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Why a news bundle will never save the media industry

Back in 2020, The New York Times made headlines when it pulled its content from the Apple News bundle. By that point, Apple had been running its $10-a-month news subscription service for about a year, and the NYT’s pullout was an early indication that Apple News wasn’t producing significant returns for publishers. 

And then a few weeks ago we learned that the Grey Lady is wading back into the Apple News ecosystem — sort of. Press Gazette reported that, while most NYT content still remains off-limits, The Athletic’s sports content is being introduced into the bundle:

Asked what prompted The Athletic to partner with Apple News, the sports outlet’s publisher David Perpich told Press Gazette he could not speak to decisions made before the acquisition.

But he said that at some point communications between himself and Cue at Apple “just gained momentum and [we] realised that, at least on our end… Apple News provided a unique platform to reach many more people than we otherwise could, and so that’s why we’re excited to do this”.

It's been years since we've had any meaningful updates on how many paid subscribers Apple News+ has or how much revenue it's driving to participating publishers. The Press Gazette article claims the Apple News app has 13.5 million monthly free users in the UK. My guess is that Apple News+ hasn't served as any sort of "game changer" for the news industry, or otherwise we'd hear publishers talking about it more often. Anecdotal reports in outlets like Digiday suggest that the revenue share has been unremarkable.

One recurring claim I keep seeing within media industry circles is that there’s robust demand for some sort of news subscription bundle. According to this theory, a moderately-priced bundle — comprising most of the national and local news outlets across the Western world — would provide such tremendous value that it would overcome subscription fatigue and, in aggregate, produce far more revenue than publishers could otherwise generate through their own subscription offerings.

But if there’s so much pent-up demand for such a bundle, then why hasn’t Apple News+ taken off? After all, it licenses content from many of the world’s largest publishers. It also comes pre-installed on every Apple device. Right now, it’s about the closest thing we have to a comprehensive, mainstream bundle. And yet it hasn’t put any meaningful dent into the decline of traditional media. 

So what gives? I think there are two main factors at play that would keep any news bundle from receiving massive adoption.

The first is that none of the individual publishers within the bundle are incentivized to promote the bundle. Not only can they generate more revenue per customer if they drive readers to their own subscription offerings, but they also get to own that relationship. That places the entire burden of customer acquisition on the news bundling platform, and it’s competing with its own publishing partners for customers. 

Secondly, the content on Apple News lives within a walled garden, which means it has limited utility and doesn’t spread outside of the app. For instance, if I read a Wall Street Journal article on Apple News and then go to share it on social media, the link directs my followers to the WSJ’s website — at least in cases in which they’re clicking from a non-iOS device. Without organic sharing, a news bundle has to rely on expensive paid acquisition in order to grow.

Just look at the struggles of the cable TV bundle as an example of why this model doesn’t work very well. Back when cable was the only viable distribution system, TV networks were incentivized to play along and embrace the bundle. But now that they each operate their own streaming platforms, they’re incentivized to hoard content and promote their own services. This has led to a sharp decline in cable subscribers, a trend that is projected to accelerate over the next several years.

I get it: news subscriptions get expensive very quickly, and it can be incredibly frustrating to hit yet another paywall when you’re trying to access a piece of information, but I just don’t see how a comprehensive news bundle truly takes off in the current media environment. For now, we’re stuck with shelling out money for individual subscriptions. 

What do you think?

Subscription churn is on the rise

Data compiled from 107 participating newspapers indicates that subscriber churn is on the rise:

“The low tide for churn was in the middle of 2021, when the churn rate was about 3%,” [Medill Spiegel Research Center Director Edward Malthouse] says. “That translates into a reader retention rate of 97%. The churn rate has gone up to about 5.5%, which cuts the reader retention rate to 94.5%. And that increase isn’t slowing.”

According to Malthouse’s formulas, a 90% reader retention rate translates into a Customer Lifetime Value (CLV) of 10 months, while a 95% retention rate doubles the CLV to 20 months.

“The problem is that the opposite happens when the churn rate goes up,” Malthouse says. “The increase in churn we’re seeing results in a 2.5% drop in reader retention since the middle of 2021, which has a huge negative impact on the CLV for those newspapers.”

