Abu Dhabi, UAEMonday 17 June 2019

Apple's 'Netflix for news' service will change the media's core business

The tech giant's new platform is unlikely to be kind to old-style, generalist publications, but dynamic and laser-focused publishing operations could fare much better

Traditional newspapers and magazines will face challenges, but Apple's new platform does have advantages. Suzanne Lee/The National.
Traditional newspapers and magazines will face challenges, but Apple's new platform does have advantages. Suzanne Lee/The National.

For all its recent ups and downs, Apple continues to make a colossal amount of money. It also likes to remind the world that it makes a lot for other people. In June 2018, at the Apple Worldwide Developers Conference in San Jose, California, Tim Cook, the company’s CEO, revealed that developers had earned $100 billion from the App Store in the 10 years since it opened.

It’s a truly staggering sum. One that makes Apple, at first glance, seem like a very good bunch of people to do business with.

And yet, earlier this month, a media storm ensued when the Wall Street Journal reported that the tech giant is about to launch a new subscription product, featuring content from several major newspapers and magazines, via the free News app already installed on iPads and iPhones. The service, which some are describing as "Netflix for news", is expected to be formally introduced to the world at a special event in March, and is likely to cost users around $10 (Dh37) a month.

On the face of it, that deal appears pretty reasonable, but look a little deeper and it quickly becomes clear why media companies and their employees are so worried. Apple plans to retain as much as 50 per cent of the service’s subscription fees. Wolfgang Blau, president of the global magazine publishing company Conde Nast International, was so appalled that he tweeted: “Apple loves journalism so very much, it wants to give news organisations a deal that is even worse than the one it gave the music industry.”

The eye-watering 50 per cent share of revenue that Apple is commanding has certainly riled publishers, in and of itself. But underneath that figure lies another issue to consider. Revenue retention rates for Apple’s subscription news service will be far higher than those the company applies to its App Store or Apple Music service. App developers, game makers and the like take home 70 to 85 per cent of the money they bill users. Meanwhile, Apple retains no more than 30 per cent of the revenue its Apple Music service accrues.

Digital news is a game that, so far, seems heavily rigged against most who dare to play it

It is not hard to see why many media outlets, already under intense pressure, consider the whole arrangement outrageous. Digital news is a game that, so far, seems heavily rigged against most who dare to play it. Take the case of The Daily, Rupert Murdoch’s much-trumpeted iPad-only newspaper, for example. Launched in February 2011, with major investment and marquee names, the title shuttered in December 2012. By some estimates, it lost about $30 million per year. At the time, The Daily was seen as a courageous punt – perhaps even the future of digital news. Today it is but another footnote in the mostly disappointing annals of “Making News Work on the Web”.

Despite all the outrage, several publishers have signed up. Most of them are hopeful that, regardless of the Apple's punishing cut, the millions of potential subscribers the company can connect them to will add up to worthwhile revenues.

And, among all the challenges of this new platform, there do appear to be some genuine opportunities. Apple’s subscription news service may turn out to be just the kind of shock to the system that will force media outlets to reconsider the ways they do business. Getting funnelled into an aggregator, such as Apple News, means that publications no longer have anything remotely approaching the stickiness of a dedicated app, or the brand recall of a traditional masthead. With old, dead-tree hegemonies comprehensively dismantled, pieces from The Guardian and the New York Times now vie for reader attention with articles by international broadcasting channels and – most importantly – small, specialist news blogs.

The only way to win on this aggressively level playing field is to run extremely efficient reporting and publishing operations. Apple’s subscription platform will not be kind to established publications that insist on following pre-internet strategies of broad-based content that attempts to appeal to everyone. But it may turn out to be an arena that rewards laser focus on solid, timely stories that appeal to defined audiences and crush any competition.

And that’s fair enough. We have to face up to the fact that the rules of the newsroom have changed. The great journalism of yesterday often involved deploying huge amounts of resources to tell compelling stories that affected and reflected the world we live in. The great journalism of tomorrow will continue to capture imaginations and reveal inconvenient truths, but it will also do so in a lean and profitable way.

Sidin Vadukut is an Indian author and historian who lives in London

Updated: February 20, 2019 01:10 PM

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