Apple News+ could lead to a massive value destruction for the magazine industry

“The usual narrative to defend AppleNews+ [sic] is that the huge installed base of a billion iPhone users worldwide will warrant a revenue boost for the publications hosted on the platform,” Frederic Filloux writes for Monday Note. “To assess the impact of a fully deployed AppleNews+ I did the following calculation.”

“In the United States, the magazine industry generates annual revenue of $27B, a loss of more than 40 percent in ten years,” Filloux writes. “Divided by 225 million readers of magazines (according to the trade association), the Average Revenue per User (ARPU) amounts to $120 per reader and per year, all sources included. The revenue promised by Apple News+ is $9.9 a month => $119 a year. Minus Apple’s 50 percent cut, it gives a net income per reader of $59. By joining Apple News+, the US magazine industry will lose 50 percent of its revenue per reader.”

Apple News+
Apple News+

 
“The real uncertainty here is the ability of Apple to nearly double the number of people paying for a magazine in the United States where most subscriptions are already dirt cheap (only 13 percent of the magazines’ circulation revenue come from digital),” Filloux writes.

Read more in the full article here.

MacDailyNews Take: Could, not will. Who’s to say, at this early date, what could happen? Apple could triple or quadruple the number of people paying for a magazine in the United States or more!

An interesting bit of perspective here: In the United States, the magazine industry generates annual revenue of $27 billion. Last quarter, Apple generated quarterly revenue of $84.3 billion. Yes, in the last reported 90-odd day period, Apple posted more than 3X the entire U.S. magazine industry’s yearly revenue!

SEE ALSO:
Texture to shut down May 28th; Android users to lose access (unless they upgrade to an Apple device) – March 29, 2019
Apple News+ hands-on: Is it worth $9.99 per month? – March 26, 2019
Apple launches Apple News+ – March 25, 2019

11 Comments

  1. I don’t think it will at all, simply because the very limited reach of the service that will only be offered to a number of countries that can be counted on one hand.

    The magazine industry globally (which is also Apple’s potential market reach) is a cacophony of languages, topics and genres Apple never will be remotely able to fold into one offering.

    Given Apple’s current CA PC and SJW leaning, they additionally limit their own market potential.

  2. Can you click on an ad in an AppleNews+ [sic] magazine and go to their site? That might help the advertisers. AppleNews+[sic]. What a name. That’s kinda like PRODUCT [RED]. 🙂

  3. What is left unsaid is the industry generates $27 billion in revenue, but what is the cost of acquiring that revenue? If Apple can significantly reduce the customer acquisition cost, then even less revenue can be greatly beneficial.

    1. You’re right who knows. After experiencing the magazine in Apple News+ they might actually be interested in getting the physical subscription. Apple News+ may end up being simply a showroom for some titles.

    2. OTOH, let’s consider the positive impact on the environment of a major breakthrough of digital newspaper/magazine subscriptions. No more piles of newspapers/magazines that eventually will produce CO2 as they are decomposing or are incinerated.

  4. Well it’s not like the current trend is exactly a winner is it, its that awkward choice whereby a certain slow death is replaced by either success through change or a quicker death. That’s how most mature industries decline eventually when faced with new realities and become scared to risk change and just consolidate on present structures. I never relish their choice when for a long time you can leave it to the next guy at the top to take that risk… until you find there’s no further cost squeezing room and its too late to make the change at all.

  5. What about the fact that they won’t have to print and ship magazines anymore? And also they’re get $59 from me now, they were getting nothing before.

  6. “Apple could triple or quadruple the number of people paying for a magazine in the United States or more!”

    I haven’t had a magazine subscription for decades. But at this price and with the ease of use, I’ll be signing up for sure.

  7. I used to travel monthly for work. I always bought a couple of computer magazines each half of the trip. They once told the story of what’s to come in the industry and how to use it. In their last 2-3+ years of existence, there was very little content that wasn’t already old news. I still bought them because in those days offline reading of articles and the airlines’ policies about turning off devices made a paper magazine a much more reliable medium for an airplane. I still wish they were available in print. I have yet to enjoy reading an entire magazine cover to cover on any digital device. I’m not sure why, but think it is due to the distractions online. I read more now, but get less read, it seems. So I don’t see me paying for a digital anything that represents something else I have to do on a computer. I’m not sure why I would consider paying for digital content when there is already more free digital content than I could ever consume. And enough with monthly or even yearly subscription fees. Enough!

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