For Apple, it will be the first time the company will allow variable pricing for content on iTunes in the United States. According to Josh Saul of Portfolio.com, sources indicate that Apple has agreed to a separate price structure to bring HBO content to iTunes.
No details were given, but it’s expected that HBO shows will sell for more than $1.99 a episode. Apple has held steadfast to its philosophy of fixed pricing — $0.99 cents per song, $1.99 for TV shows, $2.99 to $4.99 for movie rentals and $9.99 to $14.99 for movie purchases.
Apple has been so adamant about fixed pricing that NBC to pull its shows from iTunes at the end of last year after a loud, public dispute over, in part, variable pricing demands.
For HBO, the expected agreement marks the first time the cable station’s content will be available online. This content includes current shows such as “John Adams” or “Entourage” as well as old favorites like “Sex in the City,” “The Sopranos,” and “The Wire.”
HBO is currently testing an online download service, known as HBO on Broadband, letting subscribers watch 400 hours of programming a month and stream its main channel. HBOB is being tested in Wisconsin before moving to other markets.
HBO on Broadband is available only to current subscribers, while selling through iTunes would make current and catalog content accessible to many more people.
HBO has long frustrated online viewers by not making its content available except on its cable channel and on DVD, often many months after a show’s final episode in a season. Additionally, HBO DVD sets of shows such as “Deadwood” or “Rome” sell at a premium price — about $80 a set when other networks offer full seasons of their shows for $50 or less.
Whether HBO’s higher price tag for shows on DVD is the reason for the flexible pricing on iTunes, no one has said. But it’s clear something significant is happening to iTunes, most of which has not been revealed to us yet.
Our guess is that Apple is about to relax fixed pricing, at least for television shows and movies, or maybe even do away with it altogether.
Low-cost fixed pricing helped Apple establish iTunes and digital downloading, but it may have run its course and Apple is preparing for a shift in the market. Access to greater and more diverse content for variable pricing may be a tradeoff Apple is willing to make for its customers and content owners.
Apple is trying to increase TV and movie sales on iTunes and the awareness of its AppleTV device, which allows people to rent or purchase movies or buy TV shows over the Internet from their televisions. Access to top-rated and newly-released content is appealing to viewers. At the beginning of May, Apple announced that movies from all major studios will be available for purchase from iTunes the same day the DVDs go on sale in stores.
As far as music, in mid March the Financial Times reported that Apple was in discussions with the major record labels to allow customers unlimited access to the entire iTunes music library in exchange for paying a premium for iPod and iPhone devices. The subscription is an “all you can eat” model similar to Nokia’s “comes with music” deal.
Yes, something is going on at iTunes. Maybe Steve Jobs will tell us more in his keynote at the upcoming Worldwide Developers Conference.
Photo Illustration above by: Taylor Umlauf, Portfolio.com