On March 25, as Apple announced its latest push into media, the Piano team was in Vail, Colorado, attending the annual Digiday Publishing Summit. In rooms filled with publishing executives, conversations naturally started buzzing around the launch of Apple News+. Whether they’d decided to jump in or stay out, all wondered if it made sense for their business. On the plus side, there were the “billions of phones” to which Apple promised to deliver their content. On the other hand, as Frederic Filloux put it in Monday Note, it could lead to “massive value destruction” for the magazine companies participating.
Of course, Piano got a lot of questions that week. So what’s our point of view?
The Value in Plus
There are three different approaches we recommend based on the maturity of your digital subscription business.
- If you haven’t launched a subscription business yet:
Apple News+ could be a good way to bring in some incremental revenue at low cost and test the paying news audience appetite for your brand and content.
- If you’ve already got a digital subscription business, but are still early days:
Our advice is to limit the content you post on Apple News+. That’s what many publishers are doing. The New Yorker, for example, is just publishing the articles from their weekly print magazine, not the full content from their website. And to the extent you can, use the available ad space to promote full subscriptions and newsletter signups.
- If you have a strong and growing digital subscription business with exclusive content:
There’s not a great reason to join. In fact, it may be bad for business. As the math below demonstrates, Apple News+ could carve into your existing subscription revenue — and seems unlikely to be a strong source of new direct subscribers.
But if you do decide to get in, how much money could you make? There are reportedly 90 million users for Apple News, and 200,000 of them signed up for Apple News+ in the first few days. So let’s say Apple News+ does as well as The New York Times and gets to 3 million active subscribers. That’s about $360 million in annual revenue. Chump change for Apple, but a nice revenue jump for publishers. Or is it?
Your Bite of the Apple
We know from Piano data that, across our client base, 15 percent of articles drive 80 percent of pageviews. It’s fair to assume that Apple News+ will perform the same way. And the experience of publishers in the free version of Apple News over the past few years is that the largest, best-known publishers get most of the exposure and traffic (early reports show them getting the most attention at Apple News+ too). Using that math, the top 45 publications (out of 300) will share half of $288 million, or on average $3 million per publisher. That’s pretty good money. What about the rest? Average revenue would be about $140,000 annually for most of the publications participating.
But let’s put those numbers into further perspective. In 2018, The New York Times ended the year with 3.3 million digital subscribers and $400 million in digital subscription revenue. That’s $121 per subscriber. The most ALL publishers on Apple News+ can make on a subscriber is half of $9.99 per month — or about $60 per year. On average, EACH publisher will make 20 cents per subscriber per year. If a publisher takes an outsized share of reading time (the rumored method for dividing revenue) that could jump to two dollars, or maybe even five dollars. So generously, it would take 24 subscribers on Apple News+ to replace one direct subscriber at The Times. It’s pretty clear why Mark Thompson at The Times decided to sit this one out.
Beyond the Math
Are there other reasons for a publisher to join Apple News+ besides revenue? What about building a relationship with a new audience? Apple hasn’t made that easy. They hold the credit card details, login information and email addresses of subscribers. They haven’t built any tools for publishers to easily upsell readers from Apple News+ into “all access” subscriptions on their own websites or in their iOS apps, or even to sign users up for email newsletters, a basic tactic of subscriber acquisition. Yes, Apple will allow publishers to use advertising inventory in their Apple articles to promote their own subscriptions, but that’s it.
Both The Times and The Washington Post said that one key reason they declined Apple’s offer is that they want to have a direct relationship with their readers. Apple News+ could eventually be a great platform for acquiring, engaging and converting readers but — at least for now — it’s not.
Want to draw from Piano’s benchmarking data to better optimize your subscription business? Read Piano’s new ebook, Making Every Offer Count: Turning Users Into Subscribers in a Modern Media Landscape now.
Michael Silberman, SVP Strategy, leads Piano’s Strategic Services team, helping clients develop reader revenue strategies and drive success and revenue on the Piano platform. He joined Piano in 2018 after 10 years building the digital media business at New York magazine, and earlier, as one of the top editors launching and growing MSNBC.com in the early days of the consumer Internet.