With less than a week to go for Apple to officially unveil its magazine subscription service, two major U.S. newspapers — The Washington Post and The New York Times — are yet to sign up for the service. This report is in line with a previous report from earlier this month which claimed that Apple was still working on signing major publications up for its Apple News subscription service.
The Wall Street Journal is the only major publication that is currently engaged in positive talks with Apple about bringing its content to its subscription service. Apple has been trying to sign up publishers by highlighting the success of Apple Music as well but that logic is flawed.
“Based on our experiences with Apple Music, we’re very good at running a subscription business,” said one publishing exec, describing how Apple pitched the service. “We know how to build a subscription business, and we’re going to do that for news.”
However, not all publications agree with this logic. The problem is that the entertainment industry is very different from the news/publication industry. Plus, Apple is asking publishers for 50 percent of their total revenue which is an absolutely insane number.
An unnamed publisher which is not signing up for Apple’s subscription service pointed out that Apple’s magazine service does not make any financial sense for most publications.
In all, $5 per subscriber per month would be shared across all the publishers. Compare that to the $10 and up per month that top publishers are getting from people who subscribe directly. The New York Times charges $15 a month for digital access while The Wall Street Journal charges $39 and The Washington Post charges $10.
“Taking the 85 million (or even assuming major growth as a result of the new bundle service), if you put those numbers into a subscription funnel, no publisher will see a significant lift in subscribers,” said another publisher who’s sitting out the service.
It does make sense to a certain extent. Right now, readers are paying $10-$39 directly to WSJ and The Washington Post for their content. However, if these publications end up being available on Apple’s magazine subscription service, users will cancel their existing subscription and subscribe to Apple’s offering for a significantly lower rate which would also give them access to other magazines. In the end, the publications would lose out on a direct subscriber and instead get paid in pennies for the same.
Our Take
The success of Apple’s magazine subscription service will depend on the major publications it is able to offer as a part of its subscription bundle. The terms and conditions set by Apple are definitely not in favor of publishers, though they are hoping that with Apple’s pull and marketing prowess, they are able to attract a significantly wider use base.
[Via Business Insider]
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