NBCU Won’t Renew iTunes Deal

NEW YORK NBC Universal said it has informed Apple that it would not renew its current contract with the technology giant to sell its programming via the iTunes Music Store. The deal expires at the end of December.

Executives at the company declined to comment further, but did confirm that the decision was made at this time to avoid an automatic renewal of the deal, which would kick in if NBCU took no action within 90 days of the expiration of the contract.

According to sources familiar with the decision, NBCU is unhappy with the lack of flexibility in Apple’s pricing model, as the company sells nearly all TV shows via iTunes for the set price of $1.99 an episode. In addition, NBCU is said to be concerned with Apple’s apparent lack of enforcement when it comes to piracy of its content, as some executives charge that Apple has yet to take even basic steps to prevent users of iTunes and its ever-popular iPod devices from viewing copyrighted content.

As for the core complaint, many music, TV and movie companies have long complained that Apple is too rigid in its pricing models, which don’t allow for consideration of factors such as current demand for content. For example, a 20-year-old episode of Knight Rider costs consumers the same as a recent episode of the ABC hit Grey’s Anatomy. Plus, content producers contend that it is generally uncommon for a seller, rather than a producer, to dictate pricing of its products. And of course, NBCU, along with partner Fox, is set to shortly unveil Hulu.com, an online video destination that could eventually become a platform for selling episodes of TV series.

Of course, NBCU’s move could simply be looking to stage a public negotiation with Apple, as the stakes are high for both companies. While revenue figures for iTunes sales are unavailable, NBCU programming is said at times to account for 40 to 50 percent of video sales via iTunes. At the same time, several viable alternative platforms are emerging, such as Amazon’s Unbox. Meanwhile, the iTunes outlet has been credited for helping build the popularity of particular NBCU series, such as The Office and Sci Fi Channel’s Battlestar Gallactica.