The Wall Street Journal reported on Tuesday that Apple, which is preparing to introduce a subscription news service, is asking publishers to give the company 50 percent of any revenues that they generate.
Apple’s plan to create a subscription service for news is running into resistance from major publishers over the tech giant’s proposed financial terms, according to people familiar with the situation, complicating an initiative that is part of the company’s efforts to offset slowing iPhone sales.
Apple’s News Subscription Deal
In its pitch to some news organizations, the Cupertino, Calif., company has said it would keep about half of the subscription revenue from the service, the people said. The service, described by industry executives as a “Netflix for news,” would allow users to read an unlimited amount of content from participating publishers for a monthly fee. It is expected to launch later this year as a paid tier of the Apple News app, the people said.
After giving up half their revenues, the remainder will be put in a pot and then split among publishers based on how much readers engage with their stories.
How Does Apple Benefit?
It’s easy to see why Apple favors the scheme. It gets a windfall of new revenue at a time when the decline in iPhone sales has made selling additional services a high priority. It gets to bring more high-quality publishers onto its platform, burnishing its reputation as a premium brand. And it gets to talk loudly about how much it loves journalism, as Apple vice president Eddy Cue did when announcing Apple’s acquisition of the subscription news app Texture last year. “We are committed to quality journalism from trusted sources and allowing magazines to keep producing beautifully designed and engaging stories for users,” he said at the time.
For print publishers, the tablet computer was supposed to be more than just a new channel for doing business. It was supposed to be a double do-over. The shift in media consumption from desktop computer-based browsers to tablet-based apps would, it was hoped, not only press the reset button on the consumers’ expectation that digital content be free. This however doesn’t seem to be the case if tech giants like Apple dictate what publishers are and aren’t free to do on other makers’ devices.
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