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Magazine Publishers Support Apple's 50% Split for Paid Apple News Service

Apple is set to launch an Apple News service that will provide access to paywalled news content and magazines for one $9.99 monthly fee in March, but the company is still working to establish deals with newspapers.

Earlier this week, The Wall Street Journal said that Apple was having trouble convincing some major news publications like the Washington Post and The New York Times to sign up for the service, due to Apple wanting a 50 percent revenue split.


Apple would keep 50 percent of all subscription revenue and the other half of the revenue would be split among publishers "according to the amount of time users spend engaged with their articles."

Compared to Apple's 70/30 App Store split and the more than 70 percent of revenue that goes to Apple Music artists, the 50/50 split sounds stingy, but Recode today spoke with industry insiders and provided some insight into why Apple settled on that number.

As it turns out, there are many magazine publishers already on board with the 50/50 revenue agreement, with most convinced that Apple will get millions of people to subscribe to the new service, providing a lot of revenue to publishers despite the dramatic split. From Re/code:
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.

In the words of a publishing executive who is optimistic about Apple's plans: "It's the absolute dollars paid out that matters, not the percentage."
Magazine publishers, though, have little to no online monetization of their content, which is not true of major newspapers. The New York Times and the Washington Post, for example, have existing digital subscription businesses that allow them to collect 100 percent of the revenue brought in by subscribers.

According to Recode, magazine publishers that have been participating in Texture, the magazine service Apple purchased, are already familiar with that kind of revenue split. Texture will form the base for the Apple News subscription service Apple is creating, with Apple planning to charge one fee for access to news and magazines.

Since Apple's Texture purchase, magazines have been receiving approximately half of the revenue the service generates, along with 100 percent of ad revenue. It's not clear if major newspapers will ultimately agree to a similar terms given that doing so could cannibalize more profitable subscription options available outside of Apple News.

Apple is telling publishers that the new Apple News service will be heavily promoted and that it has the potential to generate millions of subscribers, which, as Recode points out, is not impossible given the success of the Apple Music service. Apple Music, which launched in 2015, now has more than 50 million paid subscribers.



Top Rated Comments

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14 weeks ago
Our profits are falling, so help us offset that with our super greedy subscription model LOL
Even 70/30 is stingy, let alone 50/50!
Rating: 17 Votes
14 weeks ago

They would be stupid not to support getting a billion devices easy access to their content.

Do you really believe that 1B people are going to subscribe for a news service? They managed to entice just 50M for music. I expect news service might get 1M.
Rating: 11 Votes
14 weeks ago
Apple has to lower its profit split.
Rating: 9 Votes
14 weeks ago
While interesting. my library offers a subscription service to a number of magazines for free. For example, I get the Economist through them. So unless Apple offers a number of magazines I wan’t and can’t get I see no reason to subscribe. YMMV.
Rating: 8 Votes
14 weeks ago

Our profits are falling, so help us offset that with our super greedy subscription model LOL
Even 70/30 is stingy, let alone 50/50!

Apple’s profit is not really “falling,” particularly because we only have 1 quarter of data in the current fiscal year.

In that quarter, Apple made $20.06B in 90 days last year and made $19.96B this quarter. So profit was down less than 0.05%. For the year, it was up 20%.

Apple will likely be even more profitable as the higher margin services business grows.

Why would you not negotiate the best possible deal for your shareholders?
Rating: 7 Votes
14 weeks ago
They would be stupid not to support getting a billion devices easy access to their content.
Rating: 7 Votes
14 weeks ago

50% of revenue? The Tim Cook’s era greed is astounding. You do all the hard work and Apple gets 1/2 for doing very little other than letting you behind walled garden. Keep this up and Tim Cook will run Apple into the ground.


My guess is you have never built or maintained a content distribution network...
Rating: 6 Votes
14 weeks ago
50% of revenue? The Tim Cook’s era greed is astounding. You do all the hard work and Apple gets 1/2 for doing very little other than letting you behind walled garden. Keep this up and Tim Cook will run Apple into the ground.
Rating: 5 Votes
14 weeks ago
I would pay 10 dollars a month for decent, respectable non fake news stuff like Wall Street Journal, Financial Times, maybe the Economist.

Those publications writers salaries are higher so its probably doesn't make sense for them to participate.
Rating: 5 Votes
14 weeks ago

You clearly missed the entire point of the article.

Like the music industry before iTunes, print media is dying. iTunes quite literally saved the music industry in the early 2000s, making it convenient and affordable for people to buy music. 99¢ per song was a marketing stroke of genius. Music piracy fell off my by a large margin and inevitably descended to a floor represented by those intent on stealing who were never going to pay for music regardless. Buying music became easier and more convenient than piracy and for a fair price that most people paid for it.

The same is coming true for print media. Nobody wants to pay for written content because it’s too expensive having to subscribe to all the newspapers and magazines we might read an article or two on. So journalism has to rely on diminishing advertising returns and as a result, newsrooms are closing at an escalating rate. Enter Apple News: make it affordable to have access to virtually any news or magazine content and make it convenient by not having to choose ahead of time. Far more people will subscribe than would have ever subscribed directly to one or two newspapers or magazines.

Like industry insiders said in the story: its way better to get a smaller percentage of a large number than it is to get a large percentage of a small number. What matters is the actual sum. Apple is giving content creators access to over a billion devices.

Sign me up!


That's an excellent summary of the past. I remember those times well. And...I think Apple is on to something if they can pull it off.
Rating: 4 Votes

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