updated 01:40 pm EDT, Thu October 25, 2007
Apple's TV show rights
Apple may have a strong bargaining position in the music space, where it controls the lion's share of digital download purchases. Its negotiating power for television shows is, however, limited. The company is facing resistance from content owners that are refusing to go along with stipulated pricing regulations. The highest-profile falling out thus far has been a break-up with NBC, which claims that 40 percent of all the television programs purchased on iTunes belonged to it (Apple disputes that figure, saying it was closer to 30 percent).
One of the reasons Apple has a stronger hand in music is revenue. Digital downloads (primarily through iTunes) account for for 15 to 20 percent of music companies' revenue, but NBC claims that less than 1 percent of the company's total revenue -- only about $15 million -- came through iTunes. Meanwhile, studios are beginning to explore other methods for distributing content. NBC's new Web site Hulu, created in partnership with Fox, will allow users to see shows from the two networks free on the Internet.
The problems could be spreading into the music space, where a Washington Post piece says that television networks and studios are gaining more leverage. Universal Music Group, the world's largest collection of record labels, has not renewed its yearly exclusive contract and instead is going month-to-month with iTunes, allowing it to deal with other distributors. Warner Music Group is also considering switching to a month-to-month contract.
Apple is also facing an uphill battle in the movie download realm, where only Walt Disney (Jobs sits on Disney's board), Paramount and Sony have made a partial selection of their content available through iTunes.
In the meantime, Apple has added two TV shows from NBC to its iTunes Store despite the recent fallout between the television network and the Cupertino-based company. NBC has already turned to Amazon to sell episodes of its new fall TV lineup via the online retailer's Amazon Unbox digital download service, and announced that it will offer one-week free downloads to bring its primetime and late-night TV shows to users desktops for a full week after the shows air