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.
Comments
Post a Comment