Interesting...

http://www.appleinsider.com/articles/07/10/29/nbc_chief_says_apple_destroyed_music_pricing.html

ken

then how come Amazon unbox is still selling episodes at $1.99??

Engadget has a column where they post stupid statements by corporate leaders (it's called "CE-Oh no he didn't!"). Zuckers comments won him today's column (http://www.engadget.com/2007/10/29/ce-oh-no-he-didnt-part-xlvii-nbc-universal-chief-says-apple/) as stupid CEO.

Hard to believe this is the same man who made Airplane, isn't it? Must of been Abrahams and the other Zucker who had the sense of humor.

I think his comments are so stupid, that they are not worth the electrons rebutting them.

Hard to believe this is the same man who made Airplane, isn't it? Must of been Abrahams and the other Zucker who had the sense of humor.

No No. The President of NBC/Universal is Jeff Zucker. Jerry and David Zucker wrote Airplane!

Jeff Zucker doesn't have a drop of creativity in his body. You think he's demanded that Sony fork over a percentage of all television sales yet?

even worse, his comments regarding the studios coming together to re-assert control of market pricing are bordering on illegal... Also, confirms this is what they have done in the past... and have lost (or losing) that power...

ken

even worse, his comments regarding the studios coming together to re-assert control of market pricing are bordering on illegal... Also, confirms this is what they have done in the past... and have lost (or losing) that power...

ken
Indeed, past CD pricing practices were ruled illegal, and they want to go back to the same thing. The difference, now, is that no matter what they do, consumers have a viable alternative -- free. Even someone totally concerned with legality can wait a year and rent the DVDs from Netflix -- which will net NBC far, far less money than iTunes sales would have.

My apologies for casting unjustified aspersions on the Airplane Zuckers... I should have known better.
Jeff Zucker doesn't have a drop of creativity in his body. You think he's demanded that Sony fork over a percentage of all television sales yet? No doubt, except that Sony is losing money these days -- all these studio/network/record company jerks look at Apple, see big dollar signs, can't understand why they aren't making as much money as Apple and think the money is rightfully theirs.

The difference, now, is that no matter what they do, consumers have a viable alternative -- free. Even someone totally concerned with legality can wait a year and rent the DVDs from Netflix -- which will net NBC far, far less money than iTunes sales would have

well, there's no need to wait for the dvd either, just record it in high def for free, keep it, timeshift it, edit out commercials, move it around to other devices, transcode it for your video iPod, all still perfectly "legal."

now, what isn't legal, for those totally concerned with legality, would be ripping those dvds you pay to rent from Netflix to then transcode and watch on your iPod. Depending on where you live, it wouldn't be legal to do that even if you "owned" those dvds. Hence, the value of iTunes content--no wait, convenient, one stop shopping, reasonably priced and you can playback on multiple devices without resorting to any ripping shenanigans.

I looked at one of the Hulu videos (off the link on Gruber's site), and it really is pathetic. I think this whole notion of the studios trying to control distribution is one huge red herring.

The beauty of iTunes is that it aggregates content into one functional, coherent user interface. And it is cross platform, and can be played on the desktop or on the TV, or on handhelds. In a way, Apple has recreated the best of cable or satellite TV--all your content in one place, nicely organized and accessible.

What NBC and the other studios are doing, in their money grab is to move content distribution back into many studio based outlets. So if you want to find a show, you have to go to multiple sources, and use a variety of technologies to get it. And the general public just isn't going to do that. The public that let cable and satellite TV evolve, is the same public that loves iTunes-style distribution--one stop.

If the studios were serious about competing with iTunes, they would look at Apple's iTunes model, and compete with it. It would take time, but it is the only way. And it seems that is what they are doing with Microsoft's Zune--content, desktop software, and players all-in-one. Unfortunately, their technology lead, is not the innovative visioneer in this field, and this particular effort is doomed to failure. Steve Jobs is just not going to lose the music and video online distribution world to Bill Gates. Just ain't gonna happen.

So it seems that until a valid iTunes competitor steps up to the place, and competes in a fashion that the public will use and accept, it doesn't really matter what NBC and the others do with services like Unbox and Hulu and the rest of them.

