Amazon
Is Apple’s inflexibility its Achilles heel?
Another twist in the NBC-Apple saga: after dumping iTunes as a distribution method for its TV shows, the peacock network has cozied up to Amazon and its Unbox service instead. It appears that Amazon — whose movie-distribution unit likely has one-millionth the market share that Apple’s does — gave NBC more flexible pricing terms than Apple was willing to.
In particular, NBC gets the ability to offer a series of shows as a bundle, which is the kind of “if you want the good stuff, you’ll have to take some of our other crap as well” deal cable subscribers have grown accustomed to. Apple has said that NBC wanted to boost the price of its shows almost four-fold, but from the sounds of it, Apple didn’t want to offer the kind of bundling NBC wanted either.
Apple has routinely resisted the pleas of both record companies and TV networks when it comes to variable pricing. As far as Steve is concerned, it’s one price or nothing, and Apple has argued that this protects the buyer by making things simple and keeping prices low. And as the dominant provider, the company has been able to maintain that position and have companies bow to its wishes. So far.
But would variable pricing be such a bad thing? Why shouldn’t users be able to pay less for the crappy stuff and more for the really in-demand content? That’s how other markets — markets that aren’t effectively controlled by one provider — usually work. Why is Apple so opposed to differential pricing? I must admit I don’t really know. But NBC’s move is evidence that content owners will go elsewhere if they can’t get the flexibility they want.
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Sure, that sounds great, until you realize the 'junk' that nobody wants will not be at a lower price, it will be at $1.99
The popular stuff will go at $2.99. $3.99, and $4.99. They don't want to lower the price on less popular shows, they want to hyper inflate the price of currently popular stuff.
If current hot shows stayed at $1.99, and older stuff was available at .49-.99 well, that would be a great reason for variable pricing, but that won't happen.
Lets not even go to the place that mentions the current TV shows are paid for by advertising, and available for free over broadcast TV. So, NBC gets paid once by advertisers, some more by iTunes customers, and again when customers purchase the DVD box set. NBC is just a greedy control freak.
Yeah, Apple and SJ are bigger control freaks, but their uniform pricing doesn't hurt the customers.
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The question that you miss asking here is ,"What do the Music and Media customers want?" The customers have long rejected the Music and Media Giants plans. We will find out soon who wins.
NBC's move to Amazon will succeed or not. We'll see how flexible the customers want to be.
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Psychology of Economics 101. Price is an indicator/signal for quality, low pricing for a show would actually reduce the demand for it! This is why theaters price the summer blockbuster same as the summer flop.
-S
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Apple is in the business of selling iPods and if you upset the Applecart (sorry) and increase the price of the content hipsters want to buy, the sales of iPods go down .
Also I personally think this is a smart move by NBCU to move away from the monopoly that is iTunes .Also remember that Amazon Unbox also works with TIVO and will probably more open to things like subscriptions and season passes and other types of bundling .eg but the season and get a free rental of this movie .
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http://www.longtail.com/the_long_tail/2005/08/c...
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