NBCU chief reveals more details about rotten Apple/Universal deal

After a brief lull, NBC Universal and Apple’s iTunes deal that recently turned rotten during contract negotiations again hit the headlines. Nearly two months after, NBC Universal's chief executive Jeff Zucker exposed what some of the contested terms between the two companies were.

NBCU boss yesterday spilled some more details regarding the Apple/Universal deal revealing that his company was dissatisfied with the earnings it was making from iTunes downloads of its TV shows, and Apple was not allowing it to experiment with bumping up the prices for one of its series.

During her remarks at a former football powerhouse Syracuse University benefit, Zucker claimed NBC has decided to pull plugs from iTunes because it had only earned about $15 million in revenue through iTunes last year despite pulling in about 40 per cent of the video downloads on the site.

Zucker said that Apple had generated millions off of iPod sales and was not willing to share any of the revenues with its content providers. "Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money," Zucker said. "They did not want to share in what they were making off the hardware or allow us to adjust pricing," he added.

Zucker bluntly rejected Apple’s claims that media conglomerate is forcing the iPod/Mac maker to charge more for downloads of its TV shows. Instead, NBC urged Apple for months to bump the pricing of one programme from the current $1.99 to $2.99 per download as an "experiment" but the offer was turned away by Apple's chief executive Steve Jobs, Zucker said.

"We wanted to take one show, it didn't matter which one it was, and experiment and sell it for $2.99," he said. "We made that offer for months and Apple said no."

In September, NBC Universal, the media and entertainment company which is iTunes' biggest video supplier had declined to renew its contract to sell its TV shows on iTunes because of a dispute with Apple over pricing.

NBC had notified Apple about its intension to pull downloads of its video content from iTunes after it failed to reach a new price agreement for the digital download service.

In December, 2005, Apple Inc. and NBC Universal announced a tie up to present iTunes users with NBC shows on demand for a price of $ 1.99 per episode. Now, NBC reportedly wants to bump prices and make the packaging/pricing structure complex, while Apple intends to stick with its older, original form of video distribution.

Introduced in 2003 for commercial music downloads, Apple's iTunes store instantly became popular with online customers. Apple had started with a library of only 200,000 songs and today it has over 6 million songs in its pocket.

Apple’s music store features the world's largest catalog with more than six million songs, 350 television shows and over 400 movies. The iTunes Store has sold over 50 million TV shows and over 1.3 million movies, making it the world's most popular online music, TV and movie store.

Movies purchased and downloaded from the iTunes Store can be viewed on a computer, fifth generation iPod and, soon on Apple TV. Most of them are priced at US$9.99 each. Movies downloaded from the iTunes Store are downloaded in near-DVD quality at a resolution of 640x480.

Earlier this month, the Cupertino, California- based Apple confirmed that it is reducing the price of all songs on its iTunes Plus, the unit of Apple's online music store that features songs without digital rights management (DRM), to 99 cents from $1.29.

Introduced in May, the “iTunes Plus” is an unprecedented iTunes service that allows customers to buy thousands of digital tracks without copy protection, enabling them to listen to the song, for the first time, directly on portable MP3 players, including Microsoft's Zune.

Apple's music catalog with anti-copying software, which is largely made up of artists from EMI, includes singles and albums from Coldplay, The Rolling Stones, Norah Jones, Frank Sinatra, Joss Stone, Pink Floyd, John Coltrane and more than a dozen of Paul McCartney's classic albums.

The price cut would no way affect the quality of DRM-free songs. The tracks will continue featuring the high-quality 256 kbps AAC encoding.