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Publishers are reportedly upset at Apple over the News+ app, and with good reason
In March of last year, Apple bought Texture, the company whose app was called "the Netflix of magazines." For $9.99 a month, users could read from a library of 200 magazines. The next month, Apple's plans had already leaked. There was talk that the company would merge Texture with its News app to create a subscription service. And this past March, with a big fanfare, Apple introduced its News+ subscription service. For $9.99 a month (that seems to be a favored price point for many subscription services), subscribers can browse online through over 300 publications.
While the free Apple News app remains, and is number one in its class with over 5 billion articles perused each month, the News+ service gives iOS users access to premium sites some of which they would normally have to pay much more to read. This includes papers like The Wall Street Journal and the Los Angeles Times, although only some of the Journal's content is available. Sounds good, but according to Business Insiders (via 9to5Mac), publishers are not exactly enthralled by the results they are seeing from News+. Apple had apparently showed projections to publishers showing that they would receive 10 times the revenue during the first year of Apple News+ compared to what they were getting with Texture; this hasn't proved to be the case. One magazine publisher says that they are receiving revenue that is "one-twentieth of what they said."
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Apple News+ is not generating the amount of revenue that Apple projected for publishers
Publishers are also reportedly not happy with the design of the app. Because publishers are paid based on the amount of time that readers spend reading a particular publication, they want Apple to come up with a way to encourage subscribers to read more content from their publications. And surprisingly, despite Apple's history of taking great pride in the hardware and software it puts out, some of the publishers are calling the Apple News+ app "unfinished," with one saying "I don’t think they’re putting their full effort behind it."
Apple hopes to hit $50 billion in Services revenue by next year
The report says that Apple has been telling publishers that it is working on making the app more intuitive for subscribers while trying to fix the issues that they are bringing up. Eddy Cue, who has the title of senior vice president of Internet Software and Services at Apple, says that there are hundreds of people working to improve the experience for both publishers and users.
Apple News+ is one of a number of subscription offerings that Apple is pushing to its active users. The company actually made a good business decision a few years ago to double the revenue generated by its Services unit from $25 billion in 2016 to $50 billion by 2020. The idea is that if iPhone sales are going to slow (which they have since peaking in 2015), the large number of active users can bring in some bucks by paying monthly for subscriptions. The Services unit is Apple's second largest division and is it's most profitable. It includes News+, Apple TV+, Apple Arcade (starting this fall), Apple Music, iTunes, AppleCare, App Store,. iCloud and Apple Pay. For the company's fiscal second quarter (which included January through March), it took in $11.45 billion in services revenue as it hones in on the $50 billion target it hopes to achieve next year.
Right now, Apple News+ is available in the U.S. and Canada only and is expected to launch in the U.K. later this year. This whole idea of paying for news might be a foreign one for many internet users. After all, there are still some large news services that do not hide behind a paywall like the Associated Press and Reuters to name a pair. But Apple is hoping that there are enough iOS users looking for a more analytical take on events that they will fork over the monthly fee to view it on Apple News+.
