On the evening of Wednesday, March 27, a few dozen magazine and digital-media notables gathered in a capacious loft in a Civil War-era five-story former mansion in Lower Manhattan. It was a very Silicon Valley version of New York. As someone who has been to the loft described it to a local news Web site, it “basically looks like what you’d expect would happen if Apple decorated a Tribeca apt, complete with glass staircase.” Indeed, the trillion-dollar tech behemoth sometimes hosts events in the space, and that’s why the publishing crowd was assembled there. Two days earlier, Apple had lifted the veil on its much-ballyhooed media strategy, in a star-studded dog and pony show held at the company’s 2.8 million-square-foot Cupertino campus. In addition to a Steven Spielberg-approved original programming slate that will compete with the likes of Netflix and Amazon, Apple also introduced Apple News+, a $9.99-a-month reading bundle that gives iOS users access to a pair of major American newspapers (The Wall Street Journal and The Los Angeles Times); a smattering of premium digital brands (including theSkimm, Vox, TechCrunch, Vulture, and The Cut); and magazines (from People and Entertainment Weekly to The New Yorker and Vanity Fair) that were previously packaged through the Netflix-style subscription service Texture, which Apple bought for an undisclosed sum last year. (Texture had previously been owned by a small consortium of publishers, including Condé Nast, which owns Vanity Fair.)
Eddy Cue and other Apple executives worked the room, among editors and business-side people from participating publications like New York, GQ, Time, Esquire, The Atlantic, and others—a casual cocktail reception to welcome Apple’s new publishing partners. But as the guests munched on mini empanadas and potato bites, some of them couldn’t help but wonder if there was a Trojan horse in their midst. As one attendee later joked, “Are we at a party, or a wake?”
That more or less sums up the schizophrenic reactions to the launch of Apple News+, which is the latest—and arguably the most consequential—entrant in a series of newfangled platform-publisher experiments ranging from Facebook Instant Articles, to Snapchat Discover, to Google Amp. On the one hand, publications throughout the industry have either moved, or are moving, toward revenue models in which people pay them directly for what they’re reading online. Apple's new venture can give publications like these the opportunity to reach millions of Apple consumers who might not already be subscribing to their content, as long as these publications are willing to give Apple a reported 50 percent of the total News+ subscription pie. (The other half is being split amongst the publishers based on engagement levels.) This proposition may sound especially promising to publications that don’t already have large, loyal audiences paying to read them on the Web each month. As one media executive put it to me, “If you have a subscription business or a membership business, and you’ve got, like, 9,000 digital subscribers, you don’t have much to lose going in with Apple.”
On the other hand, by getting on board with Apple News+, you run the risk of abdicating your direct relationship with readers and potentially cannibalizing your existing subscriber pool, thereby handing more leverage to an ever-more-powerful platform economy that has already wreaked havoc on journalism and the news business. “I have a suggestion: everyone who subscribes directly to any and all publications participating on News+ should unsubscribe ASAP and subscribe to the Apple bundle,” Rafat Ali sniped on Twitter. “Only then will publishers realize their own idiocies here.” In a searing takedown of Apple News+ published by one of its own partner publications, TechCrunch, Josh Constine argued that “publishers are crazy to jump into bed with Apple News+. . . . Publishers hope they’ll get exposure to new audiences. But any potential new or existing direct subscriber to a publisher will no longer be willing to pay a healthy monthly fee to occasionally access that top content while supporting the rest of the newsroom. They’ll just cherry pick what they want via News+, and Apple will shave off a few cents for the publisher while owning all the data, customer relationship and power.”
That would appear to be the primary concern of the two major News+ holdouts: The New York Times and The Washington Post. Apple badly wanted to lock down at least one of them, and it began a vigorous courtship of the papers last spring, not long after the Texture deal closed and Apple’s plans for its content bundle were beginning to materialize, according to people familiar with the matter. “They put a tremendous amount of pressure on,” one source said. “Eddy Cue was in and out of their offices really trying to woo them.” Cue’s elevator pitch, according to people familiar with the discussions, was, “We’ll make you the most-read newspaper in the world.”
In multiple meetings with top brass at both newspapers, Apple made it clear that they wanted the whole shebang, as opposed to a pared down offering or a specialized sliver of stories. “They didn’t want to have limitations in terms of content,” according to a person with knowledge of the talks. But Apple dangled flexible terms governing the duration after which they could pull out, as well as exclusivity. “You’d be protected against a competitor coming in,” the same source said. “If this thing was really successful and everyone else came back to the table, there was a period where you’d have exclusivity.”
