Magazine Publishers Support Apple's 50% Split for Paid Apple News Service

[Baymowe335]

Actually 1.4 billion active devices

900 million iPhones, approx 300 million iPad/iPod Touch, 100 million Macs, about 100m Apple TV/Watch.

Like the publishing exec said, it’s about revenue dollars, not the percentage. If Apple can get 50 million subs ( <4% of 1.3B) that’s $6 billion a year to divvy up. Plus they get to keep 100% of the ad revenue.

How many partners can bring $6 billion/yr to the table? Only one I know of...

Of course. My billion devices was just a loose comment to emphasize a billion.

Yes, they grew to 1.4B devices from 1.3B.

Everyone is focused on iPhone sales, but the real story is the iOS devices keep growing even if iPhone sales slow. These devices aren’t going anywhere. The services potential is limitless.

 

[ksec]

You clearly missed the entire point of the article.

Like the music industry before iTunes, print media is dying. iTunes quite literally saved the music industry in the early 2000s, making it convenient and affordable for people to buy music. 99¢ per song was a marketing stroke of genius. Music piracy fell off my by a large margin and inevitably descended to a floor represented by those intent on stealing who were never going to pay for music regardless. Buying music became easier and more convenient than piracy and for a fair price that most people paid for it.

The same is coming true for print media. Nobody wants to pay for written content because it’s too expensive having to subscribe to all the newspapers and magazines we might read an article or two on. So journalism has to rely on diminishing advertising returns and as a result, newsrooms are closing at an escalating rate. Enter Apple News: make it affordable to have access to virtually any news or magazine content and make it convenient by not having to choose ahead of time. Far more people will subscribe than would have ever subscribed directly to one or two newspapers or magazines.

Like industry insiders said in the story: its way better to get a smaller percentage of a large number than it is to get a large percentage of a small number. What matters is the actual sum. Apple is giving content creators access to over a billion devices.

Sign me up!

Why would any decent News Paper which has their own established online subscription, and are generally making turn around like New York Times, Washington Post, Bloomberg want to join it? News are not magazine, they have higher cost structure. And most news are regional, they are not application to billions of users, but a specific age group and target within region.

It make sense when Music were 99c, the maths was easy. It make sense for Magazine and Tabloids, when the content are cheap ( or cheaper ), it doesn't make sense for anything like Financial Times.

 

[iGeneo]

I would pay 10 dollars a month for decent, respectable non fake news stuff like Wall Street Journal, Financial Times, maybe the Economist.

Those publications writers salaries are higher so its probably doesn't make sense for them to participate.

Add offline reading (should be a given) and I'm in...... I travel 3-4 days a week, much needed

 

[ksec]

Actually 1.4 billion active devices

900 million iPhones, approx 300 million iPad/iPod Touch, 100 million Macs, about 100m Apple TV/Watch.

Like the publishing exec said, it’s about revenue dollars, not the percentage. If Apple can get 50 million subs ( <4% of 1.3B) that’s $6 billion a year to divvy up. Plus they get to keep 100% of the ad revenue.

How many partners can bring $6 billion/yr to the table? Only one I know of...

Well with the 50% revenue split, that is $3B / yr to split.

The 50M Number I assume came from Apple Music. And that is a global number. Your content aren't really selling to a global audience. People in Asia has no interest in your content.

Again it make sense for Magazine and other types of News Paper, I still don't see any incentive to any decent new paper to join, at least not at the 50/50 split.
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I would pay 10 dollars a month for decent, respectable non fake news stuff like Wall Street Journal, Financial Times, maybe the Economist.

Those publications writers salaries are higher so its probably doesn't make sense for them to participate.

And these publications current cost, more than $50 / month, going all to themselves. In Apple news they get $5 split, that is a potential of 10x to 100x difference.

I would love to get access to these News paper for only $10. As a consumer absolutely! But I am much more worried about Quality News Paper not getting enough revenue for their quality contents.

 

[PickUrPoison]

Of course. My billion devices was just a loose comment to emphasize a billion.

Yes, they grew to 1.4B devices from 1.3B.

Everyone is focused on iPhone sales, but the real story is the iOS devices keep growing even if iPhone sales slow. These devices aren’t going anywhere. The services potential is limitless.

Realistically, based on unique users, geographical considerations, user age etc. I think 5-10 million is probably a decent estimate of a successful Apple news service 3-5 years on. It’s still upwards of a billion in gross revenue, and all the additional eyeballs that will drive up ad rates, which is the real goal of subscriptions—not the actual subscription revenue itself.

re iPhone, what’s important about it (besides driving services) is total revenue, not units. Apple saw the smartphone market was maturing 4-5 years ago, I mean it’s hard to miss; units have been flat for years. So instead of listening to the MR armchair CEOs and cutting prices to Samsung’s $250 ASP point, they introduce a new super-premium tier. Sure, it upsets those who think they are entitled to Apple’s best flagship for $750 like years past, but they’ll live.

