Apple's new subscription news service is a bad deal for publishers, says journalism prof

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When Apple CEO Tim Cook announced the company's new subscription news service on Monday, he painted himself as a friend to the news industry — but journalist Aron Pilhofer isn't buying it. 

Apple News Plus, a new $10-a-month subscription service, will offer access to more than 300 magazines and a handful of newspapers. CBC has been on the Apple News app since November 2017, but is not part of the new subscription service.

Apple has not confirmed what cut of the revenue it will take from News Plus, but several media outlets report it will be a 50-50 split between the tech giant and publishers. 

Pilhofer, a Temple University journalism professor who has worked for The Guardian and the New York Times, spoke to As It Happens guest host Megan Williams about why she thinks Apple News Plus is a bad deal for publishers. Here is part of their conversation.

How is Apple News Plus different from, say, what Facebook or Google already offer? 

In the case of Google, for example, it's a search product, mainly. So the page still is, more or less, the publisher's. The publisher can create fairly customized experience. And if the publisher has a subscription product, or other ways that they want to interact with a reader, say, signing you up for a newsletter or something like that, the publisher can do that.

The same is also true, for the most part, with Facebook. And that's kind of a key difference.

With News Plus, Apple controls the relationship with the customer. The customer is a subscriber to News Plus, essentially to Apple, and Apple then gives publishers a cut. 

Obviously, for subscribers, you are getting a huge range of content. But what are publishers getting out of it?

Well, money, for one, if Apple is to be believed.

So the way this works, Apple takes 50 per cent of the revenue and publishers divvy up the rest. Over time, that pool of money will grow, and publishers will get paid potentially quite a lot, if you believe them.

But some big name media companies decided not to take part in it, like the New York Times and The Washington Post. Why do you think that was?

Both The Post and The Times have been aggressively moving to their own subscription products. The New York Times, for example, launched the paywall, almost, I think, nine or 10 years ago now, and has about three million all-digital subscribers at this point.

Why they didn't want to go into News Plus? Because I think they see News Plus for, in their case, what it is, which is a direct competitor.

Why would you ever pay for a fairly pricey New York Times subscription if you could get all that content for $10 a month through Apple?

So is this going to be more appealing to sites that don't have a paywall?

Yeah, absolutely. And so Vox, for example, has decided to go in. It's very big. It's an all-digital publisher. But they're not primarily, or even remotely, a subscription driven business. They're all about reach and advertising.

Apple, of course, is a business offering a huge potential audience, but you've come out against their offering a 50 per cent share of the revenue. Why is that? 

Apple ... has taken a cut of revenue that apps charge. Through the App Store, it's 30 per cent. If it's a subscription-based product, it's 30 per cent to begin with and then 15 per cent, after a year.

In the case of News Plus, Apple's taking 50 per cent of the revenue, which is quite a lot. I think it's actually way more than Apple should take and I think it's a little bit questionable given what's going on in journalism today.

We all know the business models of local news, in particular, are crumbling. And it's not just in the U.S. It's around the world.

So, for Apple to come out and say we care about journalism, but we're launching this new product and we're taking 50 per cent of the revenue — a little bit tone deaf, in my opinion.

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What would you like to have seen the Apple CEO offer, instead of what [Cook] offered? 

At a minimum, I would have liked to see revenue share agreements that are comparable with what publishers would already get through the App Store. Not 50 per cent. Closer to 30 per cent or 15 per cent. I mean that, to me, would have been a baseline.

They could have taken their cut and given it to the Knight Foundation [non-profit for journalism and the arts] or set up a foundation to support journalism, or something like that.

This is a drop in the bucket for them in terms of revenue. And I think that was just a missed opportunity for them.

Written by Sheena Goodyear and John McGill. Produced by Kate Swoger.Q&A has been edited for length and clarity.