Though Apple Inc. (NASDAQ:AAPL) has been consistent in the consumer electronics market, the Cupertino giant hasn’t lost its focus in the service division. To strengthen its service arm further, Apple is planning to launch a news subscription service within a year. Last month, Apple acquired digital magazine app Texture, which offers over 200 magazines for a subscription cost of $9.99 a month. Bloomberg reports that Apple will integrate Texture into Apple News and create its own premium news service.
Apple denied commenting on the report as the announcement has not been made public yet. The company reduced about 20 people from Texture soon after the acquisition. Available magazine in Texture includes Rolling Stone, People, National Geographic, Vogue, Wired, GQ, Maxim, Men’s Health, Entertainment Weekly, and a lot more.
“We are committed to quality journalism from trusted sources and allowing magazines to keep producing beautifully designed and engaging stories for users,” said Apple’s services chief Eddy Cue, on Apple acquiring Texture.
After Google’s much-hyped News Initiative, Apple now appears to be targeting a subscription offering for multiple magazines, quite similar to company’s music streaming service. That’s right, the service would be essentially like Apple Music, but for news and magazines.
App Store downloads, iCloud storage, iTunes music, movies and TV show purchases, Apple Pay are some of the important contributors to Apple’s growing services division. An upgraded Apple News app with subscription offering will be helpful in generating more revenue from online content and services, and a percentage of the subscription revenue will go to the publishers. Looks like a win-win for both parties.
It’s still unclear how much Apple will be willing to share with the publishers. Apple currently takes 15% revenue cut from app subscriptions in the iOS App Store and it takes a 30% cut for regular app sales.
Apple did try a similar approach before. Apple used to have an app called Newsstand, which offered digital versions of newspapers and magazines. Later it was replaced by Apple News which started in 2015.
Apple News Service: A Netflix of Online Magazine
A simplified subscription service covering multiple channels could spur Apple News usage and yield more revenue, similar to Apple Music which provides unlimited streaming of over 45 million songs for $9.99 a month. Apple’s streaming service got a broader push after it acquired Beats Music and Beats audio devices business in 2014 for $3 billion.
At the time when declining advertising revenue has emerged as the biggest challenge for news publication, most of them have started taking a dive into the paid subscription-based model. But this has led to a bigger problem for readers who don’t want to get restricted to one such publication for their daily consumption of valuable information. Considering every publication has got something interesting and valuable for consumers, there is a need for a consolidated platform that could offer best of the content on regular basis – something that Netflix has done with digital content producers. Looks, Apple has taken a cue from there and gearing to solve one of the biggest problems of the near future.
Besides, Apple needs such leads to thrive in its services division. Sales from the services division grew 23% to $30 billion in company’s fiscal 2017. Apple has said, in a recent earnings call, that it had a total of 240 million paid subscriptions, with 58% YoY growth. Also, Apple has estimated to target roughly $50 billion in service revenue by 2021.
Tech giants like Google and Apple are gearing up to in the subscription-based services. The online publishers and the companies are being mutually benefited but what about the user? That totally relies on the appetite for paying for quality content. The above companies have just found a better way to squeeze money from our pockets. There is just one upside for the user – he gets all the subscribed content in one place which will add up to his indolence – is that what these companies want?