It was four years ago that D. B. Hebbard railed against Apple and the lousy way they treat magazine publishers.
They are at it again … and we wonder what Hebbard would think of this.
“Apple’s upcoming Spotify-style magazine subscription service, an offering with all-you-can-eat access to dozens of publishers, will only pay the media partners 50 percent of the revenue, according to two senior publishing executives from different companies with knowledge of the deal,” writes Garett Sloane in Ad Age.
“Apple plans to take half of the proceeds from $10 monthly subscriptions to the magazine service, leaving publishers to split the rest based on how many people read their stories. ‘It’s a [$&@#*%] deal,” said one publishing executive, who spoke on condition of anonymity. ‘It seems greedy.’”
Apple was mum on the subject, and the publishers who did speak did so under strict anonymity, a condition of the publishing agreement.
The subscription service, which Sloane likens to Spotify for magazines, launches this spring as an outgrowth of Apple’s acquisition of media app Texture.
“Texture gave digital subscribers full access to hundreds of magazines laid out as they appear in print,” Sloane explains. “Apple is redesigning the experience, and is expected to make it more dynamic, like Apple News. As of now, Texture isn’t much more than a digital recreation of the print product.”
It should be noted four years ago the idea of a “Netflix for magazines” was generally scoffed at, as readers were not clamoring for digital versions of print magazines. The new experience is expected to be more dynamic and fit in better with digital content consumption patterns. In other words, people are far more likely to use it.
“It feels like a punch in the nose, to hear those [revenue sharing] numbers,” said Jason Kint, CEO of trade organization Digital Content Next. “There is significant concern around how platforms are squeezing the oxygen out of the media ecosystem.”
As well there should be. It was just a couple weeks ago that Facebook told publishers “we aren’t going to save you.” Apple seems to be taking a similar position, even while trying to appear like they are playing nice.
“Apple is trying to position itself as a friend to the publishing world, and CEO Tim Cook has been blasting Facebook over data collection and user privacy issues,” Sloane writes, though publishers remain unconvinced.
“Some publishers say they doubt that Apple can deliver the money and audience it has been promising for the subscription service,” Sloane writes. “The skeptical publishers point to the original Texture—it didn’t work–as proof the concept is shaky. The publishers say the revenue was meager, and the app itself sputtered through several incarnations before being sold off to Apple.”
There would have to be some fairly dramatic retooling to bring in the kind of revenue Apple is talking about – unless they bundle this with other services like music subscriptions. Specifics on the new revenue model remain sketchy, so it’s hard to know what to expect here. But for certain, a 50/50 split seems like quite an overreach.
It’s more evidence that third-party distribution platforms, while they might be good for discovery, are not the place to build solid revenue streams for publishers – it’s just too much of a crapshoot.
“If readers sign up for the Apple magazine subscription, and a publisher puts its content there, readers would have little incentive to also pay for subscriptions to the publisher’s own property,” Sloane notes.
That in itself is enough to give any publisher serious pause.