Zucker says he wants to experiment. Jobs said "not in my store." Zucker turns tail and sulks off, and spouts off. This is the way it will be for a while as Apple weeds out its partners to those who are willing to toe the Apple line. When you are the darling of the high tech world, and Wall Street, you pretty much can do what you want.

So, all the wanna-be's will have to go through their period of denial of Apple's ascendence, and attempt to go-it-alone. Or form meaningless alliances using technology and marketing methods that are doomed to failure, as we've seen time and time again.

Until another business model evolves that can either analyze and understand why Apple and iTunes have succeeded, and replicate that model and compete, all the experimentation is really meaningless. And if any business thinks they can create a model that will outcompete iTunes, it will have to be on terms that the public will intuit to be superior--not inferior, or it will be another failure by the wayside in a short time.

While iTunes may have its downsides, and we all rightly have criticized it one way or another, the model is a huge market success. And Apple knows exactly what tweaks it needs in order to counter any serious competition. It may just be exactly what Apple is holding back that really frightens the likes of NBC.

And what Apple has done, in Zucker's words of "destroyed the music business in terms of pricing,” is nothing more than the traditional business tactic of "disrupting" a prevailing model in order to supersede it with a radically different and more popular one. And once a business model has been disrupted, you can't stuff the genie back in the bottle, and go back to status quo.

Let's all just say a big buh-bye, or aloha to ad-supported and network/studio dominated TV like Hulu and NBC U and the short-sighted money grubbers like Zucker.

wildrock - perfectly stated...

+1

ken

The funny thing about Apple is they tend to see what is most important, and then get that right. This results in success.

The funny thing about quite a few other groups is, they simply can't see that Apple figured out what was important and how to do it right. They dismiss Apple's success as the result of some other ethereal quality, as though Apple is succeeding in spite of itself.
They then attempt to imitate Apple, and completely screw up the most important ingredients of Apple's success. And they fail.

This idiot can't see that Apple found the sweet spot on pricing.

Zucker seems to have smoked something really powerful before making his statements. And I'm definitely miffed I can't purchase Battlestar or Heroes episodes from iTunes any more. Guess I'll get the DVDs or whatever.

As mentioned before, NBC gets nothing now; so what did they do before Apple? Shooting off their own foot, it seems.

While I feel that NBC may be leaving money on the table by having this squabble with Apple, it's their content and they should be able to do what they want with it.

If NBC thinks that they can make more money by keeping their shows off of iTMS and getting the revenues from Hulu and NBC.com, then they owe it to their stockholders to do so. They are in the business of making money. If more money is to be made by setting up Hulu, then so be it.

Like I said above, I think they're making a mistake, but what the heck do I know. If the Hulu experiment fails and they leave money on the iTMS table, then Zucker will be ousted and someone else will step in.

As mentioned before, NBC gets nothing now; so what did they do before Apple? Shooting off their own foot, it seems.Well, to answer this question, NBC claims that they netted $15mil in revenues on iTMS downloads. Let's assume that they made $10mil in profits. If they feel that iTMS sales cancelled out more than $10mil in profits from DVD purchases, live TV viewers, and NBC.com viewers, then they need to stop selling on iTMS. I'm not sure how this can be measured, but perhaps NBC is thinking along these grounds.

And I'm definitely miffed I can't purchase Battlestar or Heroes episodes from iTunes any more. Guess I'll get the DVDs or whatever.


I just discovered that all the Heroes episodes are on Netflix Watch Instantly. If you're a member, and you have access to a PC, and all you want to do is timeshift, it might work for you. The price is certainly right.

... If the Hulu experiment fails and they leave money on the iTMS table, then Zucker will be ousted and someone else will step in.

Well, to answer this question, NBC claims that they netted $15mil in revenues on iTMS downloads. Let's assume that they made $10mil in profits. If they feel that iTMS sales cancelled out more than $10mil in profits from DVD purchases, live TV viewers, and NBC.com viewers, then they need to stop selling on iTMS. I'm not sure how this can be measured, but perhaps NBC is thinking along these grounds.
The $15 million is pure profit for NBC as I understand it. So far Hulu is concerned, they have already sunk tons of money in it -- it will be years (most likely never) before it starts making anything.

As far as Zucker paying the price for making the wrong decision -- I think you are ascribing a level of logic that doesn't exist among his bosses. He may yet get fired, but most likely because of NBC's 4th place in the ratings (which pulling NBC from iTunes won't help one bit, considering that iTunes is credited with rescuing The Office from ratings oblivion BTW).

