"We have a pretty Limited relationship with Apple and we'll see how it goes," Chernin told the UK's Royal Television Society convention. "I assume it will be prickly and dicey and contentious like all negotiations are and like all negotiations should be."
Apple has come under increasing pressure from music and video suppliers to move iTunes toward a more flexible pricing model. Last month NBC Universal announced that they didn't intend to renew their contract to distribute television shows through the online store.
The real division seems to stem from a difference in where Apple makes money compared to the entertainment companies. Despite being the leading online music distributor, iTunes' primary purpose for Apple is selling iPods. That means they don't need to make a big profit on media sales as long as they sell more than their competitors. Toward that end, they've tried to keep iTunes pricing as simple as possible, believing that's the most important factor in keeping customers.
Media companies like News Corp and NBC Universal, on the other hand, want more than customers from the service. They want profits, and a place to promote their products. While Apple's vision has proven that it works well for selling iPods, it's debatable what the effect on online music and video sales is.
What isn't debatable is that entertainment companies are looking for alternatives to the service, and new competitors seem to be popping up almost weekly.
Source: Reuters
Written by: Rich Fiscus @ 15 Sep 2007 10:43
