{"id":8427,"date":"2019-04-03T09:34:10","date_gmt":"2019-04-03T08:34:10","guid":{"rendered":"https:\/\/dev.adambowie.com\/?p=8427"},"modified":"2019-04-06T12:55:18","modified_gmt":"2019-04-06T11:55:18","slug":"apple-news-and-the-publishing-industry","status":"publish","type":"post","link":"https:\/\/dev.adambowie.com\/blog\/2019\/04\/apple-news-and-the-publishing-industry\/","title":{"rendered":"Apple News+ and the Publishing Industry"},"content":{"rendered":"\n

In March last year, Apple bought<\/a> the digital magazine service, Texture. Texture\u2019s business model was relatively straightforward \u2013 users paid a flat monthly fee of $9.99 for access to around 200 magazines. Texture placed a layer of editorial on top of things, highlighting specific articles that you might not have otherwise discovered. Initially, the business had been a joint venture from some of the biggest US publishers including Cond\u00e9 Nast and Hearst, and that brought with it access to a wide range of titles, including many quality ones like The New Yorker, Vanity Fair, Fortune <\/em>and Esquire<\/em>.<\/p>\n\n\n\n

Apple sat on its purchase for a year, developing it in the\nbackground. Notably, we stopped hearing so many podcast ads for the service. Then\nlast week, as part of a wider \u201cservices\u201d launch event, Apple News+ was\nunveiled. <\/p>\n\n\n\n

This essentially rebrands Texture as a subscription layer to\nthe existing Apple News product that comes pre-installed on every iOS device. Apple\nis trying to develop slightly less reliance on device sales, and the new app\nforms part of that strategy, forming one aspect of the services that Apple\noffers that should bring continuing revenue streams.<\/p>\n\n\n\n

For the launch of Apple News+, Apple wanted to offer more\nthan Texture had available before it. So there are additional titles included\nin the mix, not least some newspaper titles.<\/p>\n\n\n\n

50%<\/strong><\/h4>\n\n\n\n

One of the big discussion points in the media world has been\nthe revenue split that Apple is offering. Terms haven\u2019t been made public, but\nit\u2019s widely understood that Apple is taking 50% of all subscription revenues,\nand is then sharing the remaining 50% of revenue with publishers based on\nengagement. <\/p>\n\n\n\n

But 50% is an incredibly high share. <\/p>\n\n\n\n

The standard share that Apple takes in its app store is 30%,\nfalling to a lower rate over time for ongoing subscriptions. Even at that rate,\ncompanies like Netflix and Spotify have vociferously complained that it\u2019s too\nhigh, and neither allow their members to subscribe via their Apple apps. Instead,\nnew subscribers must visit their respective websites \u2013 well outside Apple\u2019s payment\nsystems.<\/p>\n\n\n\n

Meanwhile, for music subscription services like Apple Music,\nthe revenue split is perhaps closer to 20% for Apple, with 80% going to the\nrights holders.<\/p>\n\n\n\n

With newspapers and magazines laying off journalists or\nclosing down altogether, many in the sector believe that it\u2019s outrageous that\nApple should keep such a massive share of subscription revenues. <\/p>\n\n\n\n

It\u2019s therefore not surprising that two key titles in the US have chosen not<\/em> to go into the app. It\u2019s understood that Apple badly wanted either The New York Times<\/em> or The Washington Post<\/em> to come into their app. As <\/a>Vanity Fair <\/a><\/em>reports<\/a>, neither chose to do so despite Apple putting enormous efforts into persuading them. Both have built very impressive digital followings, and don\u2019t see the need to lose that direct connection with readers or to risk those revenues which they are in control of.<\/p>\n\n\n\n

Instead, the key title Apple has got is perhaps The Wall\nSt Journal<\/em>. On the surface, a $10 a month Apple News+ subscription is significantly\ncheaper than even the best offer that you can get direct from The Wall St\nJournal<\/em> itself. But the quid pro quo seems to be that while general news is\nsurfaced in a straightforward manner, the more valuable business news is \u201cburied\u201d\nwithin the app and requires searching to find it. It\u2019s also worth noting that,\nlike The Financial Times<\/em> (which is not part of Apple News+), The Wall\nSt Journal\u2019s<\/em> subscription base is heavily skewed towards corporate accounts\nand those for whom it\u2019s necessary to read the paper. For the Journal<\/em>\nthere is less at risk. The other key general news title is The Los Angeles\nTimes<\/em>. They probably also felt there was less of a risk, since they haven\u2019t\ngot as strong subscriber bases as either The Times<\/em> or The Post<\/em>.<\/p>\n\n\n\n

Don\u2019t Cancel Your Subscription<\/h4>\n\n\n\n

A key challenge for publishers with existing digital or\nprint subscription bases is the concern that those subscribers will switch to\nApple\u2019s product. The publishers end up with less money, and lose a direct\nrelationship with the readers. That\u2019s a double loss to those businesses.<\/p>\n\n\n\n

Frederic Filloux spelt it out in this week\u2019s Monday Note<\/a>, headlined: Apple News+ could lead to a massive value destruction for the magazine industry.<\/em> His topline calculations suggest that the US magazine industry will lose 50% of its revenue per reader under this model.<\/p>\n\n\n\n

He models out what a hypothetical reader to a range of\nhighbrow titles like The New Yorker <\/em>and The Atlantic<\/em> might pay,\nsuggesting the value destruction could be as high as 88% for The New Yorker<\/em>.\nNow you could certainly argue that the rate card subscription fees he bases his\ncalculations on are unrealistic \u2013 a savvy magazine subscriber has always tried\nto keep on top of special offers. But the overarching thesis seems sound.\nIndeed, it\u2019s hard to truly understand the thinking in some of these big ticket\ntitles being part of Apple\u2019s offering. <\/p>\n\n\n\n

One side effect of all of this has been the unedifying sight\nof digital editors of some titles, very publicly explaining why their existing subscribers\nshouldn\u2019t shift over to Apple.<\/p>\n\n\n\n

This is a really confusing situation. <\/p>\n\n\n\n