Amazon-NBC Deal Signals Rough Road Ahead For Network On The Web

The Web is abuzz with talk over who in the Apple-NBC debacle is the worst off for the planned severance to come next week, when The Peacock’s fall programming has its public debut. Profy’s very own Cyndy Aleo-Carreira covered the news soon after it broke, and now we receive word that, following its exit from the iTunes shop, NBC has tapped Amazon for the distribution of its content for the season ahead. So we figured we’d pick the story apart some more.

There’s no doubt that both Apple and NBC are going to lose out as a result of this separation. Whether or not NBC did in fact want a premium paid by iTunes customers for its new shows, doesn’t really matter all that much. Sure, the alleged demands of $4 or so per episode are no doubt outlandish, if that is indeed an accurate number. I dare say $1.99 is a pretty hefty fee already. More important than anything, however, is the fact that NBC needs the sale of its programming on iTunes to continue, regardless of cost, because, simply put, Apple’s outlet has consistently provided the network with the most income this side of the online-offline divide. There’s really no getting around that truth.

On the other side of the aisle, Apple sits defiant (over NBC’s “greedy” demands) but also undoubtedly frightened at the possibility that it may chart a potential 40% decrease in sales over the course of Q4 2007. The company has made it no secret that that very figure comprises the portion of downloads of shows from the iTunes Store produced by NBC. I know my basic math, and 40% is fairly close to half of the pie. That’s quite a large void to fill, don’t you think? I can’t imagine how they’ll manage the task, particularly on such short notice.

Yet, yesterday NBC arrived with news that may give some the impression that the network has moved on and found another suitor for its content, and that it’ll do quite fine without a continued partnership with Apple.

I must say, NBC is in denial if it believes its own hogwash.

Amazon, NBC’s new bridge to Web viewers, may have a reasonably trafficked marketplace, but it’s hardly worth comparing to the much more refined, much more digitally entwined storefront that is iTunes. (Entwined in the way that the iTunes-iPod-Apple TV all work hand in hand.)

Like iTunes, Amazon Unbox wraps content in a layer of DRM, so, in general terms, they’re both plagued with a similar problem. So why does one (Unbox) suck worse than the other (iTunes)?

Well, it’s pretty elementary really. Amazon restricts use of copyrighted content with Windows Media DRM. This means only a limited number of computers (2) can be authorized by the consumer to access and play back said content. The same type of limitation is put in place for transfers to portable media devices.

Apple does much the same thing with iTunes, but iTunes itself seems to come to its own rescue. Because it has the incredible benefit of the iPod and the secretly quite powerful Apple TV at hand as well, things work absolutely brilliantly for the ecosystem. Even though DRM is a terrible invention and should be eliminated at once, it doesn’t cause much trouble at all within the iTunes-dominated circle. It is, after all, the most overwhelmingly popular platform for all sorts of media on the Web at the moment, and, well #1 ain’t a bad spot to be in, is it?

The same simply cannot be said for Windows Media-based solutions.

The issues which plague all online venues other than iTunes are, in effect, what make Apple’s storefront by default the most logical space for content owners to opt for when looking to make the greatest number of sales possible. NBC’s decision to sever ties with Apple for its fall season is bad for the network, but more to the point, it’s bad for consumers.

Consumers, after all, are the ones that have given NBC its 40% share of iTunes sales in the area of television programming, and they won’t take too kindly to have to venture elsewhere - and perhaps even pay an even greater premium - for things previously so easily and conveniently made available through Apple’s very popular cross-platform solution.

I dare say, because of this disruption, we’ll see relatively few consumers move to Amazon Unbox for their fix of Heroes, and instead seek their weekly supply of entertainment via illicit means. And that definitely won’t help NBC’s case in the least.

Perhaps we’ll see a regretful, grumbling NBC return to the Apple storefront after several weeks of poor results from the land of Unbox, eh?