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All Your Subscriber Base Are Belong To Us

We seem on the verge of Apple launching the next phase of Operation: Services. The latest salvo is li
First Draught
All Your Subscriber Base Are Belong To Us
By M.G. Siegler • Issue #153 • View online
We seem on the verge of Apple launching the next phase of Operation: Services. The latest salvo is likely to come next month in the form of an announcement of both their television and news offerings. Maybe even some talk of a new “Apple Prime” bundle of these mixed with Apple Music, iCloud, and some other offerings? We shall see.
Both of these new offerings have been rumored forever because Apple has to work with outside content providers to power such services. And such content providers always leak. And the latest leak is undoubtedly at least somewhat strategic in nature: some publishers are balking at Apple’s proposed terms for their news subscription service, as WSJ scoops. Mainly, this seems to be the newspapers – though perhaps not WSJ, but instead NYT and WaPo. They don’t like the idea of splitting revenue from such an offering 50/50 with Apple. No surprise there.
And it’s really no surprise because this always seems to happen when Apple rolls out these types of partnerships. From iTunes Music to iTunes Movies to iTunes Television to iBooks to Newsstand, Apple goes in with an aggressive pitch, they get some takers, and they push ahead, hoping to use the leverage of a launch to force the others to get inline. And it usually works (though it did seem to work better in the Steve Jobs-era, see: the absolute failure to launch a television service up until now despite endless talks this entire decade). Apple will push ahead with a news subscription with the magazines and perhaps WSJ, and they’ll aim to force the rest of the folks to get in line.
But this situation seems slightly different to me in that it should have been easier: Apple acquired the service Texture with the explicit purpose of rolling out this offering. And yet, it’s also no surprise this has been a tough sell, literally. All the publishers have spent the past decade feeling screwed over by Facebook (and to a lesser extent, Google, Twitter, and even Apple – see: iPad).
Of course, that’s how the music guys probably felt in the time leading up to the launch of the iTunes Store. The difference is that the newspaper guys are in a much better position, thanks to the past couple years of Trump coverage and Trump backlash. Subscriptions are up. Digital revenue is breaking records. They don’t need Apple in the same way the music guys did to save them from piracy. (The exception here is the magazine guys, who absolutely do need a savior, so no surprise to hear that they’re on board.)
But wait, while things are better these days for the biggest newspapers, they’re still not as they once were, so they’re really going to leave incremental revenue opportunities on the table? This points to the real key here: the 50/50 split is insulting, but probably surmountable. What’s not is the same issue many of them had with the iPad Newsstand originally: they won’t get any data about subscribers who sign up for the Apple offering. Apple eventually caved on this for the iPad, but this is different since it is an Apple subscription offering, with NYT and the like just a part of the package. But without such information rights, I just don’t see the hold-outs getting on board.
Think about it in the success state. Say Apple News Unlimited (or whatever they call it) becomes a huge hit with tens of millions of subscribers – this would be surprising, but also perhaps not given the pre-installed nature and if they do bundle it with other services. A significant number of subscribers to these publications will be flowing through Apple. And the publishers will know nothing about them. Yes, they’ll be getting a check from Apple – perhaps even a really nice one, if they do well click-wise?! – but imagine a day when Apple decides to tweak things or change some terms. The publishers will have no choice but to go along. This is essentially a replay of the Facebook situation, but with subscribers and not just traffic/ads.
So yeah, that’s my read on this situation.
Happy Valentine’s Day - especially to Megan & Maisie! 💕

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M.G. Siegler

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