The $15 million is pure profit for NBC as I understand it. So far Hulu is concerned, they have already sunk tons of money in it -- it will be years (most likely never) before it starts making anything.The article in Variety says that it's $15mil in revenue. Personally, I think it's creative accounting to get a number that low, but it was clearly stated as revenue.

As far as Zucker paying the price for making the wrong decision -- I think you are ascribing a level of logic that doesn't exist among his bosses. He may yet get fired, but most likely because of NBC's 4th place in the ratings (which pulling NBC from iTunes won't help one bit, considering that iTunes is credited with rescuing The Office from ratings oblivion BTW).While I have no connections in the Hollywood business, I do see that logic does prevail when deciding these things. The stockholders are the ultimate hammer.

Disney's Eisner was held accountable for almost losing the Pixar deal. Disney was making good money with Pixar and Eisner got greedy. Jobs shopped Pixar around and Eisner is gone.

As for saving "The Office", I keep hearing that, but does that really even matter? I guess it does, but if one show fails, there's always another reality/game show to take its spot. I guess that's why NBC is in 4th.

I guess that I don't really have a point, other than NBC can do whatever they please, and that things have a way of balancing out in the end.

ft

Wow, NBC tried to make Apple give them a cut of iPod revenues

http://www.news.com/8301-13579_3-9806737-37.html

This guy Zucker is insane, absolutely nuts. Makes you wonder what other major miscalculations he's responsible for at NBC.

This is long, and I guess I apologize for that, but reading what this NBC frigtard spewed
makes me non-linear, and should do so to all of us who have a deep interest in media.

Classic example of "Learn to surf or Drown". Apple is offering a life preserver to the Media companies that are currently drowning in a sea of crap content that they made. The true loss of revenue from copyright violation (I refuse to validate the inaccurate term "piracy" to apply to copyright "violation" that is only "violation" because of media company bribery of elected officials) is a tiny tiny percentage of their yearly net profit. Why? Incremental costs of production for media properties are insanely low compared to other products (ie: the cost to make 1 vs 1,000,000 DVDs is insignificant compared to the cost to make 1 vs 1,000,000 toasters or cars or even books). In television, this cost is even further reduced because much of the initial cost of production is recouped form advertising sold during the initial and syndicated broadcasts. Add to that the fact that the overwhelming majority of copyright abusers would never have bought the physical media in the first place, while a not insignificant potion of those who like the illicit media go on to buy the physical media, and the actual loss of revenue to media companies is pretty much insignificant.

What P2P and iTunes *do* represent is a disintermediation of media. Media conglomerates got where they are because they've inserted themselves between people who create things and people who want to buy those things. The internet gives creatives the ability to not only sell their products directly to consumers, but to also advertise them and generate word of mouth. *This* is what threatens Media companies and their attendant leeches like Zucker, not any artificially-created "loss of revenue", because it is a fundamental challenge to their relevance and continued existence. And where iTunes was initially viewed as "just another channel", Apple not only puts the tools to create their own media in people's hands, but it's also created a viable distribution mechanism for that media that's just as visible as the major networks. It's not hard to imagine a 20-minute videocast sitcom created by 10 high-school kids being sold as a peer alongside the latest crap episode of "Chuck" or "Raines" (to name 2 NBC shows), and - this is what drives Zucker insane - for the same price of $1.99/episode. If people pay the same, and the videocast is as enjoyable (anyone watch "Red vs Blue"? "Boing Boing TV"?) what exactly do you need NBC for, if you're a consumer or a creative?

This is what Zucker means when he says iTunes "destroyed" the music industry. Clearly, iTunes didn't. Neither did MySpace, nor Napster, nor any other computer technology. What all of these *did* do was make the labels incrementally less relevant to the point where they can no longer abuse consumers and musicians to the extent they've been doing for the last 80 years or so. To big media, selling a fair product for a fair price with fair terms equals destruction.

Apple, frankly, couldn't care less what NBC and the rest of the big TV content producers want. If they somehow all pull their content from iTunes at the same time (about as likely as the European Union creating a unified foreign policy, and for the same reasons), then Apple just throws the gates wide open to "small" and indivdual content producers and becomes YouTube on steroids.

