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Why Apple News+ won’t cannibalize publishers’ paid subscriptions

There’s a natural life cycle that occurs any time a large tech platform develops a product aimed toward news publishers. It starts with some initial leaks that the tech company is in early discussions with publishers about the product. Then, as the product launch nears, we’re given details about which publishers have signed on as early partners and the terms of said partnerships. Then the product launches, with the tech company touting itself as the savior of journalism.

Throughout this entire life cycle, there’s always a steady drumbeat of naysayers who denounce the product as a Trojan horse, one that will either siphon money away from publishers or be discarded the moment that those publishers become reliant on it. We heard from these naysayers with the launch of Facebook Instant Articles. They decried the debut of Google’s AMP. And now they’re coming out of the woodwork to denounce Apple News Plus.

By the time Apple officially announced the product last week, we already knew most of the details. It will feature the content of around 300 publications, most of which are the magazines that were carried in the Texture app Apple acquired last year. A few news publishers have joined the mix, including The Wall Street Journal, LA Times, Vox, and TechCrunch. A subscription will cost $9.99 a month and can be purchased within the already-existing Apple News app, which at last count is used by 85 million people monthly.

Over the last few days, I’ve seen all sorts of protests from various corners of the publishing industry, but the main arguments were summed up by a TechCrunch article titled “The danger of ‘I already pay for Apple News+’” Written by Josh Constine, the piece lays out two major reasons that publishers shouldn’t partner with Apple.

The first reason? Because doing so would cannibalize these publishers’ already-existing paid subscription efforts. “They’re rendering their own subscription options unnecessary in exchange for a sliver of what Apple pays out from the mere $10 per month it charges for unlimited reading,” wrote Constine. Why pay the $39 for a Wall Street Journal subscription, this line of argument goes, when you can get the same content by subscribing to Apple?

The second argument is one that’s consistently lodged against tech platforms: they don’t share enough precious data on customers. “Readers visit Apple’s app, not the outlet’s site that gives it free rein to promote conference tickets, merchandise, research reports and other money-makers,” wrote Constine. “Publishers don’t get their Apple News+ readers’ email addresses for follow-up marketing, cookies for ad targeting and content personalization, or their credit card info to speed up future purchases.”

I don’t necessarily blame publishers for being wary of the promises made by tech platforms. I too have witnessed the whiplash caused by sudden business pivots. I remember when all those publishers agreed to migrate to Medium’s platform, only to see their business models obliterated when CEO Ev Williams decided to shut down the company’s advertising efforts. I watched as publishers staffed up teams to produce Facebook Live videos right before the company shifted its focus to Facebook Watch.

That being said, I think most of the attacks launched against Apple News Plus are overblown, and that this newly-launched version of the app will likely have a net positive effect for many of the participating publishers:

Let’s start with the argument that Apple News Plus will cannibalize publishers’ paid subscriptions. We should first acknowledge that most uses of the app will likely occur on just two devices: the iPhone and iPad. While there are a whole lot of consumers out there who own these devices, iOS only makes up 23 percent of mobile operating system market share. Android owns 74 percent of the mobile market, and a substantial portion of online reading occurs on the desktop. With that much reading taking place on devices where Apple News is inaccessible, subscription cannibalization, if it occurs at all, will be limited.

Now think about the ways you typically consume news. You might be following a link on Twitter or Facebook. Or perhaps someone emails you a URL to an article. Maybe you’re a regular visitor to a newspaper’s website. In all these use cases, Apple News Plus isn’t a viable option for you. If you’re on your desktop and follow a tweeted link to the Wall Street Journal, are you then going to pull out your iPhone and start hunting through the app for that exact article? Probably not!

Perhaps the greatest argument against cannibalization resides in the fact that publishers won’t be offering up all of their content to Apple News Plus. “Take The New Yorker, which produces 47 issues of the magazine each year — but which can publish 47 digital-only stories over just a couple days,” wrote Nieman Lab’s Joshua Benton. “If you want to read those [digital only stories] in Apple News Plus, you get thrown out into a web browser, where you get the standard New Yorker paywall. Your ‘subscription’ only goes so far.” The Wall Street Journal will reportedly only offer up “snackable” general news stories to the app. If you’re one of the million or so subscribers who rely on the Journal in your day-to-day work, Apple’s app just won’t be a suitable replacement.

And then there’s the contention that publishers will lose their relationships with readers. Pundits love to make hay of the fact that these tech platforms don’t share a lot of data about readers back to the readers. Ignored is the fact that this is true for most media distribution systems. When Comcast signs on a sports fan as a cable customer and that person watches a football game on ESPN, Comcast isn’t sending detailed information about that person back to ESPN. When someone buys a print copy of The New York Times at an airport store, that store isn’t feeding that person’s credit card info and email address to the newspaper. But why do you never hear pundits encouraging TV networks to ditch cable or for newspapers to stop selling their print editions at news stands? Yes, having a direct relationship with your customers is a nice thing to have, but plenty of successful media companies have been built without that relationship.

What always astonishes me about the attacks on Apple News Plus is that they rarely acknowledge the app’s corollaries in the music industry — Apple Music and Spotify. All the arguments lodged against Apple News Plus could easily apply to music streaming apps. They don’t share credit card numbers or email addresses with music labels. They could easily cannibalize CD or iTunes sales, which are much more lucrative on a per-unit basis.


Roger Rosner presents Apple News+ last week

Yet we know that these arguments are nonsense, because of the last few years, streaming apps have actually increased the amount the average consumer spends each year on music. These apps have single-handedly reversed the decade-long decline in music revenue, and industry executives are expressing optimism for the first time since the early 2000s.

And that’s precisely why I think publishers should at least experiment with Apple News Plus. With nearly every publisher rolling out some form of paywall, there’s a strong chance that consumers will eventually succumb to subscription fatigue. A bundled app, while paying out very little for every article consumed, might still vastly expand the universe of paid subscribers. There are about 50 million subscribers to Apple Music. If Apple News Plus even reaches half that number, it’d generate $3 billion in revenue.

If there’s one legitimate criticism against Apple News Plus, it’s that Apple’s cut of the revenue is way too high. In an era when we’re debating whether the App Store’s 30 percent tax on app makers is too onerous, Apple News taking a 50 percent cut seems absolutely ludicrous. I could understand if a publisher were to look at that number and wonder if Apple produces enough value to justify such a cut.

But then again, publishers have dumped hundreds of millions of dollars into platforms like Facebook over the years just to run ads promoting their own content — this while Facebook has shared only a tiny portion of its revenue with the media industry. Apple News delivers 85 million monthly users that click on five billion articles. And the Apple News app is featured on the home page of over a billion devices. In a world where publishers need diversified revenue streams to thrive, Apple’s continued investment in news will probably have a net positive effect on the industry. While skepticism toward tech companies is warranted, the contributions of apps like Spotify and Apple Music have shown us that sometimes these platforms truly can deliver on their promises.

Simon Owens is a tech and media journalist living in Washington, DC. Follow him onTwitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio,go here.

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