Hollywood studios trying to force price rises on Apple have flexed their muscle by pulling the plug on the popular iTunes site.
According to the Hollywood Reporter and various wire services, Apple will not be selling NBC Universal shows on iTunes for the upcoming year after the companies failed to renew their two-year contract Friday.
In a statement on its Web site, Apple said that the deal, set to expire in early December, fell apart after the company “declined to pay more than double the wholesale price” for each episode of NBC Uni shows, which include “The Office” “Heroes” and “Battlestar Galactica.” This would have increased the price per show to $4.99 for NBC Uni content whereas other broadcast and cable networks would have kept the $1.99 price tag.
“We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase,” said Eddy Cue, vp of iTunes for Apple. “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”
In a statement, an NBC spokesman disagreed with this assertion, saying that the company “never asked to double the wholesale price for our TV shows.”
“Our negotiations were centered on our request for flexibility in wholesale pricing, including the ability to package shows together in ways that could make our content even more attractive for consumers,” the spokesman said. “It is clear that Apple’s retail pricing strategy for its iTunes service is designed to drive sales of Apple devices, at the expense of those who create the content that make these devices worth buying.”
NBC also said it wants Apple to take “concrete steps” to protect content from piracy.
Apple said that instead of having the network pull its shows in December in the middle of the TV season, it would, instead, not offer them when they debut next month. An Apple spokesman said NBC Uni content from past seasons would stay on iTunes until the current contract runs out.
The NBC spokesman, though, said that the network is “hopeful” that an agreement can be worked out before the contract expires.
NBC Uni is the biggest supplier of video content to iTunes, accounting for about 30% of TV sales, according to Apple. The network also supplied three of the top ten shows to the platform last season.
Apple’s decision to pull new NBC Uni content came after a report surfaced Friday in the New York Times saying that NBC would not renew its contract to sell content on iTunes.
Many in the media industry are frustrated with what they consider low pricing on the iTunes format. Songs are sold for 99 cents, TV shows for $1.99 and movies for $9.99.
In July, Universal Music Group said it would not renew its contract with Apple and instead will enter into interim agreements with the digital storefront. UMG is owned by Vivendi, which has a 20% stake in NBC Uni.
This news comes only a few days after NBC Uni and News Corp. announced that they would name their much-publicized joint online video venture Hulu and launch a private beta mode in October.
NBC Uni shows, along with News Corp. and other professional content, will be found on Hulu’s stand-alone Web site and its distribution network, which includes Yahoo, Time Warner’s AOL, News Corp.’s MySpace and Microsoft’s MSN.
