While Apple has been struggling to convince news publishers to sign on for its impending subscription-based news service, it seems that most magazine publishers have not only already signed on, but are actually quite eager about the proposition.
Apple’s demands for a 50 percent cut of subscription revenue has been disagreeable to big publications like The New York Times and The Washington Post, which already charge more for individual subscriptions than Apple is likely to charge for its bundled “all-you-can-read” service, but also only pay Apple between 15 and 30 percent for direct subscriptions purchased through its own apps, via in-app purchase.
However, it would appear that not everybody feels this way. According to a recent report by Recode, Apple has already signed many other publishers to deals where they’re giving up half their subscription revenue to Apple. In fact, many of these deals were signed almost a year ago with magazine publishers after Apple acquired Texture, the original digital magazine subscription service.
Texture was originally put together by a consortium of publishers like Condé Nast, and basically offered the same terms to its participating magazine publishers that Apple is now trying to offer the newspapers — so it’s clear where Apple got the idea from, as well as its belief that such a business model could work. When Apple acquired Texture, it reworked the deals slightly, but the same 50 percent revenue split remained in place.
Further, many publishers have been more than happy to sign on under these terms for years — since long before Apple acquired Texture — because they believe that the additional exposure will offer them a plethora of new customers, essentially making their money on the classic economy of scale. After all, 50 percent of the revenue from a 100 million $10/month subscribers adds up to a lot more than 100 percent of the revenue from one million $20/month subscribers.
It’s the absolute dollars paid out that matters, not the percentage.Publishing Executive
Not only that, but Apple still allows publishers to retain 100 percent of the revenue from any ads that they sell in their own publications, and reportedly plans to continue doing so under its new Apple News subscriptions. Meanwhile, Apple’s marketing and exposure promises to be a boon for many smaller or more niche publications, allowing them to reach a massive customer base of over 1.3 billion users — the number of active devices Apple has worldwide — without having to spend any money of their own on marketing or advertising.
Apple has also told participating publishers that it intends to put a lot of resources into promoting the new subscription service, and has promised that it can generate millions of subscribers in a very short time, which isn’t hard to believe considering its success with Apple Music and its massive installed base of iOS devices that will all come with Apple News preloaded out of the box.
Despite all of this, however, the big news publishers have something that most magazines don’t — established digital subscription models that seem to be working for them. The fear that Apple’s subscription service could cannibalize their own direct subscription sales as well as removing their ability to control the customer relationship — and build marketing databases of their subscribers — is going to make it a tougher sell for Apple.