Media Wonk

Sorry, sir, but Zucker really is an idiot. IMO, Zucker hasn't even a cluetrain ticket, much less understanding even how to get to the station. If GE really *was* an innovative company, it would have invented an iPhone device for a NBC revenue stream before Steve & FruitCo did. That's how they did it at RCA in the days of the General. To argue that NBC should get a chunk of the iTMS revenue stream just because they're the middleman is fatuous. They can try, but as I said, GE should have invented the iPhone for NBC if they expected a revenue stream from a different distribution route.

There are a number of reasons why content providers getting a cut of hardware is wrong: • the extra cost will be passed on to the consumer, yet the consumer may never buy an NBC show • how many content providers can be added? 200 independent TV/film makers will double the cost of the iPod/Zune • who determines the cut? Do large content providers get $1 and small independent providers get 20¢? • if the emphasis of this action is to recover piracy costs, then consumers will think it OK to pirate shows since they have paid the 'pirate tax'. Otherwise only the honest suffer - not a good model! • when content providers have 'easy money' they stop innovating and get lazy Finally, if Zucker doesn't like the deal then WALK. Nobody is forcing him to sign up. The problem is that the non-digital market is shrinking. As the New Zealand Maori wisdom says 'Never be late to a battle if you want to win it'. Zucker is turning up late to this battle and doesn't realise his itch is an axe in his back.

I can see your point on the distribution revenue but I still see it as a very weak defense. At best, Apple is using media readily available from multiple access points but choses to negotiate w/ the studios for direct delivery; this obviously keeps the lawyers at bay, but also insures that everyone gets a piece of the action. NBC should no more get a piece of the iPod sale than Apple should receive a residual for The Office reruns; each should be content w/ their "piece of the pie"...NBC gets double revenue from a single program, Apple gets revenue from hardware w/ media features. In the end, this is nothing more than a battle for getting content to the public in a manner they will pay. NBC would be wise to learn the example of the music industry. It was not Apple's brilliant coup to sell digital music for a digital player, but the rapid backlash of the public to the excess costs of the studios. I, like many, can do without seeing a $5 TV show!

Mackerel: All fair points. There are any number of practical and equitable reasons why giving NBC a piece of Apple's iPod revenue wouldn't work, and why Apple would never want to open that can of worms. My point was only that, in principle, it's not an outrageous or ridiculous thing for NBC to want or to ask for. As in any business deal, it's not about who should or should not get something; it's about who can and cannot get it by using what leverage they have. D9: I would argue that NBC has indeed learned from the example of the music industry and is trying to avoid a similar fate. Whether he'll succeed is another question...PS

Your defense of Zucker and your specific point of TV sets and revenue makes no sense ... there are 110 million TV HH's in the US - at $500 a tv set (on average), you can do the math - it's a hell of a lot more than $15 million - or add in the cable box manufacturers and VCR/DVD/Tivo manufacturers? ... by your measure, shouldn't the auto makers pay goodyear, after all, tires are a LOT more important to cars than TV to ipods ... Apple sells around 45 million ipods a year, presuming NBC is 30-40% of TV video revenue, you can see that 7.5 million shows sold is a tiny percentage of the ipods storage capacity ... or that you can buy an itunes show without having an ipod ... his numbers do NOT add up ... in fact, maybe we should ask why NBC pays nothing to use OUR airwaves? Zucker's problem is that Apple never said NBC couldn't launch hulu or stream shows on nbc.com (other networls also stream and sell on itunes). In fact, Apple is the best part - no exclusive ... but Zucker somehow thinks it's an either or proposition - can't he run two businesses at the same time? Why annoy Apple for no reason? Why not take the $15 million in revenue from Apple but try and launch hulu, no one is stopping him ... now, he loses $15 million in revenue and 7.5 million impressions to launch an ad-filled something that is not what is being offered on itunes (no ads) ... Zucker would have leverage if his product was not being aired every week or available as a torrent ... so basically: a) $15 million or 7.5 million people willing to pay for it - not good enough, we'd rather have zero to spite ourselves. b) we'll spend hundreds of millions to get in bed with Fox to basically launch not YouTube but TV on the internet with ads. c) we'll upset and annoy Apple & 110 million ipod users. Zucker might've been Tv smart in 1987 but not so much in 2007.

Maybe there is an obvious way to solve this that Zucker is missing. Perhaps they should insist that their commercials are left in their programming, pay Apple a per download price for distributing their programs, and make them free to the downloading public, as just another way to receive network programming. Zucker can charge more for the advertising, since its being seen by more eyeballs, Apple gets paid by NBC for getting its advertising vehicle more consumers and consumers get it free. Win-win-win. Otherwise, Zucker should pull his head out of his butt, and crawl back to Apple and not have the audacity to think he has a vision of the future that is superior to Steve Jobs. What a maroon!

I think the question you have to ask regarding the TV analogy is simple. Without broadcasted content, a TV is a very expensive box in the corner of a room to put your family photos on. It essentially loses all or almost all its value to the consumer. Without legal digital downloads, the iPod loses almost none of its value, because consumers can (legally in most countries) transfer music from CDs. If there was no digital download business, the iPod would remain a valuable item for the consumer. Mobile, downloaded video remains a niche interest - as evidenced by the fact that NBC made only $15 million from iTunes, despite being the number 1 channel. Apple has sold some 65 million TV shows, compared with 3 billion songs In short, the success of the iPod depends not one iota on downloaded video. Given that, why should it give video companies money? That's the kind of business deal which most companies would laugh at.

Ian: My point exactly. Without the content, a TV is just an expensive box in the corner of a room. The lion's share of the value in the broadcast value chain is concentrated at the broadcast and content end. The TV enables the broadcast business model but it's a commodity component of the value chain, so the manufacturer has very little leverage. In the case of NBC and Apple, the lion's share of the value is concentrated at Apple's end of the chain. NBC's content helps enable Apple's model of selling iPods, but it's the commodity piece of the equation. I think Zucker understands that, which accounts for his frustrated trash-talking. Thus, the apt analogy to the broadcast business would be if set makers demanded a slice of the advertising revenue because their equipment enables the broadcast model. Like Zucker, they'd be correct in analyzing where the real value lies and their role in creating it. But also like Zucker, they're a commodity producer, and so have little leverage with which to claim it...PS