Apple to Launch Paid News Service But Wants Half the Revenue

This isn’t too much of a surprise to anyone who has followed the Apple business model. They didn’t become a trillion-dollar company accidentally. They’re reportedly launching a paid news service next month, but this late in the game there is still a major problem, as they want to split the revenue with publishers who would be expected to divide up that other half and share it with each other.

Starting with iOS 9, Apple replaced “Newsstand” with “Apple News,” a news aggregator app that offers news articles from multiple big-name newspapers and online news sites. This year they are working on offering a paid subscription model of the service and are rumored to be launching it next month.

This isn’t an altogether new idea for Apple. Previously, they had their iTunes service that sold MP3s, and a few years ago they launched “Apple Music,” a subscription-based streaming service that has now grown as big as Spotify. With growth like that, it’s easy to see why they want to try something similar with news.

Just like with Apple Music, the company is struggling to keep all the money. They generously offer three months of the service as a trial period before charging the subscription fee. However, they didn’t want to pay artists when their songs were streamed during that trial period. Artists balked, namely Taylor Swift, and she convinced them to pay artists in that time period.

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Now Apple is facing something similar with their planned news service that has been dubbed “Netflix for news.” Sources report that they are planning a $10 monthly service for unlimited access to news from participating publishers. They plan to keep half that subscription fee, with the rest going “into a pool that would be divided among publishers according to the amount of time users spend engaged with their articles.”

Major outlets such as The New York Times and Washington Post are protesting these terms and not just because of the expectation they will share revenue, but also because they could be required to sign on for at least a year.

It would seem that an additional problem is that it could mean current subscribers to newspapers will drop their multiple subscriptions to just pay the one fee to Apple, meaning that not only would they get less per new subscription, they could be losing existing subscriptions.

For instance, I pay $8 for monthly online access to The New York Times. But if I can access those articles in full through Apple, I’ll drop the Times and just pay the $10 to Apple and will also drop my subscription to Washington Post and a few other news services. So the Times will be missing my $8 and will have to fight for a share of $5 from Apple.

But this is at the eleventh hour, as Apple is reportedly due to launch this service on March 25, which could be the same day they do their spring release, and they’re rumored to be releasing new iPads, including a new iPad Mini. They’ll want to have this new service to announce as well, but they need to get the newspapers to agree to their terms and sign on the dotted line, otherwise their service will be worth nothing without the major papers.

Is this service something you would be willing to subscribe to? Or would you rather stick with individual newspaper services? Let us know your thoughts in the comments below.

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