Apple and NBC Split Up

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Apple will not add new NBC shows in iTunes due to a contracting disagreement between Apple and iTunes. NBC tried to force Apple to raise prices on its shows to $4.99 from the current $1.99.

This means that popular shows like The Office, Heros, Saturday Night Live and other NBC shows will no longer be available via iTunes. Apple is likely to pull all the NBC shows off iTunes.

NBC, which plans it’s own online video site with News Corp, said that the dispute was caused by Apple’s unwillingness to let NBC package together shows with variable pricing.

It seems to me that Apple should be able to control it’s retail prices, not NBC. If NBC wants to raise it’s prices to iTunes that’s NBC’s business. The desire for NBC to control a stand alone retailers pricing is just wrong, and maybe illegal as well.

In a 1911,the Supreme Court concluded that under the Sherman Antitrust Act, it was illegal for a manufacturer and distributor to set a minimum retail price for its products. However in June, 2007, the Supreme Court made a new decision that price maintenance plans will be decided on an individual basis, and courts will consider whether a particular plan is likely to increase or decrease consumer welfare. So it’s not clear what NBC might be able to get away with regarding setting retail prices.

In any case, NBC should be building a strong distribution channel and without iTunes they have cut themselves out of a lot of the market. We will have to wait and see how it plays out.

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