Two Bucks an Episode?
On Thursday, NBC indicated that it would not renew its contract to sell television episodes on the iTunes store. Though nobody is absolutely certain of the reasons, money is certainly one of them. Then, on Friday, Apple retaliated by dumping NBC shows ahead of the contract expiration date, but NBC disputed this.
The whole thing strikes me funny. Apple charges $1.99 per episode, and apparently, that isn’t enough for NBC. But if you look at what the networks make when you watch a show over the air, that sure looks like big money to me. If you divide the total commercial revenues for a typical prime time show by the number of people watching, you get a figure more like 50 cents per viewer. So when you buy a show for $1.99, you’re really being gouged. True, watching the network broadcast isn’t exactly the same as buying a digital file that you can look at over and over again, but you could easily Tivo or tape the broadcast, and thus own it, and, in any event, who wants to permanently own an episode of a TV show? How many times are you really going to watch it?
I’d love to buy my TV and watch it ad-free. But give it to me for a reasonable price — the same price the network is getting when advertisers pay for access to my eyeballs.
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Splice Now 
September 2, 2007 at 11:33 am
This isn’t really about the amount of money that is collected today. This is really about NBC/U trying to regain some control over what they feel is an Apple-led monopoly. There’s no doubt that NBC would like to make much more money than whatever cut they get from the two bucks (let’s say $1.40, as a guess). In fact, they’d probably try to raise the prices for individual episodes to try and force more people to get full season tickets. But the bottom line is that all of the media companies are so used to setting prices in their own ways (which, I suppose, is what American Enterprise is all about) and they resent Apple setting the prices.
Of course, you could argue that stores like WalMart and Best Buy set prices. We know that Costco demands lower prices on deliveries of DVDs. You could argue that and you’d be right. But the horrifying thing, to me, is that these traditional media companies don’t have the foggiest notion of what the new media is all about. Everything has to be squeezed into the same small box — creating content, and charging someone to view it (whether it’s the viewers or advertisers trying to reach those viewers).