Apple Still Scrambling to Close Deals with News Publishers Before Monday’s Event

Man Reading Apple News on iPad Credit: Kaspars Grinvalds / Shutterstock
Text Size
- +

While Apple’s streaming video service has been garnering most of the attention leading up to Monday’s Apple media event, one of the other big things we’re expecting to see from Apple is the debut of a news and magazine subscription service, and in fact with new code already found in the iOS 12.2 News app, it’s looking like the release of this service may be even more imminent than Apple’s video streaming project.

As Apple continues to wrestle with major news publishers, however, it’s becoming less clear exactly what we should expect from the new subscription service. Although Apple’s News app has been around since 2015, it only became apparent last year that the company was looking at ways to turn its free News app into a money-making project by offering a single subscription service that would cover a collection of major news publications.

While the Condé Nast-backed Texture managed to successfully implement this business model for magazine subscriptions — an accomplishment that led to its acquisition by Apple last year — the idea of tying together major news publications under a single subscription umbrella hasn’t really been tried before, and by all reports Apple has been facing an uphill battle.

The biggest problem seems to be a significant different in perspective between the big bastions of news journalism like The Wall Street Journal and The New York Times, and those publishers who put out more traditional magazine formats. Magazine publishers were on board with Texture years ago, and have eagerly signed on with Apple under basically the same terms — agreeing to give Apple a 50 percent cut in exchange the kind of exposure to new customers that Apple can deliver.

However, when Apple tried to approach news houses like The Wall Street Journal, The New York Times, and the Washington Post with the same deal, most of them were considerably less impressed, raising concerns that rather than increasing their readership, Apple’s premium News service would cannibalize their existing subscriber base, all of which pay considerably more for individual subscriptions than Apple is likely to charge for its entire premium bundle, as well as cutting off their access to the subscriber lists that are necessary for marketing and demographics.

Reports of Apple’s struggles to convince news publishers first surfaced last month, and according to a new report by Business Insider, it looks like Apple has made little headway with most of them. Part of the reason, sources say, is that Apple has been trying to pitch itself as the “saviour” of the publishing industry, while the publishers themselves don’t think they’re in need of a saviour.

Now, with the launch of the service only a few days away, Apple has reportedly been unable to convince The New York Times and The Washington Post to sign on. A deal with The Wall Street Journal hasn’t been inked yet either, but sources say that talks are still productive, and that the Journal is more open to Apple’s claims that its news service will expand its journalism to a much larger audience.

One of the biggest problems, sources say, is that Apple is making the inappropriate comparison to its success with Apple Music, touting that as an example of its success in running a subscription business. However, critics say that this logic is flawed, since music is inherently different from news, or even magazines. As one digital publishing executive notes, “No one wants an all-you-can-eat magazine service” because “magazines are passion points” — meaning that most readers aren’t looking to read dozens of different magazines, and are therefore happy to subscribe individually to those that they are already fans of.

Of course, the flip side of this argument is that while nobody wants to read 100 different magazines, many users are fans of more than one, and a $10/month subscription that provides all of a reader’s favourite news and magazine sources is going to be much easier to swallow — both financially and logistically — than maintaining even a half-dozen separate subscriptions. This is even more appealing in an era when more and more people are suffering “subscription fatigue” as even software, apps, and games switch to subscription and pay-as-you-go models.

Ultimately, however, the real issue may simply be that the big news publishers see very little financial upside to signing on with Apple’s service. The New York Times already charges $15 for digital access, while The Washington Post charges $10, and The Wall Street Journal asks for a staggering $39/month. Most news publishers are having a difficult time believing that they will gain enough new subscribers to make any real money from the considerably smaller share that they would receive from Apple’s flat-rate $10/month. Further, publishers fear that would lose their direct subscribers to Apple, turning $10–$39/month subscriptions into pennies.

There was a perception that Apple was trying to get across that, ‘We feel your pain, and we can be a savior, and we don’t really need the money, so we’re going to kick back most of it to you guys. But the message it sent with its 50-50 split was tone deaf, big time.

It also doesn’t help that top publishers also believe that Apple News isn’t a serious reading service, but rather something that people “use when they have a few minutes to kill.” As a result, they’re not as interested in Apple’s News audience, which some publishers actually feel is beneath the dignity of their publications — as one digital executive snarked, “People magazine should clean up” with Apple’s typical audience.

Publishers are also still concerned about access to reader data for marketing purposes — something they feel Apple is much likely to give them access to — as well as diluting their own brands, and how Apple will position the service on other platforms like Android and in relation to its other music and entertainment subscription services.

Of course, it’s not even 100 percent certain at this point that Apple is going to unveil its news service, much less what form it’s going to take, but it’s beginning to sound like the paid version of service may end up being more focused on magazines than news, at least until Apple can convince more of the big news publishers to participate, and that may only come after Apple can actually demonstrate how well the service plays out in the real world.

Sponsored
Social Sharing