Report: Apple goes for a 50% cut of news revenue
As we all know, the news business is incredibly profitable and totally not in trouble! Apple has long been rumored to be planning a 'Netflix for news' type product in which users can pay to subscribe to high-quality news, and the company would facilitate the experience.
This came from its acquisition of magazine app, Texture, and it's been talking to publishers for a while now about how that might work. The idea, reportedly, is simple: pay something in the order of $9.99 per month to get access to a plethora of content from the big fancy names, in one app. Super simple, but there's a catch:
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 service, described by industry executives as a “Netflix for news,” would allow users to read an unlimited amount of content from participating publishers for a monthly fee. It is expected to launch later this year as a paid tier of the Apple News app, the people said.
If I read this correctly, Apple wants a fifty percent cut of news publications' revenue to get an all-you-can-eat subscription, leaving essentially the scraps for publishers to pick from. The concept is a nice idea, but totally devalues news as a product by lumping it together, when the reality is it costs much more to produce.
The deal is ridiculous enough on its own, but weirder when you consider that The New York Times charges $10-15 per month directly to users, with pretty decent success. Why would they give up those margins in favor of this? Even a potentially enormous audience is likely not worth it, and any organization buying in would be betting its fate on Apple not changing its mind about the product later.
There's a decent reason there's no 'Netflix for news' at all: some have tried, but ultimately the complexity and scale required makes it really difficult to be profitable, let alone the margins are so razor-thin that it's just not worth it for the largest publishers.
If Apple insists on this, it'll be dead in the water. I'm willing to bet it adjusts the cut down to 30 percent, as an attempt to win over organizations like The New York Times, but it won't be enough; that's still a huge chunk of revenue in an industry that's fighting to survive, and a massive distraction from saving themselves on their own terms.
But, maybe it won't budge? It appears Apple is planning a "subscription focused" event in March, according to BuzzFeed, which is more likely to be around TV/movies, though could extend to this. This is all happening now to accelerate that fancy 'services' revenue Tim Cook has been touting, and it needs to get moving quickly so it's all on.
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