Apple plans to launch a news subscription service within the next year.
The new service will combine features from its recent Texture acquisition and Apple’s existing news app, Bloomberg reported Tuesday, citing people familiar with the matter.
Texture’s technology and its employees will be integrated into the Apple News team, which will build the new service, according to the report. The company will split revenues with publishers.
Apple purchased Texture, which offers access to more than 200 online magazines for US$9.99 a month, in March.
“We’re excited Texture will join Apple, along with an impressive catalog of magazines from many of the world’s leading publishers,” Eddy Cue, Apple’s senior vice president of Internet software and services, said when the purchase was announced.
“We are committed to quality journalism from trusted sources and allowing magazines to keep producing beautifully designed and engaging stories for users,” he added.
Popular Business Model
Apple has had success in the past with subscription acquisitions. It bought Beats Music for $3 billion in 2014. At the time, Beats had fewer than a million subscribers. Now it is part of Apple Music, which has more than 40 million users paying $9.99 a month for the service.
That kind of success will be needed if Apple is to meet its goal of $50 billion in services revenues by 2021, Bloomberg noted.
“Subscribers keep coming back, so it’s a more stable model than an ad-based business,” he told the E-Commerce Times.
With satisfaction declining in news published on social media, Apple may be positioning itself to become a trusted source of online news.
“Fake news is rampant,” declared Tim Bajarin, president of Creative Strategies.
“A curated news site that only carries solid journalism that is fact-checked would be of great interest to many Apple customers and others who do not want to deal with fake news,” he told the E-Commerce Times.
Solving the Pay Wall Problem
An Apple subscription news service could address a problem encountered by publishers who erect pay walls around their content. They can gain hard core readers as subscribers, but they can lose casual readers who don’t read their publication enough to make a subscription worthwhile.
“We are seeing some success by newspapers and other news organizations in charging for digital subscriptions,” said Dan Kennedy, author of The Return of the Moguls: How Jeff Bezos and John Henry Are Remaking Newspapers for the Twenty-first Century.
“Your most avid news readers might pay for one, two, maybe three digital subscriptions,” he told the E-Commerce Times.
“By paying a subscription fee to Apple, you could get access to more than two or three news organizations,” Kennedy said. “There’s potential there for something like Apple News becoming a main news source for many people.”
With few details about the new Apple service available, questions remain about how it might affect existing publishers, many of whom charge much more than $9.99 a month for their digital subscriptions.
One alternative would be for major news players to offer a subset of their content to Apple.
“They could get a little bit of money from Apple from that, while at the same time trying to persuade people reading their articles to become regular subscribers,” Kennedy said.
The risks for publishers who provide content to Apple may outweigh the benefits, noted Greg Sterling, vice president of strategy and insight for the Local Search Association.
“In the best case scenario, Apple news represents incremental revenue,” he told the E-Commerce Times. “In the worst, it could cannibalize potential direct subscriptions.”
Apple’s service might do pay wall publishers a favor by conditioning consumers to pay for content, Sterling reasoned. “On the other hand, it might make people less likely to be tolerant of a myriad of publication pay walls.”