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In a statement the company explained that NBC decided not to renew its agreement with iTunes after Apple declined to pay more than double the wholesale price for each episode of NBC's programming. That, Apple said,
would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99.

"We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase," said Eddy Cue, Apple's vice president of iTunes. "We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers."

Apple's agreement with NBC ends in December but because this is the middle of the television season, Apple has decided to not offer new NBC TV shows from this month.

NBC denied that it had asked for twice as much money. In his statement Cory Shields, EVP Communications at NBC, said that the talks with Apple centred on NBC's demand for more flexible pricing "in ways that could make our content even more attractive for consumers".

"It is clear that Apple's retail pricing strategy for its iTunes service is designed to drive sales of Apple devices, at the expense of those who create the content that make these devices worth buying," he said.

Shields then added that "we asked Apple to take concrete steps to protect content from piracy, since it is estimated that the typical iPod contains a significant amount of illegally downloaded material."

He cited no evidence to back up his claim - perhaps he has been talking

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to Rob Glaser or Steve Ballmer - nor did he explain quite what he expects Apple to do. After all copying and distribution of TV shows purchased through iTunes are already restricted. Unless, as Daring Fireball's John Gruber suggests, he expects Apple to prevent iPods and iPhones from playing anything other than DRM-protected video or add "spyware" features to iTunes to search for and attempt to identify bootleg video files on users' computers.

"Needless to say, it's no wonder Apple told them to go fuck themselves," Gruber said.

NBC's decision - revealed on Friday - is undoubtedly a blow to Apple, since NBC supplied iTunes with three of its 10 best selling TV shows last season, and accounted for 30% of iTunes TV show sales. But it is difficult to understand NBC's position. As Jeremy Horwitz, editor-in-chief of iLounge, points out people who might previously have paid to watch episodes of The Office, Heroes or Battlestar Galactica may now simply set their PVRs to record them for free. And without the DRM that NBC is so keen on.

"Let me explain something to you, because you don't seem to understand it already. Your TV shows are available every day, every week, and every month of the year for free. They fly through the air (and travel through cables) at no a la carte charge to customers," Horowitz wrote. "If you're concerned about piracy of what you're selling through iTunes, my suggestion would be to take a quick look at the fact that you're distributing your content in completely unprotected or compromised ways every single day. FairPlay [Apple's iTunes DRM] is the smartest, most effective protection you have."