Brooks Barnes reports in the NY Times:

NBC Universal, unable to come to an agreement with Apple on pricing, has decided not to renew its contract to sell digital downloads of television shows on iTunes.

The media conglomerate—which is the No. 1 supplier of digital video to Apple’s online store, accounting for about 40 percent of downloads — notified Apple of its decision late yesterday, according to a person familiar with the matter who asked for anonymity because negotiations between the companies are confidential.

The article speculates that, combined with Universal’s recent disagreements with Apple, major media companies are feeling “emboldened” to challenge Apple’s hegemony.

The companies have a right, of course, to do whatever they want with their material. But the fight over iTunes’s strict pricing comes down to one thing: The media companies want to do what they have always done, which is price hot product higher. That is the process that gave us ever-increasing CD prices in the 1980s and ’90s: The labels would soften consumers up with so-called “superstar product” (crap from Madonna or Garth Brooks, whoever) that would debut list prices a dollar higher.

This worked—until consumers discovered they could get everything for free on the internets, or from friends, and were finally free of the control of the greedy labels. While it’s probably true that keeping media product prices low benefits Apple (which makes money on hardware, not selling songs on iTunes), it’s even truer that keeping it lower keeps people buying from iTunes. Jacking up the prices will simply drive people back to swapping songs illegally on the file sharing networks, or on bittorents, or via mp3 discs. As storage space and bandwidth gets bigger it will become easier and easier for people to do the same with video.

On the other side of the equation is just this: That most media business execs, rather than trying to make things easy for their customers, instead lie awake at night with the sinking feeling that they could have screwed one of those customers out of an extra nickel or two.