May 21, 2024

Can Pubs Really Depend on Apple News?

I just returned from Omeda’s OX7 and am even more fired up about the upcoming AMO Summit. We’ve already got commitments on half of the sponsorships, so if you want to sponsor, reply and let me know. Tickets are very much on sale, so pick up yours today.

This is a last-chance reminder that I am hosting a webinar today at 1PM ET, sponsored by BlueConic. I’ll talk with Jeremy Feldman, Director of Digital Audience at Anchorage Daily News (ADN), Alaska’s largest news site and paper.

We’re going to dig into the tactics ADN has used to grow its subscriber revenue and learn how ADN leveraged its CDP to:

  • Boost conversions with promotional offers and personalized messaging
  • Retain subscribers through timely notifications and win-back surveys
  • Save time by integrating with their ESP and other tools

We’ll also discuss how ADN plans to use its CDP for future innovations, such as ad customization and content recommendations. 

Sign up for the webinar today.

Is Apple News a safe bet?

While so much of our attention has been on how much traffic Google and Meta are sending to publishers, another source has become a major player: Apple News. As Semafor suggests in an excellent article, some publishers consider it a viable lifeline.

But should they? According to Semafor:

The free version of Apple News is one of the biggest news platforms in the world. It’s the most widely used news application in the United States, the U.K., Canada, and Australia, and boasted over 125 million monthly users in 2020. The News+ subscription launched in 2019 after the company acquired the startup Texture, which had promised a service like a “Netflix of magazines.”

Apple News+ charges users $12.99 a month for a bundled subscription to articles from premium magazines and newspapers…

The company licenses articles from behind publishers’ paywalls, and pays them monthly based partially on time audiences spend on each piece. Publishers also can sell advertising on their content in Apple News, as well as distribute product recommendation and reviews, keeping 100% of any affiliate link revenue they generate as a result.

The theory behind this Netflix of magazines is that users don’t want to carry many subscriptions, so by bundling all content, more publishers can theoretically benefit from the upside. And for many publications, it’s working. Semafor reports that:

  • The Daily Beast expects to generate between $3 and 4 million, more than its standalone subscription program.
  • TIME generates “7-figures of revenue” + got 5 million unique visitors from Apple News last month.
  • Those traffic numbers are similar for various Condé Nast publications.

This is very real money and growth. And, in some cases, it makes sense to operate here, especially when driving the kind of traffic TIME is seeing. However, growing overly dependent on Apple could be dangerous for several reasons.

First and foremost, the audience is not yours; it’s Apple’s. Whenever someone opens the app and subscribes to Apple News+, Apple gets data on who that user is. You are not. Understanding who your readers are is fundamental to building an audience-first company. There are obviously ways around this, including promoting newsletters within the body of the article. But at the end of the day, Apple controls all of that information.

Second, the economics could weaken over time. For $12.99, a reader gets unlimited content. Apple gets $6.50 in revenue (it’s been reported that Apple takes 50% of the revenue). That leaves $6.50 for every other publisher in the network. As more publishers join, a single publisher’s content may be read less, resulting in less revenue per user. But Apple still gets its 50%.

It’s possible that this won’t happen anytime soon because Apple continues to add new users faster than it’s adding new publishers. Perhaps the revenue will continue to rise. Ultimately, we have to be confident that the pie will grow larger and faster than the number of publishers trying to grab a piece.

Third, what happens if Apple gets bored of this? Every other platform has inevitably become frustrated with the news business. Brands investing resources to create content specifically for Apple News could find themselves holding the bag if Apple decides to eliminate the program. Since we don’t know how well the program is doing, today’s money could cease to exist tomorrow.

I’m unsure if this third one is realistic, though, especially if we dig into Apple’s financials more specifically. According to a Forrester article in November 2023:

Apple reported $298 billion of product sales and $85 billion of services sales. Products constituted 78% of total sales, while services accounted for the remaining 22%. Apple experienced a 6% YoY decline in product sales, but services sales grew by 9% YoY. The gross margin for products stood at 37%, while services boasted a higher gross margin of 71%.

A company whose growth is slowing inevitably focuses on maximizing profit margin. And what’s better than a risk-free license of publisher’s content where Apple gets to keep 50% of the revenue generated on said content? We take all the investment risks; Apple reaps half the benefits.

And let’s not forget that Apple has all of the leverage in this situation. What happens when it decides to take 55% instead of 50%? Maybe some publishers balk, but when you’ve grown dependent on that revenue and built your business around it, will you walk? Or will it be bluster? Amazon did this same thing with its affiliate program. In April 2020, Amazon cut commissions for furniture and home improvement products from 8% to 3% and grocery products from 5% to 1%. That hurt partners.

My ultimate worry is publishers getting addicted to Apple, as they did with every other traffic source. The end goal should always be to have a direct relationship with the audience. Getting complacent because of short-term wins is how the long-term becomes very painful. This means publishers should view this as part of their traffic diet. We’ve seen what happens when any one source becomes your only lifeblood.

So, what should publishers do?

For publishers worried about Apple News+ cannibalizing their subscription business but can’t get over missing the potential revenue upside, I would create a new tier of subscribers on the owned and operated. You’d want to introduce additional benefits—perhaps quarterly calls or members-only virtual events—that only people who subscribe directly to you can access.

This may violate Apple’s terms and conditions—I can’t find them for the life of me—but I’m not clear why it would. Apple doesn’t share user data, so how could you promote these things to those users?

The outcome here would be Apple News+ acting as marketing for your brand. Those who read only a few articles on Apple News+ would probably never become paying subscribers anyway, so it’s free money. However, for those that come back time and again, the additional benefits from an O&O subscription could see those users moving from Apple News+ to your site directly. Again, this is potentially against their terms and conditions.

However, if you’re a b2b publisher, I would avoid Apple News+ entirely. Your direct relationship with your audience is worth far more than even if you receive the entire $6.50 from Apple.

AMO PRO: M&A Buyers and Sellers Still Don’t See Eye to Eye on Price

It’s becoming an evergreen topic, but a big divide remains between what buyers are willing to pay and what sellers hope to get in a sale. AMO spoke with four banks about the state of M&A, and they all shared thoughts on what’s going on. As one banker said, “Demand outstripped supply over the last 12-18 months, and so competition increased. This has driven up valuations for those high-quality businesses, but middle-of-the-road assets simply didn’t trade. Thus, seller expectations have risen.”

But those rising seller expectations are a mistake. Unless the asset is top-class, no one wants to buy it. And while everyone thinks their business is remarkable, the publications may not be worth their time or money in a buyer’s eyes.

Read the whole piece here.

AMO PRO: Weak Signals of Success: The Lesser-Known Metrics That Determine an Article’s Worth

Not every article you publish results in an immediate subscriber. And yet, every article might contribute to the growth of the business. In this piece, Chris Sutcliffe explores some weak signals that help judge whether an article is valuable for the company.

Ultimately, you are trying to determine the road a user takes to become a subscriber. Any one piece may not do it, but over time, that fly-by-night user could become a paid subscriber.

Read the whole piece here.

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