Digital Publishing Platforms
5 mins read

Should Publishers be Wary of Apple News?

In the wake of Facebook’s announcement that it is downgrading pages within the newsfeed and reducing user exposure to news stories, publishers have been busy diversifying their traffic sources in an attempt to become less reliant on the social media giant for referrals. Many have doubled down on newsletters, viewing the inbox as one of the last distribution platforms untouched by the algorithms of monopolistic tech behemoths. Others have turned to Twitter, a platform they widely mocked for years for its paltry referrals but that lately has been producing better traffic returns.

Another platform that’s showing surprising returns lately? Apple News. Publishers have reported significant gains from the app in recent months; it’s now one of the top four referral sources for The Washington Post and is driving half of Vox’s traffic during some months.

Apple News, with its reported 70 million users, has been aggressively hiring veteran journalists to edit its verticals, posting jobs that require a minimum of seven years of experience. Its editors operate a Slack channel where they’re pitched by publishers — all of whom want to get their content in front of the app’s huge audience — on an hourly basis.

It’s also doubled down on video, with some publishers reporting they’re seeing views “in the low seven figures” for their videos on the platform. In its most aggressive move yet in the space, Apple News paid Buzzfeed both an upfront fee and a cut of advertising sales in exchange for an exclusive window for a documentary Buzzfeed produced. The documentary received “several hundreds of thousands” of views on the app before its window ended and the video was then posted to Facebook, YouTube, and other platforms.

One thing is clear: Apple News has quickly established itself as a major player in the digital news space. But should publishers trust it? After all, they got into this whole mess because Facebook started sending them gobs of traffic — traffic they quickly got addicted to, which then led to them investing substantial resources into growing their Facebook presences. Might Apple News just end up leading them down the same fraught path?

One can make the argument that Apple’s incentives as they pertain to news are much more aligned with publishers. Apple likely doesn’t expect Apple News to become a significant revenue driver; instead, it’s part of the company’s ongoing effort to create user lock-in so it can sell high-margin phones and tablets. That means it has every incentive to keep publishers happy so they continue populating the app with content.

What’s more, publishers get a piece of every ad dollar that’s sold in Apple News. According to the app’s FAQ on the subject, publishers get 100 percent of the revenue for ads they sell themselves, 70 percent of the revenue for ads Apple sells against their content, and 50 percent of revenue for ads that “appear in between articles in For You or in Apple-curated topic feeds such as Fashion or Technology.” This is vastly different than the setup at platforms like Facebook and Google, who only share a very tiny portion of their ad sales with publishers. Apple News is much more akin to Spotify, which pays out money to music labels for every single stream.

Speaking of comparisons to Spotify, Apple just purchased Texture, an app that charges users a monthly subscription fee and gives them access to hundreds of magazines. Outlets reported that Apple wants to launch a premium subscription service by the end of the year. It’s easy to imagine a Spotify-like scenario in which publishers get paid a cut of the ad revenue for users who use the free version and then receive much higher royalties for users who have converted to the paid version.

Of course, all this revenue is hypothetical. Thus far, Apple has been able to produce a lot of eyeballs for publisher content, but not a lot of ad dollars. The company has always shied away from the kind of data collection that has made Facebook and Google so profitable, and Apple has been pretty bad about sharing analytics with its publishing partners. It eventually gave in and formed a partnership with NBCU, allowing the media company to handle all its ad sales. But publishers haven’t seen much of a revenue bump as a result of said partnership. There is some optimism, however, about reports that Apple News is testing a feature that would allow publishers to plug in Doubleclick and other ad networks into the platform, effectively allowing them to extend the ad tech they’re using on their own websites to Apple News. It’s unclear at this point if Apple will ever make this feature available to all partners.

The lack of ad sales isn’t bad for everyone. Some publishers who focus on subscription and membership models have reported that the app, with its higher end, wealthy user base, has been good at converting casual users into subscribers:

The Washington Post has also been seeing a significant rise in subscriptions. “[We have] had a subscription offer in Apple News since the launch of iOS 10, and we have been pleasantly surprised by this audience’s propensity to subscribe. After only a year, Apple News is a thriving subscription channel for us,” [Washington Post lead product manager Dave Merrell] said.

Either way, publishers should be cautious. Lest you assume that Apple will save you, remember that there was another time when publishers were sure that the tech giant would rescue the industry: with the 2010 launch of the iPad. Back in 2014, Josh Quittner, who had been Time Inc’s director of digital editorial development when the iPad debuted, told me about how the magazine industry started shoveling money into their newly-launched, shiny iPad apps. The iPad, they were all sure, was going to put the toothpaste back in the tube, and consumers were going to start paying for content again. “I’m very much one of those people who believed that apps would give us another bite at the apple, that we could control the user experience to a far greater degree than we could on the web, and that we could bring high quality advertising back,” he told me.

And we all know how that turned out.

Republished with kind permission of Simon Evans, a longtime journalist who’s written for national publications including US News & World Report, The Atlantic, Scientific American, and New York Magazine. His Medium page can be found here.