Josh has a worthy rant on the NBC/Apple debacle on his blog right now, but I just read on The Machinist that the sticking point was that NBC wanted to double the wholesale price of TV shows on iTunes. Eddy Cue, who runs iTunes for Apple, claims that this would’ve pushed the per episode price to $4.99. Apple is fighting back by by discontinuing NBC shows at the end of the current season rather than mid-season when the contract ends in December.

I’m not sure I can add much more than what Manjoo and Josh have added at this point, but I do want to point out something here. There’s this idea that taxing at too high a rate encourages people to break the law. I suspect a similar curve exists when cartels or oligopolies set arbitrary rates, as well. How elastic is the market for downloadable TV episodes?

I’m not really sure what the fair market price is for an episode of a TV show. $1.99 seems high to me at times, quite honestly. All I know is that the marginal cost of making a copy of a TV show is something around $0.00 and so people are really paying for quality and ease of access and whatever value adds services like iTunes provide (Season Pass, auto downloads, no commercials, etc). I know that I wouldn’t pay $4.99 per episode or $60-80 per season for a show. It’s not worth that much.

Now, I’m not a file sharing kind of guy. I’m that guy that gets the FCC license for my GMRS radios even though no one actually does or enforces the requirement. That’s my point, though… many people aren’t like me. Most people don’t mind breaking the law when they feel like they’re being shafted. Something tells me that BitTorrent is about to get more popular.

(PS. If you’re not reading The Machinist blog, you’re missing out. Worth the Salon subscription alone.)