NBC and Apple Fight Over Show Download Pricing

Now that the long holiday weekend is essentially over, it's time to catch up on the news.  One development last week was NBC Universal deciding not to renew its contract with Apple to distribute television episodes.  The current contract runs through December.  Apple sold shows at $1.99 per download.  NBC wanted to up the price and Apple refused.  Now NBC is looking for other outlets where it will get the prices it wants.  Good luck with that.

Not that its impossible or anything.  There's always the Microsoft outlet with the Zune, although the market there is, ahem, a bit smaller than that of the iPod.  Face it,  Apple has the largest uniform market and display platform out there which gives them their clout in setting terms.  NBC needs to take that into account when seeking partners for its content.  If the new per show price is higher (say $4.99 as bandied about in the press) and can't easily wind up on the iPod, what is the consumer incentive to buy? 

NBC's decision may find consumers waiting for the DVD which would offer a better show/price ratio.  There are plenty of tools out there that can rip DVDs to iPod (DRM notwithstanding).  That scenario, however, loses the immediacy of downloading and viewing something that was just broadcast.  Of course, NBC might also discover that the sale of a new episode of The Office was driven by convenience as much as price.  Without that combination consumers may realize that they don't actually need to buy a program they saw last night. 

It's nice to see NBC trying to grow the market away from Apple.  Competition in general is always good as it tends to lower prices.  This attempt seems to be taking it in the other direction in a setting where the alternatives to iTunes is not that appealing.  Consumers will ultimately decide whether NBC can value its product at a higher price than currently available.  And if NBC's gambit doesn't work, well that's also part of competition.

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