Apple News+ was advertised as Apple’s love letter to print journalism. However, according to a new report, it could turn out to be just another nail in its coffin.
In an article for Monday Note, Frederic Filloux runs some numbers on Apple News. By his calculations, the service could cut revenue in half for publishers — and mean that magazines must double their readers simply to equal current figures.
Filloux bases his calculations on the fact that the U.S. magazine industry currently pulls in around $27 billion. That’s a loss of more than 40 percent in a decade, he notes. This averages out at $120 per reader per year. The revenue that Apple News+ brings in, meanwhile, is $9.99 a month or $119 per year.
So, approximately the same figure, right? Not quite — since Apple is reportedly taking a 50 percent from publishers. This means that the magazine industry must gain a whole new subscriber simply to make up for the halved amount that they make from each Apple customer.
The death knell for publishers?
That’s bad enough, but Filloux also analyzes things from the perspective of individual publishers, instead of an industry average. He notes that:
“These publications will have to split Apple’s meager net [average revenue per user] of $59 as opposed to a rate card of $227. They will collectively lose $168, a 74% evaporation of value for being on Apple news+. Then, the pro-rata kiss of death sets in. If Apple chooses to distribute the revenue based on reading time, an expensive publication such as the New Yorker ($100 a year) will lose 88 percent of its revenue, even if the reader of this hypothetical bundle allocates 20 percent of their time on it. By comparison, Wired, which can afford to be ultra cheap because it carries a much heavier advertising load, will lose only 12 percent of its revenue assuming a reader spends 15 percent of their time on it. The pricier the rate card, the higher the loss.”
He describes the end result as a “miserable zero-sum game” for publishers. While there’s plenty that’s not known about Apple News+ (most importantly, how many subscribers it will get), Filloux isn’t alone in his criticism. The chief executive of the New York Times, which notably didn’t sign on for Apple’s service, has also raised similar concerns.
Do you think Apple News+ will help rescue magazine publishing or help bury it? Let us know your thoughts in the comments below.
Source: Monday Note