‘Greedy’ Apple’s historic pivot to news subscriptions

With iPhone sales flagging, Apple moves into subscription services in a big way with Apple News+.

Apple CEO Tim Cook introduces Apple News+ during a launch event at Apple headquarters in Cupertino, California. Picture: AFP

Today’s Apple event is historic, because it totally changes the direction of the company.

It’s been a long time coming, but with Apple phone sales flagging, the company is finally moving into lucrative subscription services in a big way. It’s the culmination of a process CEO Tim Cook began at least two years ago.

The problem for Apple is that it is entering as a fledgling player in some established markets, whereas with the iPod, iPhone and iPad, it initiated, defined and owned markets.

Some of what it offered today has been welcomed, but some will be steeped in controversy. There are risks ahead.

Apple News+ already has attracted criticism. Sure, you get access to more than 300 magazines thanks to Apple’s acquisition last year of the Texture digital magazine subscription service.

But there’s few major newspapers aboard: The Wall Street Journal, Los Angeles Times and Toronto Star seem the only big national ones.

That’s not surprising given that Apple wants a 50 per cent slice of subscriptions. This not only looks greedy, but to some, it is offensive.

Newspapers and their journalists put copious hours of work, sweat, and tears into their stories and for Apple to want 50pc of the take seems extraordinary, when their contribution to the editorial side of production is small.

Sure, Apple can use its big audience and platform to succeed with this, but it’s another example of a big tech company seeking easy profits in an area where it’s had no historical involvement and commitment.

Tim Cook unveils Apple’s premium subscription tier to its News app. Picture: AFP

Apple is not the only one — think Uber Eats where restaurants are reported claiming it leeches away their profits. Being an online “middleman” and getting a big take by connecting buyers and sellers is enormous business.

There are other questions, such as whether Apple News+ will undercut regular newspaper

subscriptions.

There are two things to say about this. First, going with Apple News+ offers newspapers a much expanded global audience of readers which may increase readership.

Secondly: editorial content and control. Apple will be curating content it takes from each publication and the mix could be different. Some stories are already free, and some are behind a paywall. Publications may only provide some content to Apple News+. There’s already a report that general news will get more coverage than some specialist news.

News Corp Australia, owner of The Australian, is watching developments before deciding whether to participate.

Apple’s new credit card Apple Card is another interesting development. For years, Apple has been trying to get Australian banks aboard Apple Pay. Again, resistance has been mainly about the big fees Apple allegedly wants to charge financial institutions.

By striking a deal with Goldman Sachs and Mastercard, Apple has largely circumvented this inconvenience with a universal credit card you apply for using an app. It doesn’t matter who you bank with.

Daily cash rewards instead of loyalty card points will attract many users, as will Apple’s promise not to share transaction data or retail sales information with other institutions. This promise isn’t necessarily watertight, because some retailers have in place a deal to share their customers transactions with the likes of Google. Apple needs to say whether this will continue to be the case.

Apple’s promise of no late fees, annual fees, international fees, overdue fees, and no penalty interest fees may sound great to consumers, but banks will be grinding their teeth at Apple painting itself as generous, given its apparent history of wanting to gouge them. Someone must pay for Apple to reap a profit from Apple Card.

Apple TV+ and its original content is good news for consumers and the fact it is shelling out to fund some interesting looking series to the tune of $US1bn is good news. Decent productions take a lot of money.

Having the likes of Spielberg, Abrams, Witherspoon, Aniston and Oprah Winfrey aboard will attract big audiences. The geeks among us will probably love the science fiction offerings, the spiritual will probably be attracted to Oprah, given her pensive spiel at today’s event.

Subscribers will have to decide whether to go Apple TV+, stick with Netflix, subscribe to both or go somewhere else. That battle will probably be decided mainly by the strength of bespoke shows.