Pando

Apple wants content companies to bear streaming costs of its television service

By Nathaniel Mott , written on April 2, 2015

From The News Desk

Apple is telling companies that want to be part of its television-streaming service that they must bear the cost of delivering their videos to consumers.

Recode reports that the company won't handle the infrastructure behind the television service, which is expected to debut as early as fall of this year.

Demanding that companies provide their own streams in addition to offering up their content could be motivated by several different things. As Recode reports:

TV sources say Apple executive Eddy Cue, who heads up the company’s media efforts and is leading negotiations for the new streaming service, has told them that Apple feels it should concentrate on what it’s best at — creating consumer hardware and software — and leave other tasks, like streaming infrastructure, for people who specialize in it.

An alternative theory, suggested by someone involved in the discussions: Apple thinks that if programmers are responsible for handling their own streams, Internet providers like Comcast and Verizon, who sell their own bundles of video programming, will be less likely to penalize Apple’s service. The latter explanation seems more likely. Apple doesn't want to end up like Netflix, which has to pay Internet service providers fees to ensure its video streams are delivered to consumers without requiring constant buffering.

But the former explanation is interesting because it meshes with something the New York Post reported in March: Apple is taking a hands-off approach with this streaming service, which will be released long after competitive offerings.

The company is said to be offering viewer data to programmers -- and, more interesting, it isn't telling them what to do with that information. Want to cram your shows full of ads? Go for it! Plan to make them ad-free? That's cool too.

Apple doesn't often give companies that much control. Yet it might have to do just that to get this service off the ground, as I explained after the Post's report:

Apple’s products are only as good as the content they can be used to access. People don’t buy iPhones just for the hardware; they buy them for the App Store. The same could be said for iPads, MacBooks, and Apple’s other product lines.

So even though the Post’s source might have been talking shit just to rile Apple’s feathers, it’s actually fairly easy to see why Apple might have to loosen its iron grip to get what it wants. If it’s desperate enough, and content companies are wary about doing even more business with tech companies, Apple will likely pay almost any price to get its television service going. Maybe the company really does want to focus only on hardware and software. And it would be better for Apple, content companies, and consumers for the service not to fall into the same trap that Netflix has been dragged down into.

But I suspect that allowing programmers to do what they like with viewer data, asking companies to build their own streaming infrastructure, and otherwise giving them control over this service is also motivated by Apple's desperation.