But the Times and the Post couldn’t be swayed. Over the past several years, both publications have developed substantial digital subscription businesses that are now vital moneymakers, helping to offset the industry’s advertising collapse. Those businesses continue to grow, and the Times and the Post, put simply, want their own subscribers, not Apple’s subscribers—and they certainly don’t want Apple subscribers if Apple is going to keep a 50 percent cut of the revenues.
“We’ve been pretty deliberate about saying that the best place you can experience journalism is through a relationship with a news provider,” Meredith Kopit Levien, the Times’s chief operating officer, told me. “So far for us, that has meant a direct relationship with users. The more we have a relationship with users, the better we think our business will be, and the better the experience that we can provide to them.” Kris Coratti, a Post spokeswoman, said, “Our focus is on growing our own subscription base, so joining Apple News+ did not make sense for us at this point. Apple has been a very good partner—we will continue collaborating with them on other ongoing projects and expect to do many things with them in the future.”
With the Times and the Post off the table, it was all the more crucial for Apple to sign the Journal. That may have given Rupert Murdoch and Robert Thomson, who run the Journal’s parent company, News Corp., and William Lewis, the Journal’s publisher and C.E.O., some added leverage in their own Apple negotiations. “One of their superpowers is extracting favorable terms for themselves in exchange for going in on an announcement like this,” someone who used to work for them told me. “It’s impossible to imagine that the arrangement between Apple and The Wall Street Journal is not a sweet one for the Journal.”
On first inspection, it does look pretty sweet. The Journal was able to negotiate a deal in which it is technically giving away all of its content for $9.99 a month without really giving it all away for $9.99 a month. (Digital-only Journal subscriptions begin at $19.49 a month for the first year, after which the monthly fee goes up to $38.99.) For one thing, only a limited selection of general news and opinion pieces will be promoted on the Journal’s News+ channel, and those stories will be curated by Journal editors. Moreover, while the rest of the Journal’s content will be accessible on News+, that content has to be searched for, and the archive will only cover the most recent three days. As part of the News+ rollout, the Journal has said it plans to hire several dozen additional journalists. Two sources with direct knowledge of the deal told me Apple is not paying for those jobs. (The Journal and Apple declined to comment.)
Aside from the manner in which it was able to tailor its News+ presence, the Journal appears to run a lower risk of losing its own subscribers than the Times or the Post would. Many of its customers are corporate accounts and high net-worth individuals who subscribe primarily for the Journal’s smorgasbord of business and finance news, as opposed to the more general coverage the paper has expanded into in recent years, which will be the bedrock of its News+ offering.
Murdoch’s long-standing enthusiasm for Apple was likely a factor in the deal. Murdoch sunk millions of dollars into rushing out an iPad app in a matter of weeks so that the Journal could be a part of the iPad’s April 2010 debut, and he introduced an iPad “newspaper” onstage with Eddy Cue in a splashy event at the Guggenheim the following year. He just sold one of his companies (21st Century Fox) for $70 billion, and another (Sky) for $40 billion, and he’s always been a risk-taker anyway. “When the herd moves one way, he moves the other, and that’s always been what he’s done,” another source said. “When the media pundits say something is a terrible idea, he’s gonna be more inclined to want to do it, and he’s gotten more bets right than he’s gotten wrong.” Sources also pointed out that while Murdoch and Thomson have taken a hostile stance toward Facebook, Google, and Amazon, they have a cozy relationship with the Apple crew.
It’s still too early to say whether Apple News+ will prove to be a blessing or a curse for the media business. “It feels to me a bit like Spotify in the early days,” said the editor of a prominent digital publication who is watching News+ closely, “where there’s not much money for publishers, the usage is not enormous, but it could eventually become this major revenue source and maker of brands, and potentially even of individual writers. But I don’t think it has the scale yet to make most publishers real money, given the economics and the product itself.”
But if the scale proves to be as irresistible as Apple believes it will be—the company has more than a billion devices in circulation worldwide and eventually plans to roll out News+ globally—the holdouts may come to see things differently. “I do not rule out that there will be an opportunity with one or more platforms,” the Times’s Levien told me, “in which we say, ‘Oh, this is really good for our business and for getting journalism to play a bigger role in many more peoples lives.’ Thus far, we have not seen something that makes us say that.”
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