NBC Taking Its Toys from the iTunes Sandbox?

The music industry as we know it is dying. The problem is that the industry wants to keep the machines running as long as they can, while new technology is standing by waiting for the organ donations.

All that's necessary to come to this conclusion is to look at how the record companies have handled new technology. They had a virtual goldmine sitting in their laps with Napster, but instead, fear drove them to attempt to dismantle it, assuming P2P file sharing would die with it. You can't get much more short-sighted than that. Like a Hydra, every time they've cut off one source of music sharing, 10 more grow up in its place, each harder to get a handle on than the next.

If media companies want to see the source of the bleeding, they need look no further than their own actions. Take, for example, NBC's recent stance that because Steve Jobs won't bow to their demands, they are going to pull their content from iTunes. It probably has a lot more to do with their upcoming Hulu launch than pricing and piracy concerns (after all, I think we do plenty of grousing about how invasive the iTunes DRM and even non-DRM technologies are), but NBC has forgotten something crucial: Apple has already established market share.

In this crowded space, getting your product noticed is crucial. There is so much noise out there that even the usual titans of network TV are losing ground. One of the bonuses that networks got with providing their content on iTunes was that not only would their products get noticed outside their usual niches, but they could make money from people downloading the content.

Hulu isn't going to give NBC/Universal that kind of visibility. And what NBC has failed to take into consideration is that people are impulse shoppers. You might head over to iTunes to pick up Rihanna's single for Umbrella and decide to download a season of Heroes while you are there. Heading over to an NBC-only service is going to be used mainly by fans, limiting your audience to those who are already watching your shows and any possible friends those fans send to the site.

There's a reason why Apple surges with Jobs in charge: the man knows what he's doing. The media companies are arguing for variable pricing, but most fans don't want that. It's nice knowing that you can pick up the latest Amy Winehouse album for the same price as a collection of performances from Yo-Yo Ma, and never have to wonder what your end total is going to be. Parents are actually giving allowances in iTunes accounts based on the simplified pricing; who wants to listen to a kid griping that this week's allowance wasn't enough to score the soundtrack from High School Musical 2?

If customers were more interested in company-specific sites and variable pricing, iTunes wouldn't be the thriving behemoth that it is. And I have a suspicion that NBC will end up crawling back to Jobs, tail between its legs, begging to come back. The new era of media is here, and they'd be wiser to embrace where it's heading.

Update: Jobs called NBC/Universal's bluff. Apparently, the price increases they wanted would have resulted in a price hike to iTunes customers of $3.00: from $1.99 per episode to $4.99 per episode. And rather than cut iTunes users off mid-season? Apple has decided to cease selling NBC's programs starting with the new fall season. NBC/Universal will be left with no outlet for their programming, since Hulu isn't expected to launch until October, and without the additional buzz that iTunes carrying new episodes of their fall premieres would add. I think they called your bluff, NBC!