You are here

Apple's new paid subscription news service to feature WSJ

But sources say NYT, WP opting out due to deal terms like extent of content access, revenue cut

San Francisco

THE Wall Street Journal (WSJ) plans to join a new paid subscription news service run by Apple, according to two people familiar with the plans, as other publishers chafe at the terms that the Silicon Valley company is demanding of its partners.

Other major publishers, including The New York Times and The Washington Post, have opted out of joining the subscription service, said the people, who requested anonymity because they were not authorised to speak publicly about the plans.

Apple and WSJ plan to announce the deal at a media event at Apple's headquarters in Cupertino, California on Monday. The event is intended to draw attention to the company's bet on news and entertainment, including a streaming service that will put Apple in direct competition with Netflix, Amazon and HBO.

sentifi.com

Market voices on:

The service, described by some as a "Netflix for news", will offer access to a new paid tier of the Apple News app. Through that tier, readers will be able to consume articles from hundreds of participating magazines and news outlets. The app's free tier will still let people read a smattering of select articles from a wide variety of publishers.

To persuade publishers to join the paid service, Apple executives have said the scale of Apple News, which is installed on every iPhone sold to consumers, could introduce millions of new customers to their content.

But the most recent terms that Apple is offering to publishers ask for a cut of roughly half of the subscription revenue involved in the service, the people said. Apple has also asked publishers to give unlimited access to all their content, which has caused concern among potential partners, they added. A subscription is expected to cost US$10 a month.

The deal's terms have caused some publishers to recoil, as a 50 per cent cut is higher than the 30 per cent that Apple usually takes from apps and subscriptions sold through its App Store. Publishers are also concerned that they won't have access to important data about the consumers - credit cards, email addresses and other subscriber information - as part of the deal.

Representatives from Apple, The Times, WSJ and The Washington Post declined to comment. Some deal terms were previously reported by Recode and WSJ.

As sales of Apple's marquee product, the iPhone, start to slow, the company is expanding into different software-based businesses, which typically have higher profit margins and do not rely on supply chains and manufacturing.

Publishers have also been seeking to expand beyond their core subscriber bases, finding new audiences across non-traditional platforms and striking deals with tech companies. Apple has teamed up with news organisations on its Apple News product for years, offering select content to consumers for free.

But publishers have grown wary of some partnerships in recent years, as past relationships with companies like Facebook, Medium and others have soured. In the past, Facebook has inked deals with publishers to fund or support new initiatives, only to quickly change plans and yank support from one year to the next. NYTIMES