Reports are emerging that Apple plans to launch its subscription news service on March 25, but publishers are balking at the internet giant’s revenue demands.
The service has been described as being like “Netflix for news”, with users paying a flat monthly price to Apple – rumoured to be in the range of US$10 per month – for access to a range of paid news and magazines. It might end up being a good deal for consumers, but publishers aren’t as enthusiastic.
The Wall Street Journal reports that Apple has proposed deals in which the firm would keep half of the revenue publishers generate from participating. The remainder would be placed into a pot and divided among publishers according to how much time readers spend “engaged” with the stories they publish.
Although it’s hard to say just how much revenue that might generate, many believe it would be a paltry amount, not unlike the poor returns publishers are seeing from YouTube’s Red ad-free subscription service.
Apple technically allows publishers to keep all of the revenue for the ads they sell, but there’s one caveat: the ads must be sold using a custom Apple News format instead of the standard formats they might be used to. As a result, many have been letting Apple sell their ads on their behalf, but this is not generating very much money.
Major publishers in doubt
The New York Times and The Washington Post are reportedly among the major outlets who are balking at the terms. Not only are they concerned about the revenue sharing arrangement, but losing control over valuable subscriber data is also a worry. However, talks are ongoing. While the Wall Street Journal has also expressed concerns, they are reportedly having “productive” conversations with Apple. Other concerns include the fact that Apple is asking publishers to sign on for at least a year; some want shorter deals, while others would like longer ones.
The three news outlets are already distributing a selected subset of their articles within the Apple News platform, and readers can access them for free. The news organizations currently keep 100 per cent of the revenue they get from the ads they sell on such articles, and they get to take home 70 per cent of the revenue from ads that appear next to their articles that they don’t sell.
The Apple News subscription service could help create an additional stream of revenue at a time when Apple is still trying to regain some ground in light of slowing iPhone sales, so many observers believe that there is room for negotiation with publishers.