NBC's Zucker Hints At Return to iTunes

Bad corporate blood led to the collapse of the NBC/Apple business relationship in the fall of last year. Now, via the Engadget news feed, comes word that things may be thawing out between the two. A for-pay article in the Financial Times had words from NBC Universal's COE Jeff Zucker, saying: "'We've said all along that we admire Apple, that we want to be in business with Apple.' He then unexpectedly adds, 'We're great fans of Steve Jobs.' No telling what has caused the turnabout. Perhaps the writers strike gave both parties time to reflect on their mounting lost revenue." The site also notes that NBC signed a deal as part of the recent movie rental announcement, possibly contributing to the thaw. They link to a BusinessWeek article pointing out positive statements from Jobs reciprocating these 'feelings'.

Comments

Obviously...

[dkf]

No telling what has caused the turnabout. Well, I bet it's called "money". If each reckons they can make more profit (or possibly just increase turnover) by tolerating the other, that's a strong incentive to grin and bear it. The details? They'll become clear over time.

Re:Obviously...

[Anonymous Coward]

Absolutely. Business is all about money. NBC believes (or believed) that they had the leverage to get more money out of Apple. Conversely, Apple believes (or believed) that NBC would be accepting of the status quo in terms of money.

And what happened? General Electric gave NBC an opportunity to create its own online video distribution service. How cool is that??? VERY cool, and it is a project I wish I worked on. Because a failure would mean that they just re-join the iTunes club, and a year or two of no iTunes sales. Sure, it had a small chance of success, but the cost was low and the potential payoff was huge. And it's a huge, unique project for those involved.

So I don't blame NBC for going in this route. I'm sure others will try too. But the fact is, a retailer that sells all products (instead of just one class of product) is compelling to consumers, and that's just something that NBC couldn't overcome given the current old-school business model in the industry of "we only sell our own stuff".

The record labels fell into the same trap. As Jobs knows, people certainly don't want to search 100 stores to find what they want - they want to shop at the Walmart of on-line media sales and be done with it.

Re:Obviously...

[morgan_greywolf]

Absolutely. Business is all about money. NBC believes (or believed) that they had the leverage to get more money out of Apple. No, I don't think they were trying to get more money out of Apple -- they were just trying to cut Apple completely out of the equation and keep all the profits for themselves. In the process, they learned that it's hard to build an online buying community and that Apple's success with iTunes, despite all appearances, did not happen overnight. Apple had to take plenty of losses for a while before they gained enough of an audience to make more money. Apple leveraged the money it made from its other successful businesses -- namely computer hardware and software sales so they had plenty of time to ride out the initial slow period.

Media companies are far less likely to do that. They expect each business unit to stand on its own and aren't as willing to leverage one business unit with another. That's why Big Media took so long to get into online distribution and why Apple had the opportunity to carve itself out a nice niche in the first place.

Re:Obviously...

[jollyreaper]

No, I don't think they were trying to get more money out of Apple -- they were just trying to cut Apple completely out of the equation and keep all the profits for themselves. In the process, they learned that it's hard to build an online buying community and that Apple's success with iTunes, despite all appearances, did not happen overnight. Apple had to take plenty of losses for a while before they gained enough of an audience to make more money. Apple leveraged the money it made from its other successful businesses -- namely computer hardware and software sales so they had plenty of time to ride out the initial slow period. Got it in one, Mr. Garibaldi. And you know what? I bet that there were people all up and down NBC telling him this and he refused to listen. What, those pretentious sweater geeks can do it over at Apple, it must be simple! Hey, Fran, your teenager likes computers, right? Tell him I'll give him a hundred bucks to whip up an iTunes replacement. Tell him it'll look good on his resume.

It just galls me to see how fucking incompetents who have no understanding of their industry get put into positions of power and are pile-driven into the ground. I've got a book I'm reading right now on four important commanders who fought in the Battle of Leyte Gulf. The author is sympathetic to both sides but really shows how ignorant mindsets can lead to disaster. On the Japanese side, the popular fiction was that Westerners were all lazy, cowardly, and the men henpecked by domineering wives. They lacked warrior spirit and were contemptibly unworthy of their wealth. It didn't matter that many western-educated Japanese military men knew otherwise, you simply did not speak up against the cultural myth. The Japanese could not divorce poetic license from real life. All the popular talk about going and dying for the emperor instead of kicking ass and coming home alive, insane. The obsession with forcing the Decisive Naval Battle (Germans were guilty of this sort of thinking, too) while not realizing that they were losing large chunks of their fleet trying to force it. Instead of attacking the vulnerable hand wielding the sword, they determined to punch their fists right into the swordpoint. And because Japanese culture is all about not losing face and not embarrassing your superior, nobody fought the wrongheaded notions going about. Ignorant course of action were decided upon and even people who strongly disagreed with them had no recourse. There was also plenty of stupid on the American side as well, the gun club admirals having their pissing contests with the naval aviation admirals. You had MacArthur putting his own glory ahead of the best interests of the United States, good men making terrible mistakes in the heat of battle (Halsey and Taffy-3), etc. I forget who said it but it's true: the winner in a war is the side that makes the least mistakes. The United States pulled quite a few boners but the Japanese were worse off in terms of resources and cultural mindset.

