March 13, 2018 / 7:54 PM / 9 months ago

Breakingviews - Apple acquires goodwill of flag-waving publishers

The new iPhone 7 smartphone is displayed inside an Apple Inc. store in Los Angeles, California, U.S., September 16, 2016. REUTERS/Lucy Nicholson

NEW YORK (Reuters Breakingviews) - Apple is acquiring the goodwill of flag-waving magazine publishers for less than pocket change. The $925 billion iPhone maker is buying Texture, a digital subscription service for titles like Rolling Stone. The pixelated newsstand was intended as an antidote to Apple’s onerous terms. With the print industry suffering, though, buying it makes the tech giant look like a white knight.

Almost a decade ago, Apple was courting media firms as it prepared to launch the iPad. Yet publishers were wary. Top of mind was the music industry’s quick decline thanks to the astounding success of the iPod and iTunes. In response, magazine bosses wanted to keep access to vital subscriber data.

Hence Next Issue Media was formed by a group of magazine companies including Conde Nast and Hearst and in 2010 launched what has since been named Texture. The service is billed as the Netflix of magazines, allowing subscribers to tap around 200 titles such as Vanity Fair for one monthly fee.

The effort hasn’t noticeably boosted the fortunes of its owners, which are suffering under tremendous pressures. Advertisers are fleeing print, compounding the effects of cheap subscriptions. Moody’s figures ad revenue for U.S. magazines declined 62 percent to $7.4 billion in 2017 from $19.5 billion in 2007.

There’s a newer threat in town anyway: Facebook. Mark Zuckerberg’s social network, which is under intense scrutiny for amplifying fake news, has been siphoning off advertising revenue from traditional news outlets. Apple executive Eddy Cue said the deal signals a commitment “to quality journalism from trusted sources.”

Playing white knight has another advantage beyond mending fences. Services revenue is one of the fastest-growing business lines for the tech giant, rising 18 percent to $8.5 billion last quarter. Selling magazines, however cheaply, keeps those fees rolling in.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below