Jeff Zucker from NBC Universal revealed more information about why they ditched iTunes. Zucker says the deal resulted in only $15 million in revenue during the last year and that digital business models are turning media revenues "from dollars into pennies":
Interviewed by the New Yorker's Ken Auletta at a benefit for Syracuse U.'s Newhouse School, Zucker described the impasse that led to NBC U's decision not to renew its current iTunes deal, which expires in December.
NBC U wanted to explore higher pricing for hit shows such as "Heroes" by raising the price from Apple's standard $1.99 to $2.99 on an experimental basis.
"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 they said no."
In lieu of more flexibility on pricing, NBC U sought a cut of Apple's hardware sales.
"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."
NBC Universal programming accounted for 40% of iTunes' video sales. Zucker used iTunes as an example of the kind of digital business model that, he asserted, is corrosive to the media business.
"We don't want to replace the dollars we were making in the analog world with pennies on the digital side," he said.