Apple to NBC: Screw you!

I had barely pushed “publish” on my last entry when Apple decided it wouldn’t wait until the NBCU contract expired in December and announced that NBC’s fall line-up wouldn’t be available via iTunes. According to Marketwatch, Apple will also drop other NBCU programming.

According to a statement from the company, NBC refused to renew its agreement with iTunes after Apple balked at paying fees that it said would more than double the wholesale price for each NBC TV episode.

Apple said NBC’s demands would have raised the price of NBC shows to $4.99 an episode from the current $1.99 price tag.

We would not agree to their dramatic price increase,” said Eddy Cue, Apple’s vice president of iTunes, in a statement. “We hope they will change their minds.”

A spokesman for NBCU denied that they had asked for double the wholesale price, adding, “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.”

Sorry, I don’t buy that. Nobody from Hollywood does ANYTHING that makes things “more attractive for consumers.” It’s all about money, and Apple — the folks who invented this source of revenue for everybody in the first place — is trying to help you and I by keeping prices low.

I find most interesting in this article from Marketwatch the comments of James McQuivey, an analyst at Forrester Research.

What they’re going to have to realize,” McQuivey said, “is that out of all the dozens of shows available out there, most people only want the four or five most popular shows. And if those aren’t there, those consumers are just going to walk away.”

This is conventional thinking, but it’s also the kind of stuff that got traditional media in trouble in the first place. Let me repeat what I said in my previous entry. Losing this content hurts NBCU much more than it will hurt Apple. Let’s watch and see what happens.

For Media 1.0, it’s always about control

Here’s one that bears watching. NBC Universal has told Apple that it’s not going to renew its contract with them to provide programs via iTunes. According to the New York Times, NBCU wants to do things with its programs — such as bundling — in order to increase revenue. Apple’s model is one of simple, straightforward pricing, $1.99 per episode, $9.99 per movie. Rafat Ali at PaidContent summarizes:

NBC was in early on iTunes’ video offering, and now accounts for about 40 percent of downloads…The current two-year deal extends through December, so the 1,500 hours of NBCU programs will remain available on iTunes at least until then.

…This also comes as NBCU-Fox video joint venture Hulu is about to get off the ground, where NBC will be putting most of its shows for free streaming and distribution.

This could be just rhetoric in negotiations (after all, the NYT story is based on “a source close to the negotiations,” which is mediaspeak for someone who stands to benefit from releasing the information), but I think there’s an important element to note.

If NBCU’s content accounts for 40% of downloads, they are making the assumption that it is their content that drives those downloads. They no doubt use that number amongst themselves for high-fives and encouragement that content is still scalable via the Web. Why else even think of playing chicken with iTunes? The assumption is that “the people” so love our content that they’ll come where WE want them to come in order to get it. It’s the same logic that drove Viacom’s decision to sue rather than work with YouTube.

Apple, on the other hand, would argue that it is the presence of the content on iTunes that drives the downloads, that people download their products, because, as an aggregator, iTunes makes it easy for people to find them and download them.

So who is right? On this question rests much, and it’s the stickiest of all wickets for traditional media, because the business model of Media 1.0 doesn’t play well in an age of distributed media.

The gamble NBCU is making is that they can still make business decisions with their content that don’t include their customers. While I do believe that serious “Office” fans will go where they have to go to get their downloads, forcing everybody to do this is ultimately a fool’s folly, for most people will opt for the path of least resistance.

Let’s see, Office isn’t here anymore, so what else do they have?” It is a critical mistake to assume that iTunes downloads will go down by 40% simply because NBCU decides not to play. Every other content creator that does business with iTunes is hoping NBC will go away, and this is the essential problem. NBCU may be able to increase its revenue, but eyeballs that go away are eyeballs that aren’t coming back.

If NBC were to leave, it would also hurt iTunes, because its ability to aggregate and present everybody’s content is its value proposition. So it’s not an easy matter for Apple either.

In the end, though — and as has been evidenced so many times in recent years — it is foolish to mess with empowered consumers. Who negotiates for them?

Hulu was the best they could do?

Reaction to the name of NBCU and News Corp’s new video portal has been almost entirely negative, and I’m afraid I have to agree. I mean, “hulu?” For the uneducated, the two media giants announced the partnership before they’d hired anybody or had a name for it, so media bloggers and observers dubbed it “ClownCo,” which would’ve been a better name than hulu, for crying out loud.

