As we reported yesterday, Apple is allegedly launching a premium news subscription at a media event Monday, March 25 at Steve Jobs Theater. But because greedy Apple apparently wants half of the revenue, it’s facing resistance from America’s biggest newspapers.
Citing people familiar with the matter, The Wall Street Journal reported yesterday that major publishers have two objections to Apple’s proposed financial terms.
Issue #1: revenue split
The all-you-can-eat service is said to cost $10 per month. Apple would keep half of that revenue while the rest of the revenue would go into a pool that would be divided among publishers according to the amount of time users spend engaged with their articles.
In its pitch to some news organizations, the Cupertino, Calif., company has said it would keep about half of the subscription revenue from the service, the people said.
The New York Times and the Washington Post are among the major outlets that so far haven’t agreed to license their content to the service, in part because of concerns over the proposed terms, which haven’t been previously disclosed, according to the people familiar with the matter.
To give you an idea of the pricing and revenue split issues, The New York Times subscription is $15 per month, The Washington Post charges $10 per month and monthly access to The Wall Street Journal is $39.
Issue #1: subscriber data
Apple’s In-App Subscription mechanism does not share transaction details like credit card numbers and email addresses. Publishers need that data to market other products to readers, but Apple won’t give it to them to protect your privacy.
Another concern for some publishers is that they likely wouldn’t get access to subscriber data, including credit-card information and email addresses, the people said. Credit-card information and email addresses are crucial for news organizations that seek to build their own customer databases and market their products to readers.
The fear here is that existing newspaper subscribers might switch to Apple’s service due to value, integration and the convenience of iTunes billing. As a result, those folks would likely cancel their subscription purchased from a publisher’s website, likely resulting in lower revenue for the participating publishers.
But Apple is in a tough position because without the likes of the New York Times and the Washington Post licensing content to the company, pushing an all-you-can-eat $10 per month news subscription is going to be way more difficult than it needs to be.
The Verge‘s Casey Newton argues nothing the iPhone can do is worth 50 percent of revenue, writing in a piece titled “Apple’s new deal for journalism should send publishers running”:
Publishers, meanwhile, may need to hire new employees to manage the partnership, build the necessary product integrations, and address customer service issues.
At a time when the industry is already laying off hundreds of journalists, asking them to build out their partnership and product teams in exchange for a potential revenue increase in the single digits appears laughable on its face.
The iOS 12.2 beta revealed that Apple had laid the groundwork for in-app news subscriptions in the News app. Currently, the News app can unlock subscription content if you’re subscribed via a publisher’s website.
BuzzFeed News claimed yesterday that Apple would hold a press event on May 20 solely dedicated to announcing the new service. The ongoing negotiations probably don’t necessarily suggest that relaunching Texture as a premium option within the News app could get delayed.
Apple is a tough negotiator and there’s still a few weeks left for its executives to sign those all-important deals with major publishers. “Talks are ongoing, and deals with the publishers could still be reached,” reads the report.
The Wall Street Journal also has concerns, but its recent conversations with Apple have been productive, one of the people familiar with the matter said.
And finally, this bit about a Prime-like service:
Apple has discussed bundling the news offering with a forthcoming package of original TV shows and iCloud, a storage service for photos, documents and more, one of the people familiar with the matter said.
As you know, the News app currently supports paywalled and ad-supported content. Publishers get to keep 100 percent of proceeds from ads that they sell directly. In case of Apple ads, the company gets 30 percent of ad revenue in the first year and 15 percent after that.
he upcoming service is thought to be based on Apple’s acquisition of Texture. The initiative is part of the company’s efforts to offset slowing iPhone sales.