NBC, CBS, ABC, Fox, Viacom and the rest are already dead. They just don't know it yet.

Montressor- couldn't agree more and well said IMO. To your point and complete with all kinds of irony; the most recent Apple commercial shown on these big networks was made by exactly the example you describe:
http://www.nytimes.com/2007/10/26/business/media/26appleweb.html?_r=2&ex=1351137600&en=63fd5eb855566342&ei=5088&partner=rssnyt&emc=rss&oref=slogin&oref=slogin

In his closing words:
“we’re producing films we put on YouTube that we make in a day and a half in the parking lot,” he said, laughing.

I do think some at these studios are starting to get it (NBC excluded evidently!); Not sure they are dead, but they will change how they do business rapidly or die....

thanks for the excellent post...

ken

NBC, CBS, ABC, Fox, Viacom and the rest are already dead. They just don't know it yet.The era of advertiser-supported viewing is changing in the 21st century. NBC U is just an example of a studio that refuses to accept the notion that many of us are changing our viewing habits, and refuse to watch advertisements, or the shows that their corporate manufacturers want us to watch. I'll bet that advertiser pressure has as much to do with Zucker's moves with iTunes as anything. "Here little boy, quit showing your programs on iTunes, and we will give you more money than you can make there..."

In other words, to the degree that technology allows me, I choose to not watch commercial advertising (praise the 30-second skip). Nor do I enjoy the vast majority of programming that is brought to me and paid for by commercial advertisers. My time is more valuable than to spend it watching commercial advertising, just so I can watch some sub-par programming that has more to do with moving dollars from brainwashed consumers to corporate coffers, and back to the likes of NBC U.

Let me spend my hard-earned dollars directly buying content that I really want to watch without the distraction of a corporate business transaction (commercial advertising) getting in the way, and wasting my time. Say goodbye to tiered programming packages--I don't want my programming choices subsidized by the Home Shopping Network, thank you very much (and here is where the scare-mongers hired by the cable and satellite industry and studios step in to perpetuate the status quo).

What Zucker et al. are really afraid of is that the era of commercial advertisers controlling and funding programming content, and funneling mega-billions into production and profit is coming to an end. They refuse to get off of the corporate advertising tit and compete side-by-side with content producers who are willing to deliver programming based on their direct value to the end viewer.

Watch Hulu for free with it's advertiser-supported model, and it is no different than watching the same sort of TV we've had since the beginning of OTA. You will watch programming (and ads) that their advertisers think will most make you want to buy their products or services.

Failure to watch the mandatory advertising = piracy (no matter how you accomplish this) and heresy. This is what really strikes fear into the heart of Zucker-thought. iTunes was nothing more to him than an experiment to see if the networks could extend their iron grip into the next big content provider (since cable and satellite tv). And they couldn't. And they are bitter. And they are scared of a future they (and their advertisers) don't control.

Technology is allowing more and more people to realize that watching advertising is stealing their lives away. 30-sec spots add up to minutes. Minutes add up to hours. Hours to days. Days to years.

By the time you reach 40, you've spent one whole year of your life, 24/7, watching commercial tv advertising. And you've been brainwashed to accept that just so you can watch the likes of [insert bad network tv show of your choice]. That's the real crime.

All you have to do is to look at the impending writer's strike to know what is really going on. NBC claims that Apple is taking an unfair cut of their business when in fact NBC, not to mention other networks, is trying to squeeze all the money they can out of advertising revenue because they can "cut out" the writers who only stand a chance of making money if NBC sells content instead of generating revenue through ads. Right now the writers only get their fair cut of the booty when customers pay for the video content, HULU is an ad-revenue model which means it is designed to reap maximal revenue for NBC and screw over the writers. iTunes is more akin to DVD sales with customers actually purchasing content which NBC actually doesn't want, they want ad monies which they don't have to share with anyone.

Edit- I think it disingenuous for Zucker to cry crocodile tears that Apple is taking the fruits of his company's labor when in fact he is trying to essentially find the best way to screw over his own employees.

I wonder how Zucker feels now with the looming WGA strike and the fact that Heroes is starting to bomb pretty bad in both the critics eyes and Nielsen viewers when compared to last season. If the strike does happen and the show's ratings continue to drop, I bet that the paltry $15 million in revenue from iTunes will start to look pretty good.