NBC says bye to iTunes, hello to piracy and lost revenue

In news that comes just weeks after iTunes' loss of Universal Music Group, NBC has officially canceled its contract with iTunes, citing the need for stricter piracy controls and higher pricing that Apple was unwilling to provide. That said, NBC will still continue to sell its programming on iTunes until its contract runs out in December.

In other words, January will be the month that NBC sees a severe increase in the piracy it's trying to so hard to curb.

I'm not quite sure what any of these companies are thinking. First, Universal Music Group steps away from the third-largest music retailer in the world because it thinks iTunes is suffocating it, then NBC walks away to make more money and stop people from stealing its media. But what both companies don't understand is that they need Apple far more than Apple needs them.

Let me paint a scenario for you of what happens as soon as NBC pulls its programming off iTunes.

First, the company will tout its new video service, Hulu, as the savior for this generation. After that corporate-speak is completed, it will begin telling the world about the issues with iTunes in an attempt to downplay its importance. First, NBC will use the line, "Well gee, shouldn't we be allowed to make some money too?" And after that doesn't work, the company will resort to the classic, "Well, look at all of these pirates! It's the actors who are getting hurt by this. Think of them!"

After this new PR campaign is complete, NBC executives--obviously without any grasp on reality--will sit there and expect their assistants to bring them financial numbers that show exploding growth in programming sales. With cigars firmly in place, the big shots will open up the revenue reports and come to one damning conclusion: revenue from programming has gone down, yet piracy has increased tenfold.

Meanwhile, back in Cupertino, Steve Jobs and company are left counting their iTunes revenue with nary a blink at the modicum of lost revenue they experienced from the NBC move. Give it about six months and NBC will be calling back with an olive branch in hand, hoping to get back onto iTunes. Only this time, NBC will have an even worse agreement with Apple.

How many times do I have to say it until someone at NBC finally hears me? There is no way you can benefit from leaving iTunes. People who would normally have purchased shows like The Office are now going to their favorite torrent site and downloading each episode to their hearts' content. From there, they'll be adding those illegally downloaded songs directly to their iTunes account and will enjoy them on their Apple TV or iPod.

It's about time that NBC, Universal and the rest of these bozos realize that without iTunes, their online presence is nil. Sure, Universal can sell its music to Wal-Mart or the Zune Marketplace and do um, fine, but is it really willing to lose all of the revenue iTunes has provided for it? I guarantee it'll be back. Right now, Universal is a lone duck on an empty pond--it's in for trouble.

But more than anything, this NBC move really baffles me. If you want to stop piracy of your programming, why would you take it off legitimate services? Am I missing something here? Is it the company's greed or belief that it can go it alone? Either way, it's a dumb move.

Sad as it is, there's no way to fully eliminate piracy. Whether you want to believe it or not, the best way to stop piracy is to give people most of what they want: no DRM, an affordable price and ease of purchase. NBC wants stronger DRM and higher prices and it's making its product less available. Sounds like a recipe for trouble.

NBC is in for a rude awakening. Because it currently can not see through its greed and short-sightedness, its goals will be trumped by its biggest fear.

Get ready, NBC, because a flurry of piracy, lost revenue and eventual Steve Jobs genuflection is on your 2008 calendar.

Nice move.