Home / Technology / The logic behind Apple's give-us-half-your-revenue pitch to news publishers

The logic behind Apple's give-us-half-your-revenue pitch to news publishers

Apple says it wants to help save journalism.

Cue internet outrage.

Casey Newton.

Cue internet outrage.

Casey Newton to Apple blogger John Gruber: 50 percent is way, way too high – "insane," in Gruber's words – given that Apple normally takes 15 percent to 30 percent of the revenue it generates when someone buys something from its App Store. Insult to injury: Apple's new arch-enemy Facebook takes zero percent when it helps someone

So what is Apple thinking now?

Here's the short answer, which I've cobbled together by talking to industry sources: Apple has already already signed up for sale Apple's subscribe to subscriptions to its news service, which is currently being promulgated as a premium version of Apple News this spring.

Apple wants to sign up many millions of people to the new service.

In the words of a publishing executive who is optimistic about Apple's plans: "It's the absolute dollars paid out that matters, not the percentage. "

That argument seems unlikely to persuade the big newspapers, including the New York Times and the Washington Post, that Apple is trying to add to its service. Both of them have their own digital subscription businesses over the past few years, and they believe that they are better owning.

But We'll let Apple ̵

1; which declined to comment – and its negotiating partners – to give it a word about Apple on the record – sort that for themselves.

But here's a quick story about how we got here:

Remember the iPad and how it is going to revolutionize the publishing business? People really thought this back in 2009, and that's why a consortium of publishers, including Conde Nast, Hearst, and Meredith put together a "Netflix for magazines" service, which subscribers read all the stories they wanted for a monthly fee. [19659013] That service, which was finally called Texture, paid out 10 percent of its monthly revenue to its owner-operators, who diverges from it.

Texture never got much traction, and last year Apple bought it for an undisclosed sum , Apple intends to launch for $ 10 a month.

And after Apple bought Texture, it gives them about half of the subscription revenue the service generates. Publishers So be sure to get 100 percent of the sales revenue.

Apple's App Store , or other app developers like Spotify or Fortnite creator Epic Games, which keep 70 percent to 85 percent of the revenue their apps generate via Apple.

Facebook, meanwhile, does not capture any revenue when it helps news publishers sell subscriptions – but it does not actually sell subscriptions itself. Instead, they may be using the deal.

You could argue that since the-thing-formerly-known-as-texture wants to be Apple-owned service, it's fair for Apple to Treat It's different than stuff owned by Apple's App Store partners. But that's not terribly convincing, given that the service can not exist without the content. So, Apple pays more than 70 percent of its revenue to the Apple Music Music service.

The more compelling argument, I'm told by publishers that is Apple, is that Apple is going to spend many millions of subscribers.

Apple Music, which launched in 2015, has signed up more than 50 million paid subscribers, due to Apple's promotional muscle and the fact that it comes preloaded, with a free trial, on Apple iPhones.

Again, none of that may convince the Times, the Post or Wall Street Journal (which first reported on Apple's proposed revenue share *) to join up.

Unlike most of the magazine publishers that are currently in Texture, those papers have been built so that all-you-can-eat service that bundles them along with anyone else could cannibalize what they have. They are thus understandably skittish about a service where Apple would have the primary customer relationship.

Sometimes these things take a long time to resolve.

* See, guys? Not that hard. Couple words and a link.

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