"Apple Has Destroyed the Music Business"

David Schatsky | October 29, 2007, 10:37 AM

... said Jeff Zucker today at an event organized by the Newhouse School of Public Communications.

"If we don't take controle on the video side, they'll do the same" to video.

Zucker made the comment in response to a question by moderator Ken Auletta of the New Yorker. (Auletta did a fabulous job of volleying one penetrating question after another at Zucker.)

Zucker put in context the highly publicized conflict between NBC Universal and Apple over pricing on the iTunes TV show store. NBC sought to introduce flexible pricing; Apple refused.

Zucker said NBC wanted to take any single one of its shows--and would even allow Steve Jobs to pick the show--to experiment with variable pricing on iTunes. In the near term, it wasn't about money, suggested Zucker, who said NBC Universal earned $15 million dollars through iTunes sales. It was about being able to experiment.

Update (and I've heard from readers about this): It wasn't just about experimenting on the price points for digital downloads. NBC was also asking for a cut of Apple's iPod sales, at least at some point in the negotiations. Zucker himself said so.

"Nobody has figured out the economic model on the digital side," Zucker said.

I had the opportunity to ask him how NBC Universal was navigating this uncertainty. These times call for experimentation, he said. Thus NBC's multiprong Internet video distribution strategy, with the support of NBC's branded destinations like nbc.com as well as "superstores" like the just-launched hulu.com, for example. [See David Card's brief initial thoughts on Hulu.] And Zucker's insistance on variable pricing.

Even today, even to Zucker (and I've said so myself), figuring out Internet video is all about experimentation. Companies who allow themselves to be locked into a business model too soon may put themselves at a disdvantage as the contours of the internet video future begin to emerge.