Munching On Apple: NBC's Zucker Says It Was Small Bite

by Wayne Friedman, Oct 30, 2007, 3:51 PM

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To Jeff Zucker, some Internet platforms just equate to big CPMs, big headlines -- and chump change in terms of overall revenue.

That's what the president of NBC Universal told New Yorker writer Ken Auletta on Monday, referring to what Apple's iTunes Music Store brought to the party for his TV shows.  

Zucker said it amount to just $15 million -- or approximately the craft services fee for "Heroes."  

When compared with the tens of billions that NBC Universal collectively grabs from its other media platforms, one can see how the iTunes experiment fell short of what was meaningful for NBC's bottom line.

Zucker is impatient - perhaps rightly so. Maybe he figures the business should be pulling $150 million, not $15 million.  But when looking at projected $1 billion in revenue gains from other specific Internet businesses - such as Fox is estimating from MySpace -- Zucker feels the iTunes platform's growth curve will be a stunted one.

This isn't to say he is discounting the Internet - even from his own experiences. He noted that some 50 million streams of NBC shows were played on NBC.com during the month of October.  

Zucker says: "It's like a small cable channel in our universe that is becoming very successful." Hmmm... . A small cable channel gets around $150 million in advertising revenues. No wonder Zucker wanted to at least experiment with the possibility of raising the retail price of some shows - advertising-free --  at least to $2.99 from $1.99.

It also make senses that NBC, along with News Corp., would also like to control their own destiny in linking up for Hulu.com. They both want to create, in essence, another cable channel. But will consumers watch full TV shows -- or would they rather have just a few clips?

We've all been suckered with big advertising prospects of TV shows on the Web - especially with those crazy, expensive $30 to $50 cost per thousand 18-49 viewers that many digital platforms have priced on TV episodes.

The downside is, total out-of-pocket advertising packages for some of these shows are also chump change -- about the total retail price of a couple of iPods.

Content providers believe their content is valuable - perhaps more so then what we are used to. They have it in their heads that if they are going to transfer their assets from traditional TV distribution points to new digital ones, they at least want near-comparable dollars.

Perhaps Zucker believes Apple wasn't on the same agenda. Maybe it was all about selling iPods and iPhones.

But Apple knows this: In an explosively growing TV entertainment world where consumers are still looking for freebies, or near freebies, no one wants to pay that much - not even advertisers.

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