This is a shakedown
On the face of it, it’s a battle so unbalanced that any deal between the two could only go one way.
On one side, we have Apple, a company with enough cash reserves that it could perform terribly for decades and not have to cut costs. On the other, we have news publishing, an industry already beaten to within an inch of its life by rapid change, and desperate for new sources of revenue.
Given the imbalance here, and Apple’s shift to focusing on generating recurring revenue from its customers through services, it’s maybe no surprise that Apple is reportedly asking publishers for a 50/50 split
of revenue from its forthcoming subscription news product. Oh, and publishers won’t get any data about who reads their content, either.
In case you’re unfamiliar with such deals, that’s… rather greedy.
The traditional App Store split sees developers getting 70%, and Apple getting 30%. In the early days of the smartphone revolution, that seemed fine, but some developers these days grumble that Apple takes too much and perhaps it should rethink the split. Apple, which has a monopoly over distribution of iOS apps, has no motivation to do such a thing. But if it shifted to a 50/50 split with developers, there would be a riot (well, a lot of angry blog posts, and some developers pulling off the platform, anyway).
Apple’s negotiating position with publishers seems to be ‘you need us more than we need you, so we’re going to milk you for everything we can.’ It’s unlikely to work with many publishers – they might not be swimming in cash, but they do have some dignity… and a platform to shout about the injustice.
My guess is Apple will shift to something more like the traditional 70/30 split in the weeks before its reportedly planned services-focused event at the end of March. That said, I like this whimsical suggestion
from Alex Hern, the Guardian’s UK technology editor, too: “Apple should commit to a negative 50% margin. Top up journalistic revenues by spending some of its enormous cash pile.”