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The Logic Behind Apple's Giving Us Half-Your-Earnings Course to News Publishers



Apple says it will help save journalism.

All it takes is half of all revenue journalists do when they sell their stuff through an upcoming new Apple subscription service.

Cue internet utanger.

The argument, made by everyone from my colleague Casey Newton to Apple blogger John Gruber: 50 percent is way too high – "madness" in Gruber's words – given that Apple normally takes 15 percent to 30 percent of the revenue it generates when someone buys something from the App Store. Persecution on Injury: Apple's new Facebook foe Facebook takes zero percent when it helps someone to subscribe to a publication.

So what is Apple thinking now?

Here is the brief answer I have embraced by talking to the industry Sources: Apple has already signed many publishers for deals where they receive 50 percent of the revenue Apple generates through subscriptions to the news service, as for Time is called Texture, and will be launched as a premium version of Apple News this spring.

And some publishers are happy to do so because they believe Apple will register millions of people for the new service. And they would preferably have a smaller percentage of a larger number than a larger portion of a smaller number.

In a release day's words that are optimistic about Apple's plans: "It is the absolute dollars paid out that matters, not the percentage."

That argument seems unlikely to persuade the major newspapers, including New York Times and Washington Post, Apple is trying to add its service. Both have built their own digital subscription services in recent years, and they can feel that they have 1

00 percent of a product they control than a piece of collective business run by a gigantic technical company.

But We let Apple – who refused to comment – and their negotiating partners – who don't say a word about Apple on the record – sort it for themselves.

But here's a quickish story about how we got here:

Remember the iPad and how it would revolutionize the publishing business? People believed this in 2009, and so there was a consortium of publishers, including Conde Nast, Hearst and Meredith, putting together a "Netflix for Magazine" service, which gave subscribers read all the stories they wanted for a monthly fee. [19659013] The service that was eventually called Texture paid 10 percent of its monthly income to its owner operators, who split it up based on the use of their titles. And publishers who sold their stuff through the service but did not own a piece of texture, caught 50 percent of their revenue, also cut up on use.

Texture has never received much traction, and last year Apple bought it for an unfinished sum. It will provide the foundation for the new subscription service Apple intends to launch for $ 10 a month.

And after Apple bought Texture, it created new deals for magazine publishers, giving them about half the subscription revenue the service generates. Publishers also keep 100 percent of their advertising revenue generating titles.

It's still a completely different division than Apple offers video retailers like HBO, which can hold as much as 85 percent of any revenue generated by a subscription sold through Apple's App Store, or other app developers such as Spotify or Fortnite Creator Epic Games, which retains 70 percent to 85 percent of revenue their apps generate via Apple.

Facebook, meanwhile, does not capture revenue when it helps news publishers sell subscriptions – but it does not actually sell the subscriptions themselves. Instead, Facebook manages its users to publisher's websites and lets them handle the deal.

You may argue that since what is previously known-as-Texture will be an Apple-owned service, it is fair for Apple to process It is different from things owned by Apple's App Store partners. But it is not very convincing, as the service cannot exist without the content. Apple also pays more than 70 percent of the revenue to music owners who run their Apple Music service.

The more convincing argument I tell of publishers who have agreed to work with Apple is that Apple is spending a lot of time and money marketing the new service and believes it can generate millions of subscribers.

The Best Evidence Of That Theory: Apple Music, which Apple launched in 2015, has registered more than 50 million paid subscribers because of Apple's promotional muscle and the fact that the service is provided pre-installed, with a free trial, on Apple iPhones.

Again, none of them can convince the Times, Post or Wall Street Journal (which first reported on Apple's proposed revenue share *) to join.

Unlike most of the magazine publishers currently in Texture, the papers have already built meaningful digital subscription businesses already, so an all-you-can-eat service that ties them with everyone else can cannibalize it hair. They are also understandably boring about a service where Apple would have the primary customer relationship.

And if arguments between Apple and media companies over subscription terms are known, there is a reason. Sometimes these things take a long time to solve.

* See you? Not so hard. Pair of words and a link.


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