NBC’s dispute with Apple over the company’s fixed pricing policy for downloads of its TV shows from iTunes is well worth tuning into.
The conflict is based on NBC’s demands for more control over the pricing of its content in iTunes, while Apple is insisting that variable pricing simply isn’t an option.
Well, here’s the kicker: Apple has already rolled out variable pricing in iTunes. It just depends on where you live. And, it’s frankly a bit of an outrage...
The NBC scuffle moved into the public domain last week following a batch of private negotiations, which failed. As such, NBC said the deal it has in place with Apple will be allowed to lapse in December.
Apple then went on the attack, describing NBC as "greedy and an attack on consumer interests", according to the New York Times.
"We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase," said Apple VP Eddy Cue, before adding: “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”
All of this is pretty lamentable, given Apple's history of greed and attacking consumer interests here in the UK.
Apple charges UK-based iTunes users £1.89 to download an episode of a TV show. Meanwhile in the US it charges just $1.99 for what appears to be exactly the same thing. One British Pound buys you two US Dollars these days. So what’s that all about? Has Apple ever attempted to explain – much less justify – the difference?
It’s the same with songs at iTunes. In the US you can download tracks for 99 cents, but in the UK it costs 79p (about 60% more, for no apparent reason). Yowzah.
With games, which Apple also sells, it costs $4.99 in the US for a download or, if you’re unlucky enough to live in the UK, a whopping £3.99 (an 80% premium to US pricing).
Can anybody logically explain why I’m expected to pay twice as much as a US-based iTunes user? Why the savage increase in price? Does it cost any more to distribute this content in the UK? Is Apple subsidising its US operations by charging Europeans double? And with the way exchange rates are going it could get proportionately worse...
The Office of Fair Trading has previously spotted this issue and referred it to the European Commission, as long ago as 2004, and consumer group Which? recently filed a complaint, but we’re still waiting on any significant action.
Apple’s NBC dispute harks back to earlier industry demands about the need for variable pricing. Music execs previously argued that archive material should be made available for a lower price, while newer songs should be priced more highly. Apple has resisted all such requests.
But why? Well, Steve Jobs has held firm in his belief that fixed pricing is the way forward, with one eye on creating and maintaining a simple proposition for consumers, and the other on a consistent framework that content owners can sign up to. If you bend the rules for one, you surely bend them for all.
Certainly there’s some sound logic in Jobs' thinking, although the content owners argue that Apple’s content pricing policy is ultimately aimed at driving sales of Apple’s hardware, notably the all-conquering iPod. Apple makes peanuts from selling music, but sales of its devices generate healthy profits.
It will be very interesting to see how all this pans out, as a move towards variable pricing is surely inevitable, even if iTunes resists. It could be a false dawn - I'm not so sure that lower pricing will drive demand for niche / archived artists, I just don't think it works like that with something like music.
Who will budge first? And who knows best? Jobs, or NBC?