Something is going on at iTunes: Apple reportedly agrees to variable pricing to get HBO shows

hbo logoApple and Home Box Office will be achieving a couple of very important firsts when HBO content comes to iTunes in the next few weeks.

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, sources indicate that Apple has agreed to a separate price structure to bring HBO content to iTunes.

itunesNo 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 on ipodHBO 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,

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last100 is edited by Steve O'Hear. Aside from founding last100, Steve is co-founder and CEO of Beepl and a freelance journalist who has written for numerous publications, including TechCrunch, The Guardian, ZDNet, ReadWriteWeb and Macworld, and also wrote and directed the Silicon Valley documentary, In Search of the Valley. See his full profile and disclosure of his industry affiliations.

One Response to “Something is going on at iTunes: Apple reportedly agrees to variable pricing to get HBO shows”

  1. Michael says:

    It’s funny that everyone thinks that this is the absolute first time that Apple has done any type of variable pricing on TV shows, in fact the most recent episode available for Avatar: The last Airbender is sold for $3.99 in iTunes. But, this seems to be just an isolated instance and Apple hasn’t made a habit of variable pricing until now. HBO content is going for $1.99 or $2.99 depending on which show you’re purchasing.

    I’m not sure if anything too crazy is going on in iTunes, I think this is just Apple trying to get more content in the store, I think Apple might have realized that to get certain content owners they have to agree to deals that might not favor them as much as other deals and this happens to be (what I would believe to be) the first instance of this. Although it could also be Steve Jobs realizing that their is a huge opportunity to be the premier spot for getting HBO content before the DVD comes out (which in HBOs case has always been an incredibly long wait).

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