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Apple Pushing Networks to Cut iTunes TV Prices to 99 Cents a Show

Illustration for article titled Apple Pushing Networks to Cut iTunes TV Prices to 99 Cents a Show

Apparently, Apple's feeling pretty generous "aggressive" lately price-wise. Citing "three people familiar with the proposal," Variety's reporting that Apple's "mulling" chopping the price of TV shows down to 99 cents an episode. Naturally, the networks aren't exactly thrilled with the less-than-modest proposal. So why make it?

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It's well known that the iTunes video store isn't the titanic market juggernaut the music store is—to wit, NBC can walk, but Universal Records stays, despite the fact it's the biggest label and has notoriously strained relations with Apple. It's clear from the new iPod line that Apple sees video as its next frontier. But they're simply not selling the volume of video they expect or want to.

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On one level, the idea's fairly compelling: the video download market right now is primordial at best, and 99 cents a show is a hard bargain—even just considering production for a TV episode vs. a single track—that's bound to pull in eyeballs and pump iTunes sales, maybe enough to start to grab the first foothold in the market.

Which might be exactly why the networks would balk, clipping half their check aside. The contentious situation between record labels and iTunes is largely because of the iPod/iTunes grip on the digital music market. It's leverage Hollywood is clearly wary of granting anyone wiggle room toward. So we'll be more than surprised if this comes to pass, even over in Disney land. [Variety, thanks John]

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DISCUSSION

The part we are missing here is that the primary revenue stream for the networks is advertisement revenue. The money coming in from iTunes is chump change, and does not fit with the revenue / employee model in place at the networks today. While we can sit around and say 'even 99 cents seems expensive for a TV show' (and it does), there are good financial reasons for the networks to not play that game.

If they price shows accordingly it is possible their ratings on their network will go down (slightly) as a result. A slight drop in ratings could translate to a dramatic drop in advertisement revenue, which is how those shows are paid for.

It makes sense to all of us that they need to change their model, but it is difficult to argue with the concern that they can not show their ratings reducing. The iTunes play was merely to give regular viewers a back-up if they miss an episode, it was never meant to replace watching the network.

The lesser concern, but certainly still on everyone's mind, is the power the Apple yields on their iTunes product. The very fact that they can consider changing the pricing structure sends shock-waves. As you might guess, big companies have big egos (including Apple), and no one wants anything dictated to them. Any surprise that NBC has exited stage left?