Coverage: Publishers chafe at cut from Apple’s new service

Apple’s upcoming Spotify-style magazine subscription service, an offering with all-you-can eat access to dozens of publishers, will only pay the media partners 50 percent of the revenue.

Garett Sloane of Ad Age had the news:

Apple plans to take half of the proceeds from $10 monthly subscriptions to the magazine service, leaving publishers to split the rest based on how many people read their stories. “It’s a shitty deal,” said one publishing executive, who spoke on condition of anonymity. “It seems greedy.”

Publishing executives spoke on condition of anonymity for this story because they were not authorized to speak publicly about the deal terms. Apple did not return a request for comment.

Apple’s new subscription media service is expected to launch in the spring, an outgrowth of last year’s acquisition of Texture, an app that was jointly founded by traditional media giants, including Condé Nast, Hearst and Meredith. Texture gave digital subscribers full access to hundreds of magazines laid out as they appear in print. Apple is redesigning the experience, and is expected to make it more dynamic, like Apple News. As of now, Texture isn’t much more than a digital recreation of the print product.

“It feels like a punch in the nose, to hear those [revenue sharing] numbers,” says Jason Kint, CEO of Digital Content Next, a trade organization that advocates for traditional media companies. “There is significant concern around how platforms are squeezing the oxygen out of the media ecosystem.”

Jeremy Horwitz of VentureBeat reported that Apple won’t share subscriber data with publications:

The company has been expected to offer a subscription tier in the News app for roughly a year. After acquiring a magazine subscription service called Texture last March, Apple executives suggested that they would have something to announce around the same time this year. Now the Wall Street Journal reports that Apple will price its “Netflix for news” all-you-can-read subscription service at about $10 per month, keeping around half of the revenue for itself. The remaining $5 would be split by publishers based on “the amount of time users spend engaged with their articles,” and Apple would not likely share subscriber data with the publications.

If this sounds like a case of double or triple deja vu, that’s because the same basic story has played out several times since 2010, when the iPad was first positioned as a potential savior for the declining news industry. Most recently, Bloomberg first reported in December that Apple was planning to keep Texture’s engagement time-based revenue split system, but told publishers that an increased number of subscribers would boost their revenues.

Prior to that, Apple spearheaded an iOS initiative called Newsstand that herded newspaper and magazine apps into a special folder, enabling them to sell recurring subscriptions — with a 30 percent cut to Apple.

Chaim Gartenberg of The Verge reported that Apple has tried to extract more money from others for years:

We’ve been down this road before, too — Apple trying to extract unreasonably unfair terms from content creators is what has doomed its TV ambitions for years, to the point where Apple simply is now spending millions in creating its own exclusive content for its upcoming TV service instead of licensing from other sources.

Adding to the pressure is that Apple’s paid news service is coming at a critical time for the company, one that has seen iPhone sales slump and a new emphasis on services as a key revenue source for the company. Apple News comes preinstalled on every one of the billions of iOS devices in the world, and converting even a fraction of those users into ongoing paid subscribers would be a huge addition to Apple’s services business.

It’s a strategy the company has already used to achieve great success with Apple Music, which leveraged its first-party positioning to offer actual competition to Spotify. Pulling a similar coup with News and its 90 million users would be key to the company’s future — but it needs to have compelling content, from partners who feel the deal is worth it, in order to accomplish that. Asking already beleaguered news publishers to fight over just half the total revenue on a per-view basis seems like a bad way to start.