Apple is trying to offset the downturn in its smart-phone business by developing a fast-growing services business that includes app-store sales, streaming music subscriptions and mobile payments.
The company is all set, therefore, to launch several new services, including original TV programming as well as a new subscription service that allows the subscriber to read an unlimited amount of “news” content from participating publishers for a monthly fee. Although the new service is expected to launch later this year as a paid tier of the Apple News app, it has encountered some friction about how fees will be extracted and divided up among the publishers. Currently, the major publishers that Apple had planned to use for its service (that some are calling the “Netflix of News” – see recent WSJ article) are balking at the payments that are being offered them. In pitching the service to publishers, Apple has portrayed the program as one where one-half of the proceeds from subscribers would generate to Apple and the remainder of the revenue would go into a pot to be divided among the publishers depending upon the amount of time users spend engaged with their articles. The “news” service is said to be pitched to subscribers for a $10/month fee, initially – with costs to change as necessary. Among the publishers that currently have not signed on are the New York Times and the Washington Post – perhaps that’s because their offerings wouldn’t be considered “news” – ? (I jest.) Their concerns center around the subscription payment scheme and the sharing of the proceeds. The WSJ also has not signed on as a “publisher” – but the company has said that talks are underway with Apple and look promising. The publishers, apparently, are complaining because they aren’t to be allowed access to subscriber data, including credit-card information and email addresses – but I’d guess that the final agreement with the publishers will allow this. Therefore, this sounds like a really good reason not to be a subscriber to the service. Gosh, can I please sign up for your service, Apple, so that you can harvest all my personal information and share it with the world – ? The print publishers are also wary of anything coming from high tech, because of the impacts that the tech industry has already had on newspapers and other publishers. It’s the subscriptions to their digital services that are currently keeping print publishers afloat. Perhaps, this is an opportunity for Apple to whittle down that field even further. The news organizations already sell a sub-set of articles on Apple News – a free service that comes installed on iPhones – and keep 100% of the revenues from ads that they sell to appear alongside the articles, as well as 70% of ads that appear alongside that they have not initiated the sales for, but are placed there by Apple. The pitch from Apple for the new “news” service is that it will allow publishers to expand their subscription base. Interesting concept, but as with all things digital and social, it comes with a price tag for the consumer, in the form of giving up personal data and other consumer information – like articles read, specific interests explored while reading the news, etc. Apple will be able to generate a “profile” of every subscriber including not only their personal information but also their likes for news specifics as well as other preferences. A powerful data set, I’d say. Wonder what the price tag to buyers of that information will be?