This portal has been so hyped as God’s gift to online video that any name they came up with would likely have bombed, especially with the tech community — which includes the people who’ve written the book on online video without the “help” of the networks or studios. Old media just doesn’t get that new media isn’t created in a board room with fancy consultants (oh shit, I’m a consultant!), because the results are usually just varnished horse crap. Hulu? The first thing people did was research the word in various languages, and the meanings are almost too funny to believe. In Indonesian, it means “butt.” In Swahili, “cease and desist.”

The problem is that the fuss over the stupid name casts a pall on what is really a smart move by NBC and Fox, namely creating a single portal for video instead of asking people to come to each branded site. Of course, it would be better if all networks were a part of this, and I think announcing the project without a name or a more complete partner list was a huge tactical error.

Bloggers meet in Portland

I had the great pleasure of attending a local blogger meet-up last night in Portland at the studios of KATU-TV. I’m not sure of the headcount, but 50–60 is probably about right.

Athena holds court

As I travel around the country and do these gatherings, I find that the blogosphere of each community generally reflects the personality of the community itself. Bloggers are fun people to hang with — bright, witty, passionate, curious, and often quite comedic. Portland’s is a fun-loving bunch, moreso, I think, than their neighbors to the north in Seattle, where the humor is a bit more restrained (exceptions noted). It reminded me more of a meet-up with bloggers in Nashville than, say, San Francisco or Seattle.

Like other smart local media outlets, KATU-TV has taken a position of embracing the personal media revolution in its community. This isn’t easy for TV stations, but it’s an important first step in participating in the conversation — the buzz — that is the cyberspace community. I don’t see how media companies will be relevant in the years to come without taking this step.

And at every blogger meet-up, there’s always one blogger that really makes me smile. In Portland, that award goes to Athena, shown below holding court with (from left to right) Rob Dunlop of Fisher Communications, owners of KATU-TV, Don Pratt, KATU-TV news director, and Matt Davis, a reporter for the Portland Mercury and an active participant in the alternative paper’s Blogtown, PDX blog.

Athena holds court

Athena tickled me. She’s the author of a book about ghosts in Seattle, so she begged Don for a tour of the KATU basement. Her blog is called TheBlissQuest, where her slogan is “Eat my bliss…” I asked her how the quest was going, and she said she’s experienced bliss only in bits and pieces so far, but “I’m still waiting for the big chunks.”

But Athena was just one of many Portland bloggers that I met, and everyone had something unique about them and a story to tell. Bloggers are like that, which is why I enjoy being in their company so much.

Understanding the Yahoo! Consortium

Here is the latest in my on-going series of essays, TV News in a Postmodern World.

I know I sound like a broken record sometimes (only people my age use that saying), but the foremost assumption of a networked media world is that the highest value goes to the people running the network, not its individual nodes. This is why we strongly recommend that clients get into the business of network building in addition to distributing their content through networks run by others. This is possible at the local level, because, well, everybody’s a sort of media company these days.

This is just one of the reasons I question the value of the Yahoo! Newspaper Consortium, an enormous blending of Yahoo!‘s reach and technology with the content and sales efforts of 19 major newspaper companies in the U.S. I’ve had several discussions with people involved in the deal, including a guy I really respect who felt I wasn’t considering all the factors. This essay is my attempt to put the details of the deal into language we can all understand, because I think there is an important lesson here for all of us, whether newspaper or television.

Understanding the Yahoo! Consortium

These are the people in your neighborhood

TechCrunch provided a link this weekend to Vision 20/20, a nice mash-up site that provides users with a free map showing where sex offenders live in their neighborhoods. Just click on POM Offender Locator in the top navigation and enter your address. It’s pretty freaky, a nice public service, and an excellent demonstration of what you can do with databases and maps to create meaningful content.

Which got me to thinking…

NBC is continuing with its controversial “To Catch A Predator” series despite advertisers pulling out of the “show.” My heart bleeds for NBC, so why don’t they visit the Vision 20/20 website, find offenders living in the hood, and have pretend youngsters knock on the door with Girl Scout cookies? The cookie box cam video alone would be priceless. They could call it “To Catch a Repeat Predator,” and with his brow appropriately furrowed, Chris Hansen could ask them, “Don’t you know you can’t do this?.”

Noble, huh?