Content providers balk at Apple's price terms for iPad
Consumers lined up around the block to be among the first to get the iPad April 3. As for content companies, though … well, that’s been a much shorter line.
As Apple celebrates the launch of its next big product, it’s finding that the path to success may not be as easy this time around. Content providers continue to push back against the company’s partnership terms, despite incredibly strong consumer demand for the iPad and sales forecasts of 8 million-10 million before the end of the year.
Even before it was launched, the iPad was a hit. Pre-orders were so intense that Apple was unable to fulfill them all on the system’s launch day. And schools are already using the iPad as a recruitment device. (Seton Hall U has promised to give every fulltime student one of the devices this fall — along with 13-inch MacBook laptop.)
That commercial success, though, is precisely why there hasn’t been a rush among content companies to collaborate.
Apple is reportedly interested in offering iPad customers a $30 “all-you-can-eat” subscription package, which would allow owners to access any TV content in the iTunes library. Recognizing the position of power that Apple quickly built in the music industry, however, content providers are taking a firmer stance in price negotiations this time around, intent on protecting existing revenue sources as they explore this new one.
Though the iPad might be getting the lion’s share of today’s spotlight, studios are also closely keeping an eye on Apple TV. The company hasn’t done much with the product historically, calling it primarily “a hobby.” But as the television market evolves, Apple TV could become more important — and a threat to cable operators. (The maturation of Internet TVcould also work to the system’s advantage.)
If it does, video content in the iTunes store and any subscription plans the company has in place with content providers will likely carry over. And if there’s any frustration with the terms those studios agree to in the mobile space, that could be magnified multiple times when the living room comes into play.
Certainly, Apple and the content companies will ultimately work out some sort of deal. When they do, pay close attention to the terms. Those will be the strongest indicator to date about the level of Apple’s growing power in the entertainment realm.