This probably means that the subscription space has become extremely saturated and consumers are getting more picky about content subscriptions.

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Taxing Google is not a business model

You’ve probably heard by now that the Canadian government has forced Google to dole out about $100 million a year to be distributed to Canadian news publishers.

This development has gotten the News Media Alliance — a US-based industry trade group — all excited about the potential of legislation that would force similar concessions from Meta and Google toward US publishers. Its CEO Danielle Coffey appeared on a podcast to tout such bills that are currently making their way through the California legislature and the US Congress:

Using the [Canadian] arrangement as precedent, the U.S. news media could expect to secure a similar compensation model from the search engine, potentially as soon as next year, Coffey said on the Local Market Trends podcast. In the U.S., however, the total dispensation could amount to billions of dollars.

“Definitely billions,” Coffey said on the podcast. “Even with the lowest numbers that we’ve seen around the world, when translated to the U.S. economy and market share, it’s definitely a B. And we believe that B should be plural.”

It's pretty sad that the nation's largest trade group for the media industry is prioritizing legislative rent seeking as the solution to save journalism.

I won’t reiterate all the criticism against this sort of legislation — Techdirt’s Mike Masnick has already done an excellent job debunking many of its justifications — but I will point out that taxing Google — or any other major tech platform — is not a viable business model, and it’ll do nothing to fix the systemic problems plaguing the media industry. At best, it’s a temporary Band-Aid that will boost entrenched players at the expense of up-and-coming media startups.

The rise of independent media in India

Several high profile journalists in India have quit their jobs and launched their own YouTube channels so they can maintain their independence in an increasingly press-hostile environment:

Going solo is punishing work in a country that the World Press Freedom Index now ranks 161st out of 180. A YouTube channel or Instagram account does not offer the same protections as working for a mainstream media company: There is little financial security, legal support, or physical protection. Alone in their own homes, several of India’s best-known journalists [said] they are fearful for their future. They spoke of online threats and warnings over the phone, of being frozen out by friends and family; of fears their equipment could be seized, their homes raided, or they could be thrown into jail.

Why publishers are doubling down on live events

Digiday reports that Time and other publishers have significantly increased the number of live events they host each year:

Time hosted 27 events in 2023, up from 10 in 2022, and next year there are currently 33 events scheduled, including a new one tied to the soon-to-be launched Time Health franchise. The events team ... grew substantially as well in 2023, starting with 5 employees at the top of the year and ending 2023 with 13, with roles ranging from design, sales, customer success, programming and audience development.

This isn’t entirely surprising given the harsh economic headwinds the industry faced in 2023. There are a number of reasons publishers are attracted to the live events space:

Built-in marketing

Publishers have already invested heavily in building out audience distribution within their niche, so it’s not a huge extra lift to utilize their marketing channels to promote an event. This decreases the amount they have to spend on paid marketing to drive attendance.

Speaker recruitment

The vast majority of conference speakers are unpaid, which means you have to convince industry leaders that it’s worth their time to travel to another city to deliver a talk. It’s much easier to do this when you have the imprimatur of a legacy news brand behind you.

Differentiated content

Ask any attendee why they chose to travel to a particular conference, and they’ll often rank “networking opportunities” higher than the speaker lineup. In a world that’s flush with more web content than one person could ever consume, a live event offers a truly differentiated experience that no tech platform can replicate.

Advertiser ROI

Unlike programmatic display advertising, which delivers almost no ROI, conferences actually drive measurable results for brands, especially in the B2B sector. Most brands will always have budget set aside for events, and the tech platforms have no desire to go after that budget.

***

Of course, live events will never serve as the silver bullet that can completely reverse the media industry’s revenue woes. They require relatively high overhead and are extremely limited in their scalability. But they can be a great addition to a publisher’s revenue mix as long as they’re well-executed.

Why an independent musician has no desire to sign with a music label

This is a great interview with a former child actor who then leveraged platforms like TikTok, YouTube, and Spotify to launch his rap career, all without the help of a major music label:

If video embeds don’t work in your inbox, go here.

ICYMI: Inside Morning Brew's video strategy

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