Media Companies Take a Big Gamble on Apple

Media Companies Take a Big Gamble on Apple

Executives have been burned by their previous dealings with big tech companies. But Apple’s promise of a billion devices worldwide was too good to pass up. Even for Rupert Murdoch.

By Edmund Lee April 2, 2019

Like many other media executives, Pamela Wasserstein was wary of tech giants and their attempts to go into business with content creators.

“There was great optimism around partnerships, and I think that optimism has largely cooled, and people are now more cautious,” said Ms. Wasserstein, the chief executive of New York Media, the publisher of New York magazine and web titles like The Cut and Vulture.

But like others in her position at publishers like Condé Nast, Dow Jones and Meredith, she put caution aside and joined Apple’s media initiative, the recently unveiled Apple News Plus app, which promises to blast out content across more than a billion devices worldwide.

The tech giant based the service on an app it acquired last year called Texture, which gave readers access to some 200 publications with a single subscription. The revamped and renamed version, introduced with much fanfare last week at the company’s headquarters in Cupertino, Calif., charges subscribers $9.99 a month ($12.99 in Canada) for content from more than 300 titles, including The New Yorker, Vanity Fair, Vogue, Time, The Atlantic and People, as well as The Los Angeles Times and The Wall Street Journal. (Also included: Airbnb Magazine, Birds & Blooms, Retro Gamer and Salt Water Sportsman, befitting the app’s conceit as an omnibus newsstand.)

Weighing the pros and cons, Ms. Wasserstein concluded that Apple News Plus would allow her publications to reach “a new audience in an environment that feels right for us.”

Going into business with a tech giant was a calculated risk. Like most publishers, New York Media had seen its revenue shrink in an internet environment where Google and Facebook scoop up advertising dollars and have great influence over what people read. (New York Media’s online sales have grown more recently.)

There’s a sense among Manhattan’s media ranks that any deal with Silicon Valley amounts to a fool’s bargain.

Now, by necessity, magazines, newspapers and websites have learned to be promiscuous tradesmen to stop relying on one revenue source. They have embraced new business lines like branded content, conferences and podcasts just to diversify and stay afloat.

Ms. Wasserstein was among the publishers at the Steve Jobs Theater when Apple unveiled the service. On stage, Tim Cook, the chief executive, contrasted Apple’s editorial approach to the “very different choice” other companies have made. It was a notable remark, given the criticism of Facebook and Google over their role in spreading misinformation.

Apple’s plan was something altogether different, Mr. Cook promised. “This is going to take Apple News to a whole new level,” he said. Cheers bounced around the room — half occupied by Apple employees — as glossy magazine covers skated across the giant screen at his back.

The marketing event seems to have accomplished its goal. More than 200,000 people subscribed to Apple News Plus in its first 48 hours — more than Texture had amassed at its peak, according to two people with knowledge of the figures who asked not to be named to discuss confidential information. (Texture’s subscribers have not been counted toward Apple’s subscribers.)

The New York Times and The Washington Post did not join the effort, despite intense lobbying from Apple. Mark Thompson, the chief executive of The Times, said the problem with the app, from his perspective, was how it “jumbled different news sources into these superficially attractive mixtures,” making it difficult for users to know which publication they’re consuming. A spokeswoman for The Post said that the paper’s “focus is on growing our own subscription base” and that it was not interested in offering its wares through another company.

Some executives who said yes to the plan seemed less than sanguine, but they declined to comment publicly for fear of upsetting Apple or violating the ironclad nondisclosure agreements the news companies had signed.

In addition to allowing their publications to be part of Apple’s big bundle, publishers have risked cannibalizing their own subscription efforts by signing on. At $9.99 a month, Apple News Plus is a bargain, especially for casual readers. The Journal, by contrast, charges a monthly fee of $39 for digital access. Online subscriptions to The New Yorker, Vanity Fair and Wired — all owned by Condé Nast — together cost more than $10 a month. The New Yorker by itself costs $7.50.

The day after the splashy announcement, The New Yorker found itself on the defensive after a Reuters headline blared: “Is it time to dump your New Yorker subscription?” In reply, Michael Luo, the editor of The New Yorker’s website, sounded off in a 13-part tweetstorm advising readers not to dump the magazine. Only a portion of its archive would be available on the Apple service, he wrote, and readers could miss out on certain articles by Ronan Farrow, Jane Mayer and Doreen St. Félix, not to mention the weekly crossword.

