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Apple strong-armed by NBC- are labels next to make them say uncle?

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Wednesday, Sep 10, 2008

After demanding standard pricing for their music and TV offerings, Apple finally blinked to bring NBC back to their fold.  As this CNET story reports, this might mean that music labels might make similar demands about flexible pricing, seeing that Apple is willing to bend if it means losing a huge chunk of high profit content.  In the case of NBC, they demanded that some of their TV shows not be sold at iTunes for standard $1.99 price.  Instead, some of their shows will be offered up for 99 cents.  Similarly, record labels have pushed for the option for raising or lowering prices- recent hits would be priced above the standard 99 cent charge for songs while some oldies would be discounted below that.  Apple’s believed that they found the sweet spot for digital sales by keeping the price uniform and point to the fact that they’ve passed Walmart as the biggest music retailer out there now.  It’s hard to argue with success but the reason that Apple’s on top now is that they have the goods, courtesy of the major labels who offer up their songs there.  Apple’s gamble has been that they can call the shots because they think that the labels won’t pull out their goods from iTunes and risk losing an increasing source of revenue in a biz that’s sinking otherwise.  The NBC decision might give the labels some leverage in this battle and get Apple to back down with them also.  The question now is how far entrenched each side is in this battle and how much they’re willing to give up. It’ll be an interesting confrontation to say the least…

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