I don't want to tell HBO to stop using legacy thinking. I would advise it that traditional television industry legacy thinking is bad for it, but HBO's legacy is this: The Sopranos and Sex in the City. Throw in some Big Love, Curb Your Enthusiasm, Entourage, and Flight of the Conchords if you must, but none of them are the draws that Sopranos and Sex were.
HBO is trying to go old school legacy. It wants on Apple's iTunes, but it wants flexible pricing. That's not the kind of legacy thinking HBO should be using.
HBO needs to get over that because it's dumb thinking. We're moving towards people not wanting to pay for content at all, in any situation, and they'd like to have the flexibility to get on iTunes and charge more.
Here's why the iTunes pricing is OK as it is at $1.99:
If HBO airs two shows a week that you like, and you download both of them 4 times a month each, that's already $16. You're better off just subscribing to HBO. And if they can't produce two shows a week you like and you're not in it for the movies? That's HBO's problem (and that is in fact, HBO's main problem!).
I understand wanting to embrace new tech AND still having the illusion of control, but they'd be better off offering people like me who are already PAYING FOR HBO a $2 month surcharge to have free downloads of the shows I already paid for so that I can stick Entourage on the iPhone easily. I wouldn't pay $5 a month extra for that, but I might pay $2/mo, though I think it someday will just be bundled into the subscription price because it will need to be in order to be competitive. HBO is obviously not embracing that future reality yet.
Better still, HBO should focus on making sure it has two shows a week that millions want to watch. That is HBO's legacy. Unfortunately, it's not HBO's present reality, but merely a thing of the past.
Silicon Alley Insider's take is that if it's true that Apple really caved on pricing, the next round of negotiations with the studios could get a little hectic for Apple.