, you are close to getting it.

  1. climacs

    Dedicated MacNNer

    Joined: Sep 2001

    +6

    they got MS to do it

    I believe Universal convinced MS to give them a $1 for each Zune sold, and then Universal (NBC) tried to use that to bully Apple into doing the same. "Look, a precedent!"

    Of course, MS would love it if Apple itself set a precedent of giving content providers a cut of their hardware (iPod) sales... and then down the road that gets extended to the computers.

    Anyway, doesn't hurt to ask, right? Hopefully Apple laughed Universal/NBC out of the room when they proposed that ludicrous suggestion.

  1. ff11

    Fresh-Faced Recruit

    Joined: Apr 2004

    +5

    Puzzled ...

    I just don't understand WHY Apple would give them a cut of hardware sales. Do TV manufacturers give them a cut? Does NBC give Apple a cut of what they make in their other endeavors?

    Don't get me wrong, I see why NBC would want free money it had nothing to do with generating, I just don't see why they expected Apple to go along with that idea.

  1. Salty

    Professional Poster

    Joined: Jul 2005

    +2

    Douche

    Honestly this guy comes off as a huge douche bag. He seems to always be looking for ways to make more money off the same shoddy product. Why the heck would Apple give them a cut of hardware sales? Which hardware? Most people are gonna watch this on their computers that they might not have even bought from Apple. Some on their iPods that they got for music, some on their Apple TVs.

  1. afaby

    Fresh-Faced Recruit

    Joined: Jul 2005

    +6

    Fly on the wall.

    I wish I was there to witness Steve Jobs laughing in the face of this bozo when he suggested they get a cut of hardware sales.

  1. climacs

    Dedicated MacNNer

    Joined: Sep 2001

    +1

    re: why

    Uni/NBC's reasoning was, I believe, twofold: 1) Apple was making gobs of money with iPods thanks to the content provided by companies like Uni/NBC; 2) Apple was profiting from piracy (you see, anybody who owns an iPod is stealing music; this is an actual quote from a Universal/NBC exec) and so it was only right for Apple to give Uni/NBC a cut of iPod sales as compensation.

  1. malax

    Fresh-Faced Recruit

    Joined: Aug 2006

    +1

    Another precedent

    Isn't there some odd tax on CD-Rs with the money going back to the record companies? Or is that a Canadian thing? But like climacs says it's based on the assumption that iPods are primarily music theft devices, which is total BS.

  1. ff11

    Fresh-Faced Recruit

    Joined: Apr 2004

    +2

    re: re: why

    But that reasoning goes both ways. You could argue 1)Uni/NBC make gobs of money on advertising due to interest generated in their shows by iTunes 2)People are stealing iPods so they can use them to download Universal/NBC programming.

  1. bigpoppa206

    Fresh-Faced Recruit

    Joined: Jun 2003

    +1

    Since NBC is

    a part of Universal (who asked for the same thing a while back) I'm not surprised. I'm sure there are plenty of revenue streams coming in to NBC that they absolutely would not share with anyone else but they want Apple to do it??? Amazing.

  1. afaby

    Fresh-Faced Recruit

    Joined: Jul 2005

    +2

    re: re: why

    @climacs:

    You can make the same argument against any device that plays media such as a CD/DVD player, walkman, TV, etc, yet the record companies aren't pursuing a cut from the sales of any of those devices? Why just the iPod?

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