Spurning Apple, Universal runs to Amazon

After reaching an impasse with Apple over 2008 pricing of NBC TV episodes, AP reports that Universal has run into the willing arms of Amazon with its Unbox service.

The latest announcement implies that Amazon will be selling the NBC shows for the $1.99 (retail) price that Apple claimed Universal was no longer offering.

There are several problems with flirting with someone to make your partner jealous. One is that you’re trading down — that your original choice was actually the better one, and getting emotional is hurting yourself to get even. Today Amazon’s download service certainly lacks the volume and customers of the iTunes Store, although apparently the new Sci-Fi/NBC content are off to a good start, with (as PC World reports)

three of its shows (Battlestar Galactica, Heroes and The Office) are among the top ten sellers, with Galactica and Heroes nabbing the top two spots.

Apple seems to have called Universal’s bluff, assuming that it has no better alternative. I suspect NBC content will someday be back on iTunes. If the pricing is the same as today, then Apple won. If Apple carries at least some episodes for more than $1.99, Universal won.

Now (in the AP story) Universal is claiming that it wanted the flexibility to sell its products for less:

NBC Universal … has said it wants to package programming in different ways at different prices, something Amazon is willing to consider, according to Jean-Briac Perrette, president of NBC Universal's digital distribution division.

In an interview, Perrette said NBC Universal might like to sell single episodes of two different shows together, for example, or let customers who have already purchased several episodes buy a full season at a prorated price.

That’s a red herring (not to be confused with a Red Herring). NBC (like Fox and other networks) wants more revenue from its content and the goal is obviously to push up the average selling price.

More plausible is when Ars Technica repeats the report that Universal thought Apple’s download policies (five authorized devices per household) were too lax (read: consumer friendly). To pick a fight with Apple, NBC must think there are a lot of households where mom and dad (or dad and junior) want to watch Battlestar Galactica or The Office — households that can be convinced to buy a second copy.

NBC is working hard to create a viable competitor to Apple, and will soon have many allies in its efforts. Competition is normally good for consumers because it gives consumers more choice. But what if competition is fueled only to allow suppliers to increase prices?

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