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Back in November, I interviewed Brian Alvey, a web entrepreneur who, among other things, led the team that designed the iPad newspaper app The Daily. For those who don’t remember, The Daily was a high profile collaboration between Rupert Murdoch and Steve Jobs. It debuted in 2011 on the iPad shortly after the device’s launch. Murdoch’s News Corp spent millions on the app, hired veteran journalists, broke some major stories, generated something north of 100,000 paying subscribers, but ultimately failed to build a sustainable business. It ceased operations in late 2012.
I asked Alvey why he thinks The Daily failed. He listed several reasons, but primarily homed in on Apple’s unwillingness to share vital user data with The Daily’s staff, thereby hindering their ability to market the app effectively. “They had 100,000 people paying,” he told me. “That’s amazing. It was an 18-month product. And even then, on top of that, they collected 150,000 email addresses from those people. But they didn’t own the subscribers themselves. If you subscribed to this and then unsubscribed, Apple owned you. The Daily and News Corp didn’t. They had your email address, but they didn’t know which email address matched the person who just unsubscribed. They didn’t have any of the billing, credit cards, anything like that. So they couldn’t write you and say, ‘how can we win you back?’ They just couldn’t do that.”
The Daily wasn’t the only publication that felt burnt by Apple. In 2011, the Cupertino giant rolled out Newsstand, a home screen folder that housed publisher apps. One by one, newspapers and magazines invested significant resources in launching shiny new apps for the platform with the hope that the iPad would reverse the dire forces that were then ravaging the news industry. “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,” Josh Quittner, who was once Time Inc’s director of digital editorial development for news, told me back in 2014.
But the iPad didn’t put the toothpaste back in the tube. Apple eventually shuttered Newsstand, and most publishers scaled back their mobile app efforts and reinvested in their websites.
So you can’t really blame media companies for being skeptical of Apple’s latest forays into the journalism business. That skepticism has flourished for months as Apple’s tried to grow Apple News, its news aggregation app that reportedly has at least 70 million regular users, is a growing traffic driver for many publishers, but so far has failed to generate much revenue for content providers. Perhaps the best person to summarize the situation was Slate’s Will Oremus, who wrote that “Slate makes more money from a single article that gets 50,000 page views on its site than it does from the 6 million page views it receives on Apple News in an average month.”
And that publisher skepticism has continued while Apple’s been building out a paid subscription platform for news. In March, Apple acquired Texture, a mobile app that bundled over 200 magazines into a single monthly subscription. At the time of the acquisition, it reportedly had about 200,000 paying subscribers, but Apple has much grander ambitions to actually roll it into the Apple News app, offering a subscription tier on top of the free, ad-supported version.
Apple has been aggressively courting publishers — including The New York Times, Washington Post, and Wall Street Journal — trying to convince them to include their content behind the subscription paywall, but, according to Bloomberg, those publishers have been resistant to Apple’s siren song. At $9.99 per month, the app would be cheaper than many standalone subscriptions (The New York Times: $15 per month. The Wall Street Journal: $35 per month), and publishers are worried that it could cannibalize their already-existing paying subscribers.
While I understand the skepticism, I think it’s misguided and that publishers should embrace efforts like these. A publisher refusing to participate in Texture because it could cannibalize its subscription sales would be the equivalent of a music label refusing to put its music on Spotify because it might eat into its CD sales.
And Spotify is an apt comparison, especially because Apple would be implementing a similar approach to paying participating publishers; just as Spotify allocates subscription revenue depending on the number of streams a song has, Texture does the same based on the amount of engagement a particular article receives.
When streaming apps like Spotify and Pandora came onto the scene, music labels were justifiably skeptical. What they would be paid per stream was infinitesimally small compared to what they made on a CD sale or even an iTunes download. But as it turned out, indexing such a large library of music provided enough of a draw to entice tens of millions of consumers into subscribing to these apps, thereby increasing the amount they spent on music each year. The success speaks for itself: for the first time since the birth of Napster, the music industry is growing again.
Yes, publishers like The New York Times and Washington Post have seen success growing their digital subscription base, but as more and more publishers launch metered paywall and membership models, the industry may soon be facing subscription fatigue. Sure, consumers might be willing to subscribe to their favorite newspaper and magazine, but will they then cough up money for a third, fourth, fifth publication?
Publishers shouldn’t underestimate the power of Apple and how many subscriptions it can drive by placing an app on the homescreen of 1.3 billion devices. Apple Music was a relative latecomer to the music streaming game, and yet it’s already surpassed 50 million paying subscribers. Apple News also arrived on the scene much later than other news aggregation apps like Flipboard and Smart News, and it already had 70 million regular users by 2016 and is likely far north of that number now.
Let’s do some math and assume that Texture eventually hits 20 million paying subscribers, which is far above what any individual publication has achieved to date. At $9.99 per month, that’s nearly $2.4 billion in revenue that it could drive for the news industry.
And there’s even a way that publishers could have their cake and eat it too. If they’re worried about Texture cannibalizing individual subscription sales, they could start by introducing only a small portion of their content each month to the app, withholding enough for their own website so there’s still incentive to subscribe. This will allow them to test the waters to see how much meaningful revenue Texture generates, and then they can adjust their content output on the app accordingly.
If the publishing industry is going to survive the transition from print to digital, it will need to employ a variety of business models: display ads, native advertising, ecommerce, live events, individual subscriptions, and yes, bundled subscriptions too. While it’s healthy for publishers to show skepticism toward major platforms like Facebook, Google, and Apple, they must also recognize that these companies offer tremendous reach — and reach, if leveraged the right way, brings with it the potential for more revenue.
Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.
Photo by Liana Mikah on Unsplash
