Major newspaper publishers have balked at Apple’s proposed terms for an upcoming news subscription service but according to a new report, a bunch of publishers have already signed up for the service with a 50:50 revenue split.
Recode‘s Peter Kafka has the story:
Apple has already signed many publishers to deals where they’ll get 50 percent of the revenue Apple generates through subscriptions to its news service, which is currently called Texture and will be relaunched as a premium version of Apple News this spring.
So why are some of these publishers eager to share half of all the revenue journalists make through the service with Apple?
Reportedly because the hope is that Apple will help sign up many millions of people to the new service and they’d “rather have a smaller percentage of a bigger number than a bigger chunk of a smaller number.”
The more compelling argument, I’m told by publishers that have agreed to work with Apple, is that Apple is going to spend a lot of time and money promoting the new service and thinks it can generate many millions of subscribers.
In the words of a publishing executive who is optimistic about Apple’s plans: “It’s the absolute dollars paid out that matters, not the percentage.”
Ultimately, it remains to be seen if that argument will persuade the big newspapers that Apple is trying to add to its service.
Both of them have built their own digital subscription businesses over the past few years, and they may feel that they’re better owning 100 percent of a product they control than a piece of a collective run by a giant tech company.
The Wall Street Journal yesterday claimed that Apple’s proposal consists of the company keeping half of the revenue earned from monthly subscriptions 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.
The argument, made by everyone from my colleague Casey Newton to Apple blogger John Gruber: 50 percent is way, way too high—’insane,’ in Gruber’s words—given that Apple normally takes 15 percent to 30 percent of the revenue it generates when someone buys something from its App Store. Insult to injury: Apple’s new arch-enemy Facebook takes zero percent when it helps someone subscribe to a publication.
Aside from revenue split, ownership of subscriber data is another sticking point because Apple won’t give publishers subscribers’ email addresses and credit card numbers which could be used to construct their own customer databases for selling other products to readers.
I’m not surprised that the Journal story is critical of Apple’s proposed terms because the newspaper is among launch partners for the news service. “The Wall Street Journal also has concerns, but its recent conversations with Apple have been productive,” the paper wrote.
Of course, Apple’s talks with potential launch partners are still ongoing so deals with the publishers could still be reached in time for launch.