Apple is planning to release a news subscription service and is facing both support and resistance from a number of publishers after the tech firm stated that they expected to receive 50 percent of all revenue generated by publishers using its platform.
The service has been described as a “Netflix for news,” allowing members to read an unlimited amount of content from partnered publishers for a set monthly fee.
According to a new report from Recode, citing inside sources, Apple already has “many publishers” signed up under these terms. Furthermore, the report claims, publishers will still get to keep 100 percent of the generated ad revenue:
Here’s the short answer, which I’ve cobbled together by talking to industry sources: Apple has already signed many publishers to deals where they’ll get 50 percent of the revenue Apple generates through subscriptions to its news service, which is currently called Texture and will be relaunched as a premium version of Apple News this spring.
And some publishers are happy to do it, because they think Apple will sign up many millions of people to the new service. And they’d rather have a smaller percentage of a bigger number than a bigger chunk of a smaller number.
Revenue sharing, however, isn’t the only factor these publishers are considering in Apple’s negotiations. For many, the draw lies in the possibility that Apple’s upcoming service will substantially increase their respective readerships.
According to the report, Apple is confident that it will be able to generate millions of subscribers through investment and promotion. As such, many publishers are content to receive a smaller percentage of revenue from a much larger subscriber base rather than a larger share of a smaller revenue pool.
“It’s the absolute dollars paid out that matters, not the percentage,” said one unnamed publishing executive who is optimistic about Apple’s plans.
It’s unlikely that this argument will convince large newspapers like the New York Times or the Washington Post who have invested in a buildout of first-party digital services to get on board; however, negotiations are ongoing. Publishers are also concerned about access to subscriber data that Apple typically doesn’t provide.