So as a result, revenue increases despite an increasingly saturated market and the upgrade cycle lengthening markedly from 2 to maybe 3-4 years. Brilliant! (But they really should have stopped reporting units at least a year or two ago I think.)

 

[Romeo_Nightfall]

While interesting. my library offers a subscription service to a number of magazines for free. For example, I get the Economist through them. So unless Apple offers a number of magazines I wan’t and can’t get I see no reason to subscribe. YMMV.

your library is a social service - i think you compare two sides of a story

 

[macsrcool1234]

You know nothing about business.

Proof: These companies agreed to 50% terms. They get it, you don’t. That’s why you’re sitting there and the executives are in charge of these companies.

This guy really, really likes Apple. Super creepy signature too. Does Tim Cook have a restraining order on you??

 

[bobob]

Our profits are falling, so help us offset that with our super greedy subscription model LOL
Even 70/30 is stingy, let alone 50/50!

Is that the magazine owners speaking?

Have you never seen the discounts magazine subscriptions are being offered at? 80% off is common. 50/50 with all distribution and administration costs covered would be a bonanza for most publishers!

 

[Chloros]

This guy really, really likes Apple. Super creepy signature too. Does Tim Cook have a restraining order on you??

hey hey now....ive been banned for calling people sheep

 

[omihek]

The only problem I have with magazines, whether paper or pdf, are all the ads. There used to be more content than there is now. I don't want to pay to view a bunch of ads in a magazine.

But money tho.

 

[danny842003]

And what device do they have is so awesome to warrant 50%? And can you imagine the conditions? No boobs, no bad language, nothing that doesn't fit Tim's Disney view of the world. PUKE!

I didn’t realise Tim had stopped bad language on Apple Music.
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Why would any decent News Paper which has their own established online subscription, and are generally making turn around like New York Times, Washington Post, Bloomberg want to join it? News are not magazine, they have higher cost structure. And most news are regional, they are not application to billions of users, but a specific age group and target within region.

It make sense when Music were 99c, the maths was easy. It make sense for Magazine and Tabloids, when the content are cheap ( or cheaper ), it doesn't make sense for anything like Financial Times.

I would imagine scale could entice NYT and the Washington Post being a foreigner I often see Pay walled articles from those two newspapers. I’m unlikely to get a subscription to either of them. I am however likely to read some articles which may also include advertising. I think this would go for many foreigners.

 

[rom3o]

They would be stupid not to support getting a billion devices easy access to their content.

Technically they already have this access through the App Store and there are also suitable publishing platforms like Zinio (extending the service to Android as well) they could use if they were to team up and offer their own all-in-one subscription.

But the USP here is probably that Apple pre-installs the App with iOS and promotes it aggressively (ads, App Store Highlights, notifications, etc), gaining more awareness for the service then the publishers would on their own.

Which - as with other Apple services - is a bit anti-competitive but regulators these days doesn’t seem to be as strict as back in the days when they considered a pre-installed IE to be unfair competition...

 

[ROGmaster]

I believe it's 1.4 Billion, last I heard) Apple customers

It's 1.4 Billion active Apple devices.
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So as a result, revenue increases despite an increasingly saturated market and the upgrade cycle lengthening markedly from 2 to maybe 3-4 years. Brilliant! (But they really should have stopped reporting units at least a year or two ago I think.)

But also realistically anybody can increase prices and that doesn't mean revenue will go up for ever.
So I don't see whta's so brilliant here.

 

[Abazigal]

It's not about a particular device. It's about magazine publishers having potential access to 1+ Billion (I believe it's 1.4 Billion, last I heard) Apple customers with credit cards on file, and with Apple providing marketing, servers, billing, etc.


"And can you imagine the conditions? No boobs, no bad language, nothing that doesn't fit Tim's Disney view of the world. "

I haven't found that to be the case with Apple News. I suspect it would be no different.

Apple reported having 900 million active iPhones. That said, the news app is currently available only in a couple of countries, so unless Apple moves on to expand its availability, you will probably have to discount that number by a fair amount.
[doublepost=1550146619][/doublepost]It's funny. Just yesterday, the news made it sound like Apple was nuts for demanding a 50% revenue cut for their news service and news outlets would abandon the platform in droves. Today, it turns out that numerous news outlets have already signed on, additional analysis shows that the 50% cut might not be that unreasonable after all, and Apple appears to be in a far stronger position than initially let on.

Sure makes all the early posts bashing Apple seem quite shortsighted in this regard.

 

[PickUrPoison]

But also realistically anybody can increase prices and that doesn't mean revenue will go up for ever.
So I don't see whta's so brilliant here.

It’s not raising prices, it’s introducing new products at higher price points that customers are willing to pay for. If customers don’t find value in the higher priced offerings, revenue won’t go up.

