Forget iTunes! Why TV Should Create Its Own Online Store

Last Updated Feb 22, 2010 4:59 PM EST

Here's a news flash that's entirely predictable: TV broadcasters aren't as sure as Apple that they should charge consumers only 99 cents (instead of the customary $1.99) to buy their shows on iTunes. This looks like a completely unnecessary replay of past controversies between music publishers and Apple. Per The New York Times:
In conversations with networks, Apple representatives have cited 99 cents as the magic price point that brought digital music sales into the mainstream. The company says the same price could propel TV sales, according to the network executives. But the networks have little data about what effect 99-cent sales would have, making them more apprehensive about a change.
But there is a big difference. In this case, the TV networks have power. If 99-cent pricing is really a big issue for them, they must believe that they are being forced into the thrall of the mighty iTunes, as the music industry was. In fact, right now Apple may need the broadcast networks more than they need it; the Times story says the company's interest in slashing prices has to do with its need to goose sales of the coming iPad, which despite all the hype, has no known market.

While there's no denying that Apple's iTunes store has a huge customer base, of about 125 million consumers, TV networks have their own distribution channels for the same content and that's where they should be focusing their efforts. These of course include Hulu, which is owned by Disney/ABC, News Corp.'s Fox and NBC Universal, and Fancast xFinity TV, which is owned by NBC owner-to-be Comcast and distributes content from CBS (BNET's corporate overlord).

For the four reasons detailed below, networks should be using those channels, and others, to build their own platform to rival, or replace, iTunes:

1) On their own sales platforms, they could control pricing. No more disputes with Apple over what TV programming is worth, or how it would be presented and packaged to consumers.

2) With their own online store, the networks would know much more about consumers' online buying habits. The lack of transparency about this in the music industry has made the magazine industry take note. That's the main reason behind industry efforts to create a digital newsstand to sell content -- iPad (and Kindle) be damned!

3) Online video has a huge traffic footprint outside of iTunes, which could be used to gain traction for the store. Many different sites from Hulu to Fancast to YouTube could be leveraged in the name of sales. Hulu, for instance, had 43 million unique visitors by the end of 2009, according to comScore. Striking a distribution deal with YouTube (while retaining control of the data) would expose network content to more than 125 million unique visitors per month in the U.S. alone.

4) It would begin the process of bringing paid content onto Hulu (and Fancast). A paid model will have to come to Hulu, for at least some content. (News Corp. knows this; whether its partners do is still up in the air.) One easy way to experiment with price points is to offer consumers the opportunity to pay for programming if they don't want to see any advertising, using the same multiple choice questioning that Hulu currently uses to let users decide how they want to view advertising. Giving viewers a choice between seeing advertising or paying a fee not to, is a natural progression.

C'mon broadcast networks, get with the program--and make it yours.

Previous coverage of online video at BNET Media: