Apple's Chump Change For Hollywood

Andrea Chalupa writes: It's Apple back-lash time.

When Apple announced yesterday that iTunes has sold 200 million TV shows over the last three years, the company clearly expected Hollywood and network executives to stand up and cheer. They didn't.

As Silicon Valley Insider pointed out, if most of those shows are sold at the fixed price of $1.99 a pop, then the networks and studios get $280 million from their 70 percent cut. That comes out to a shared pot of $93 million a year.

Compare that to the $11 billion in ad revenue that broadcasting racked up last quarter, according to the Television Bureau of Advertising. Or to NBC's $645 million in profit last quarter.

So it's no wonder Jeff Zucker fought Steve Jobs to raise the price of its shows. During his year-long public feud with Jobs, Zucker last October sniffed that his network only sees $15 million in sales from iTunes. And even after NBC U pulled its shows last fall, Jobs refused to budge from the fixed price system that's led the success of iTunes.
 
Finally early last month NBC put the shows back on. And now Apple is announcing, just yesterday, there will be a dollar price increase, but only for high-definition TV shows by four major networks -- NBC, Fox, ABC, and CBS.

Sure, these networks now are making a dollar more, which is a potential 50 percent increase, but only for their HD offerings. And even if all 200 million episodes were sold at this new price, the total for all four networks would only come to $598 million (average of $150 million each). For a $200 billion market cap company like GE, it's all just chump change.