Apple News+ could lead to a massive value destruction for the magazine industry | Monday Note

A perhaps precarious publisher proposition

"Then, the pro-rata kiss of death sets in. If Apple chooses to distribute the revenue based on reading time, an expensive publication such as the New Yorker ($100 a year) will lose 88 percent of its revenue, even if the reader of this hypothetical bundle allocates 20 percent of their time on it. By comparison, Wired, which can afford to be ultra cheap because it carries a much heavier advertising load, will lose only 12 percent of its revenue assuming a reader spends 15 percent of their time on it. The pricier the rate card, the higher the loss.
Regardless of the distribution, it is a miserable zero-sum game — or rather a $59 a year lousy game — for the publishers.
One justification to join Apple News+ is the often-heard rationale “It is just another channel, publishers should take advantage of it”. It could make sense if the publisher were able to retain the relationship with the customer. For obvious reasons, that won’t be the case in the Apple News+ ecosystem. Apple will own the relationship. Publishers who will lose three-quarters of their revenue by joining Apple News+, won’t be able to develop or upsell anything directly to their customers, based on their profile, propensity to pay, etc. As for “the other channel,” it is a blind one for news brands that won’t even be able to get incremental revenue for their current business."

Apple News+ could lead to a massive value destruction for the magazine industry | Monday Note