In Apple’s quarter ending Sept 30, 2018, Apple had iPhone ASP of $793, crushing analyst estimates of $751. The year ago quarter was $618. That’s nearly a 30% increase, in a quarter that had very few selling days of XS and XS Max. Rather, those are sales of the X, nearly a year after its release. Not simply raising prices; a compelling new product at a new, higher price point—that saw unit sales of over 46 million. At $793 ASP.

btw I never said it would go on forever, and no one, including Apple expects it to. So a multi-pronged strategy for increasing hardware sales (AirPods, Watch, iPad at $329, iPad Pro at $799+, higher spec Macs) and also services revenue—which is on fire and has a 60%+ gross margin—supplements revenue, exactly as planned years ago. The magazine subscription service will add to that services revenue, though it will take years to become significant.

 

[ipponrg]

Sure makes all the early posts bashing Apple seem quite shortsighted in this regard.

You don’t know yet which magazines were interested. For all we know, it could be mags that don’t have a lot of traction in the first place.

 

[apolloa]

This story is about magazines, which have lots of adverts right? Last time I checked newspapers don’t tend to have a lot of adverts in them and a much lower cover price, so for them it makes little sense to agree to Apple’s terms.
Magazines are a dying breed anyway, the internet has killed them off, when was the last time anyone bought an Apple magazine like Mac Format?

 

[neliason]

Cigarette/tobacco ads are now always two pages side to side. One with some dude leaning against the pickup and the next page has massive letters “SURGEON GENERAL WARNING”

I don’t read print newspapers or magazines anymore, so I don’t see it. But that sounds awful. And it all is ridiculous. Of course smoking is bad for you. They’ve known that since long before the government got in on the racket. But what is ridiculous is alcohol to a much greater extent and FDA approved drugs to an increasing extent do far worse damage to humanity. Those products don’t have to have such ridiculously large warnings. Anyway, tobacco companies used to have some really great ad campaigns and product art.

 

[audiophilosophy]

Several people here in the comments are saying that the 50/50 split is justifiable and fair to publishers because it would open up a larger advertising audience and, as a result, it would allow publishers to make higher profits in ads. The way I see it, if I’m a consumer paying $10 a month for published content, I would expect that I would be exempt from ads. I don’t have an Apple Music subscription, but I assume that isn’t junked up with ads, is it? Wouldn’t it be a better customer experience if Apple made publishers go ad free and let the publishers take a 70% profit (or maybe greater). Steve Jobs always thought first of the customers, and the profits came naturally as a result. Tim Cook thinks first of Apple’s margins and maybe next of the shareholders. Customers are further down on the list of priorities for Tim Cook.

 

[78Bandit]

We'll see how it goes. I'm currently subscribing to the WSJ, The Economist, NYT, and WP. If I can get all their content included in the $10 Apple News subscription I'll be saving a substantial amount of money. Any other news sources would just be gravy.

Personally I'll be surprised if the WSJ makes the cut. They were one of the first to minimize online advertising supporting their content, have been paywalled for a long time, and are making it work with a high subscription rate and very unobtrusive ads. They would be the ones most likely to lose substantial individual subscription revenue that would need to be replaced by advertising revenue.

 

[jarman92]

I really hope the newspapers don't give in to Apple's outrageous demand here. A "news" service without the Times and the Post is hardly worth discussing.

 

[Bonte]

Magazines don't make money on the print version price, that's a non-profit deal because they make all the money on advertisements. So this 50-50 split is a lot more than what they make now and ad-revenue will also go up.

 

[jlc1978]

your library is a social service - i think you compare two sides of a story

The type of service is irrelevant as long as it provides what you need. If it does then there is no reasons to switch.

 

[CarlJ]

Do you really believe that 1B people are going to subscribe for a news service?

Do you really think the person you're responding to was suggesting a billion people would subscribe? Or is that just an easy strawman to fight against. I suspect there are a lot of magazines out there who would be very happy to have a million new readers. We'll see how it works out.

 

[HJM.NL]

Apple’s profit is not really “falling,” particularly because we only have 1 quarter of data in the current fiscal year.

In that quarter, Apple made $20.06B in 90 days last year and made $19.96B this quarter. So profit was down less than 0.05%. For the year, it was up 20%.

Apple will likely be even more profitable as the higher margin services business grows.

Why would you not negotiate the best possible deal for your shareholders?

Because the shareholders shouldn’t be the main focus. Customers should be the ones. You should attract shareholders by delivering a roadmap of products that convince them they’re prepared for the future instead of milking customers and delivering dividends.

Seeing their messy product line ups and Mobile World Congress around the corner I wouldn’t bet on higher profits the coming quarters.

To turn the tide new, better, more affordable products that offer the customer more value for money would be a better idea.

For me as a potential customer it makes me sad and annoyed to see Apple making exhorbitant amounts of profits and seeing that every product they come to market is more expensive than the ones before.

It sure isn’t a mentality with placing the customer first by milking them to the max.