Apple’s news subscription product brings the work of many publishers under one roof with the offer of exposure to its massive user base, but the question is whether the big new audience is worth surrendering traffic. The New York Times and Wall Street Journal chart opposite courses.
Why it matters: The news business is changing and subscriptions are suddenly key to many categories’ business models – just look at the bike manufacturer Brompton – after software companies like Microsoft and Adobe showed how paying for access to a service was a stronger revenue stream than selling individual products.
In 2019, Apple began to ramp up its subscription-funded services business after its iPhone business began to run out of fanatics willing to shell out $1000+ every year. Still, the device is all important, especially in its offer to publishers, known as Apple News Plus, an all-in subscription to a raft of premium titles that goes beyond the pre-loaded Apple News app.
Why would that work? Just in the US, which is Apple’s strongest market, it enjoys just under half of all smartphone usage out of America’s roughly 250m smartphone owners. Globally, 1.5 billion Apple devices are in circulation, and all new devices sold carry Apple News. It’s an offer very few can refuse.
At launch, Apple said it would take 50% of the subscription value and then split the rest between the publications in the scheme according to time spent.
Rejections: For the New York Times, this offer didn’t cut the mustard, as its entire strategy – which has proven effective – was to build up unmediated direct relationships with paying subscribers.
As a result, in June, the news organisation cut ties with Apple News – the free version – altogether, saying that the partnership had delivered little in the way of new relationships with readers.
“Core to a healthy model between The Times and the platforms is a direct path for sending those readers back into our environments, where we control the presentation of our report, the relationships with our readers and the nature of our business rules,” Meredith Kopit Levien, chief operating officer, told employees.
The long game: For one of the most premium publishers in the US, the News Corp-owned Wall Street Journal, both Apple News, and its Plus tier continues to be a “beneficial experience” according to News Corp CEO Robert Thompson, speaking on an earnings call last week.
The benefit, he explained, was that it was opening up the product to a different audience: “That Apple News partnership allows us to focus on that tier of content and bring in a significantly new audience that we would hope to graduate to a paid WSJ subscription over time,” Thomson said.
“And it is a genuinely different audience. It’s actually, of late, more women than men. For The Wall Street Journal itself, it’s more men than women.”
Like the rest of the news industry, the company is being buffeted by the industry-wide reduction in ad spend, which for the company meant a drop of 52% in its fourth quarter. However, subscriptions were a bright spot across its financial segment, Dow Jones, which publishes the Journal, with a 5.6% increase in subscription revenue.
The rub: Size, lamentably, matters. Both the New York Times and News Corp are colossal companies – the latter in particular. The NYT and WSJ, along with The Times in the UK, are strong brands with powerful subscriber bases.
Thompson noted that, along with the deal with Apple and another currently in the works with Facebook, “it’s also fair to say that negotiations are ongoing with other companies and other regions.” It’s all about getting a fair deal out of platforms for the distribution of content.
However, the real challenge will be for smaller publishers, who lack the clout to force platforms’ hands. Subscriptions are a consolidation business; fair deals on content sharing should be for everyone, not just for the titans.
Sourced from WARC, Statista, Brompton, WSJ, Seeking Alpha, New York Times; additional content by WARC staff