The last company I worked for was like that. You get these crazy ideas handed down from on high and you had no idea who advocated the policy, what the rationale was, and simply assumed that the powers that be had access to better information than you and the whole thing must not be as crazy as it appeared. Well, turns out us peons were right: those were damn stupid decisions. But in this corporate culture, you had to protest the way the Japanese did, seppeku -- because if you criticized management, you were putting the "I'm asking to be fired" blade to your belly and giving it a good shove. So through fear and uncertainty, ignorant fools drove a profitable company into bankruptcy. When the first signs of danger showed, the smartest and ablest jumped ship. When the layoffs began, the smart and able who were too loyal to jump the first time started looking for work and jumped as soon as they found it. By the end, all that were left were the timid and people too specialized to easily find work outside of the industry.

Ok, that was a little bit of thread drift...

Translation...

[RyuuzakiTetsuya]

No one's going to the NBC site and thus sitting through ads to pay for our online venture.

I think that it's partially because of the way the content looks zoomed in. Compressed Flash Video never looks good, atleast whatever encoding Apple was using made an effort to look good when viewed up close.

Re:Translation...

[peragrin]

Not only aren't people using their site, their site is slow to load, the video is crappy at best, and their bandwidth bill must have been huge.

The great thing about apple's offerings is that you can output it to a TV at full screen and sit on your couch to watch them. Try that with most flash video's. Youtube it is allowed CNN it isn't.

Anything is better than nothing.

[Anonymous Coward]

I no longer live in the US, and so the US iTunes Store is the easiest, most convenient way for me to get the shows I want to see.

All that happened when NBC pulled their shows is I torrented their shows, whilst purchasing the others on iTunes. I imagine others did the same.

I appreciate that NBC probably don't want to be bullied by Apple over the prices, but maybe now they are realising that the revenue they were receiving is better than none at all?

Re:Anything is better than nothing.

[marcsiry]

I think it's telling that Sanctuary's About page describes the hardware and software used to create the show, but doesn't tell me what the show is, you know, about.
 
Art is about creating an emotional connection with the viewer. Maybe when the Sanctuary folks realize that's more important than "an innovative 3D computer-model tracking system live on set" they'll begin to accrue more viewers.

Re:Anything is better than nothing.

[Generic Guy]

NBC probably don't want to be bullied by Apple over the prices...

It is arguable who 'bullied' whom. My back of the napkin recollection is more like this:
NBC got essentially 'free' money by simply providing the episodes to iTunes and sitting back while Apple does all the work. Apple handles the cataloging, payment collection, file servers and network bandwidth. NBC sat and collected a large portion of each sale.

Then NBC got even more greedy. To buy a single episode of something, NBC is rumored to have wanted to force bundles. Instead of one episode for $1.99, they would for example 'force' you to buy another unrelated or perhaps two other unrelated programs for more like $4.99. My guess is this was a gambit to try and generate interest in NBC's other titles. In their twisted logic one show you actually want with two attached throwaways (you would be forced into purchasing) is somehow "cheaper" for the end customer. In my book, that simply makes the one show I want $4.99 instead of $1.99.

Apple apparently balked at the idea of these forced bundles, which would ruin iTunes' straight-forward simplicity (among other things), and told NBC to take a hike. I suppose you could say while NBC was busy strangling their golden goose, the goose realized its own long-term interest was to get up and leave.

NBC was paying attention...

[OSXCPA]

...to the fact that .torrent activity for their shows went through the roof when they pulled out of iTunes, taking their shows and affiliates with them. I know people (cough) who used to happily pay $1.99 an episode for Law and Order, Project Runway and Battlestar Galactica who discovered that those shows were available 'free'. Considering the only other option was buy a Tivo and / or upgrade cable to get Bravo and SciFi - what do you think they did? They would certainly go back to paying the $1.99 if the option were available.

Feeewings...

[LaminatorX]

NBC is reported to have asked Disney if Disney's friend, Apple, still liked NBC; and if so, did Apple just like NBC, or did it, you know, "like" like NBC.

Corporate Egos

[Detritus]

I've never understood why some businessmen let their egos get in the way of making money.

Me: Here, take my money!

NBC: No, thanks. Not until Steve says he's sorry.

An interesting note

[RalphBNumbers]

Andrea Jung joined Apple's board of directors a couple of weeks ago.

She's also on GE's board of directors.

GE owns 80% of NBC Universal.

(and since Kevin Bacon has no doubt worked for NBC Universal, I can connect Steve Jobs to Kevin Bacon in four steps)