The latest news from the NBC-Zune-Microsoft front is fascinating.

The story thus far is that NBC, which had a very popular slate of shows available at the iTunes Store, wanted to raise prices. Apple said no.

NBC, a media conglomerate that kicks it old style when it comes to feeling like it should be able to squeeze as much money as possible out of its customers, whined for a while and then finally picked up its Offices and Heroeses and went homeses.

Now it’s playing with the bully down the block. (Microsoft, if you follow my point.) Here’s where it gets interesting. In the old world, that would be the end of the story.

Twenty years ago, if an indie retailer had protested a jump in, say, CD prices, the big corporation would have pulled its product and gone over to Sam Goody’s or whatever, and the small retailer would be screwed.

That’s the media landscape Big Content knew and loved. The sitch today is different. Microsoft’s competition for the iPod is the Zune, which despite the company’s best efforts has a puny market share.

So—getting NBC, with its very hep and sophisticated lineup of shows, is a coup right? What does Microsoft care if the company wants to try to jack up the price on this or that?

Because apparently that wasn’t the whole deal. According to a story on the NYT’s Bits blog, Microsoft made a couple of arrangements with NBC:

Microsoft […] will accept NBC’s pricing scheme and will work with it to try to develop a copyright “cop” to be installed on its devices.

[…]

[…T]he copyright filtering system is still in development and its exact form has not been set.

Mr. Perrette said the plan is to create “filtering technology that allows for playback of legitimately purchased content versus non-legitimately purchased content.”

That’s corporatespeak for “Your Zune won’t be able to play pirated material. ” They are talking about a system that has become a Holy Grail for Big Content: Filters that would allow only legitimate—i.e., corporate approved—media to work on the players.

This is a sort of reverse DRM. A song with digital rights management attached will only play on certain players. This is a system where the player excludes everything but approved content.

It’s a fiendish plan, if it weren’t for the fact that no one in their right mind would buy a product like that.

(I’m a little surprised the companies only went half way. What they really need is a Zune that, when you try to play pirated material, automatically sends your personal information, complete with GPS coordinates, to the RIAA for automated legal action.)

After the item was posted, Microsoft began to spin the issue wildly. The writer never said the copyright cop had been incorporated into the Zune, just that that had been part of the deal with NBC, and quoted Microsoft thusly:

Adam Sohn, a spokesman for Microsoft, declined to discuss details of this effort other than to say that the software company is exploring anti-piracy measures with NBC. He said Microsoft, which suffers from its own piracy problems, is sympathetic to Hollywood’s concerns.

But after the piece was posted, the company complained, and the writer posted this update:

In the Zune Insider Blog, Cesar Menendez, a member of Microsoft’s Zune team, refers to this post, and the blog discussion it prompted. He writes:

We have no plans or commitments to implement any new type of content filtering in the Zune devices as part of our content distribution deal with NBC.

It’s worth noting that [NBC’s] Mr. Perrette told me that Microsoft committed to explore filtering; he didn’t say it committed to implementing those filters.

Here is what Mr. Sohn, the Microsoft spokesman, told me yesterday when I asked him about what Mr. Perrette said: “I don’t think they are wrong, but we are not going to characterize those discussions.” Later he added, “We have agreed to work with NBC across a range of topics, and protection of copyrighted material is certainly one of them.”

In other words, the original story was entirely correct.

It must be said that one explanation for all of this is that the unsophisticated folks from NBC came to the table with this proposal and Microsoft led them on (”Of course we can do that! Why, we’ve got a big ol’ team of people up in Redmond that are just wizards at this sort of thing!”), with no intention of actually doing it.

But it’s still a good example of how the transformative power of the digital convergence has made the old world of doing business more difficult; if nothing else, word of such comical dealings gets out. The irony is that NBC shows are going to be watched on computers and the internet no matter what the company does.

Moving from the iTunes Store to the Zune just means it will make less money. Sooner or later, presumably, one of the Six Sigma GE folks overseeing NBC Universal are going to notice the declining digital income figures and knock some heads together.

Microsoft, however, needs a lot more exclusives than The Office to compete with Apple, and the next company to come along dangling a deal won’t be as dumb as NBC.