“The best way to read ALL that we do @newyorker every day and every week is to subscribe,” Mr. Luo tweeted.

Patrick Soon-Shiong, the owner and publisher of The Los Angeles Times, seemed unworried about tying the paper’s fortunes to Apple, saying in an email that the service would “encourage more people to pay for quality content.”

The Journal reported that, thanks to the deal with Apple, it would add 50 people to its newsroom. But the union that represents the paper’s employees noted the new job listings were open to contract workers.

“It would be the first time that we’d see a move toward an unprotected work force,” Tim Martell, the union’s executive director, said. “We don’t like the uncertainty.”

To abide by the union’s contract with The Journal, Mr. Martell added, contract workers in the newsroom would be allowed to work for a maximum of 12 months. That suggests the Journal sees these hires as a temporary assignment — a compromise approach — as it gauges the benefits and costs of the Apple partnership.

The majority of Journal stories will appear on the service, but with only a three-day archive. Content for niche groups, such as CFO Journal, which is aimed at the financial community, and CMO Today, geared toward advertising professionals, will not be included.

For Rupert Murdoch, the owner of The Journal since 2007, the partnership is a way for him to realize his long-held dream of turning the paper into something of interest to readers beyond Wall Street and corporate boardrooms.

The mogul was the driving force behind the Apple deal, according to two executives close to Mr. Murdoch. He wants The Journal to include more general interest, sports and lifestyle coverage, and the partnership with Apple gives the paper a concrete reason to move beyond its core readership.

Unswayed by sentiment, Mr. Murdoch, 88, recently sold off the bulk of his television and film properties as he refocused on the news business and reshaped his empire into an entity built to survive the final steps of the digital revolution. He was able to extract better terms from Apple than other publishers, the people close to him said, including the ability to exit on a time frame that would be more favorable to The Journal.

Mr. Murdoch has worked with Apple in the past. In 2011, when tablets were supposedly going to save journalism, he poured millions into an iPad publication, The Daily, with the help of Apple’s chief executive, Steven P. Jobs. The effort failed to make its mark and was shut down after less than two years.

Publications that originated at the now defunct Time Inc. — like Time, Sports Illustrated and Fortune — are also part of Apple News Plus. They were pushed into the arrangement as part of a deal struck by Meredith, the company that purchased them in 2017, according to two news executives familiar with the matter. Although Meredith sold Time and Fortune last year and is looking to move Sports Illustrated, the three publications appear to be locked in to Apple News Plus, at least for the time being. (Meredith and Apple declined to comment.)

The economics of Apple’s venture will vary from title to title. After the company takes half the subscription price, its partners will split the rest. How much each media company receives is based on the amount of time readers devote to its content. That model mimics Spotify and Apple Music, which pay record labels based on how often their tracks are streamed.

The visibility of individual articles will depend on Apple’s algorithm, which takes into account a user’s preference — you can “follow” a particular magazine or topic — as well as the judgments of Lauren Kern, the editor in chief of Apple News, and her team.

In contrast with Google and Facebook, Apple has promoted the human touch. The presence of Ms. Kern, a former editor at New York magazine, has to some degree assuaged publishers’ fears of algorithmic tyranny.

“Lauren being there gives me confidence, but it’s not that she knows who we are, but that she knows what great content is,” said Ms. Wasserstein, of New York Media.

Although Ms. Kern provides a link between the news media and Silicon Valley, Apple will also have to get used to the journalists now associated with its team. The New Yorker weighed in on the Cupertino event with a satirical story headlined “Tim Cook’s Big Apple Circus.”

Apple got another taste of what it has signed up for after it hosted a private party last week for its new partners at the company’s Lower Manhattan loft. In its coverage of the event, Vanity Fair, one of those partners, included a quote from an unnamed partygoer who summed up the mood of the room and, perhaps, the industry at large.

The quote became the story’s headline: “Are we at a party, or a wake?”

A version of this article appears in print on April 2, 2019 of the New York edition with the headline: Old Media Gambles on a Deal With Apple.


Popular posts from this blog

Report: World’s 1st remote brain surgery via 5G network performed in China

Visualizing The Power Of The World's Supercomputers

BMW traps alleged thief by remotely locking him in car