About a month ago, there was news that NBC and Apple were having trouble agreeing on terms for the renewal of their contract to distribute NBC shows on the iTunes Store. It seemed that the one main snag had to do with pricing. Apple wanted to keep it the same, NBC wanted variable pricing.
Currently, TV shows on the iTunes store cost $1.99 across the board. They can be half an hour or an hour, popular or obscure, comedy or drama. Either way, they cost $1.99. Variable pricing would allow the TV network to set the price how they see fit.
Shortly after rumors leaked that the contract would not be renewed, Apple issued a press release stating that the reason for not renewing the contract was:
“Apple declined to pay more than double the wholesale price for each NBC TV episode, which would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99.”
NBC came back to say that the reason was that they wanted more flexibility with pricing and the ability to have variable pricing. (Couldn’t find the press release)
From this perspective, NBC clearly looks like the bad guy to consumers. How dare they raise prices, don’t they know we can get this stuff for free over the air (cable) and on the internet (torrents). Apple clearly loves us little guys (although the consumer base can by no means be considered little) and is willing to fight for us. Right?
Let me paint you another picture. Apple is hurting us as consumers. They are taking away our power and at the same time making it look good. If Apple were to allow NBC use variable pricing, the consumers could then have an influence on setting the price. Will NBC set crazy high prices like $5 per episode of Heroes, you bet. At the same time they will lower the price of some less popular shows to $1.
If consumers are really so upset about the price at $5, hopefully they won’t buy, and at the same time they might check out that mediocre show for $1. By using variable pricing, NBC can judge the market to see what people are willing to pay for the TV shows. Their results could show that people are willing to pay $4 for an episode, but they could also show that sales will triple if they cut the price to $1. If NBC were able to judge this correctly, it could greatly benefit us consumers. As it currently stands, NBC has no way to tell if they could make more money by lowering prices because Apple wields the power. Sure consumers could get hurt by this, but I would rather have the power to influence price then have no power or choice at all.
My idea would work great, except there is one glaring problem. The media distribution agencies (MPAA, RIAA, TV Networks) are very cautious when it comes to internet distribution. They assume that all of their customers are thieves and thus interpret any bad result as a failure of the distribution channel rather than high prices. This means that they might price the episode at $5 and justify the declining sales as the falut of the internet. This is one major problem with the industry, if they could get over this and realize the benefits of internet distribution they could rake in the cash. Until then, Apple may end up being the good guy that sticks up for the consumer. As good as that sounds, it is unlikely. Remember that Apple is in business to make a profit, not help out everyone.
In the end, would you rather have a chance to influence prices or have no shows on iTunes. I vote for variable pricing.
Back in the day there were mix tapes. You would take a set of songs that you liked and made a tape for your friends or yourself. Then CDs came along and started to change the game. It was faster and easier to make. Plus, you had way more room to write the names of the songs. The name also changed. No longer did we have mix tapes, instead the mixes took over. People started making these all the time. It was one of the best ways to share your favorite songs. Everyone could enjoy a piece of your world.
