Earlier last week, Buzzfeed and the WSJ reported that Apple will debut a new subscription service within its Apple News product on March 25th. Apple aims to create a “Netflix for news” service that comes at a steep price for publishers – Apple is charging a $10 monthly subscription fee and taking 50% of the revenue. The other 50% will be distributed among participating publishers based on story views.
Recode does a great job of breaking down Apple’s logic for their new subscription service. Apple’s track record does make parts of the offer compelling. Apple would bring publishers expanded reach and new audiences at an incredible scale. A comparable example would be Apple Music. As a result of Apple’s promotional muscle and the application coming preloaded on Apple iPhones, they now have more than 50 million subscribers.
Some publishers are excited at the prospect of the reach and scale that Apple could generate. Others argue that Apple taking half of the subscription revenue is too high a cost considering Apple typically takes 15 to 30% of the revenue it generates when someone buys something from the App Store. Scorned from previous overtures from Big Tech (namely Facebook), the new “deal” was met with a lukewarm reaction from publishers. Then, Apple included one more cost to publishers:
Apple would own audience data and insights, as well as transaction data.
That little detail turns a lousy offer into a backbreaking one.
There is no amount of money worth giving up the direct relationship with readers and the data that comes with it. If we can learn anything from the past three years of Facebook algorithm changes, mass layoffs, or brands being sold off for parts, it is that media companies need control of their most important resource – first-party data.
Today’s disruptors and leading brands like Uber, Netflix, and Amazon are such powerful forces because they leverage first-party data to put individual customers at the center of everything they do. It’s part of their core infrastructure allowing full autonomy, speed, and control over privacy. Collecting and using first-party data across all systems allows them to create an entirely bespoke customer data set. They build sticky experiences that no other brand can replicate because it is based on that unique data set and constant collection and optimization. Media brands naturally have a lot of customer interaction and therefore are data-rich, making them uniquely positioned to take advantage of this first-party data opportunity.
Our work with leading media companies like Hearst, National Geographic, and The Atlantic has shown us that leveraging first-party data to build a direct relationship with readers is the path forward for publishers. That path starts with recognizing the value of their first-party data and refusing to give up a direct relationship with readers. If you ask us, this is one apple that publishers should avoid taking a bite out of.