In March, Apple (NASDAQ:AAPL) acquired Texture, a subscription-based magazine service that earned the nickname of "the Netflix of magazines." Texture offered a subscription for $10 per month that would allow subscribers to access to hundreds of periodicals from the largest publishers, which owned Texture through a joint venture. Texture had "hundreds of thousands" of paying subscribers as recently as 2016. It wasn't long -- only about a month -- before reports surfaced that Apple was expectedly planning to use Texture to launch a premium news subscription of its own, amid the Mac maker's ongoing services push.
The service could launch as soon as spring of 2019.
Apple could undercut publishers
Bloomberg reports that Apple is about to relaunch Texture as part of Apple News, while attempting to revamp the design and interface to be more modern and similar to how most users consume online news these days. Currently, Texture simply delivers images of how magazines look in print format. Apple is trying to get prominent outlets like The Wall Street Journal and The New York Times onboard, but many publishers fear that partnering with Apple could end up cannibalizing their own businesses.
Getting access to hundreds of magazines and newspapers for $10 per month would threaten to undercut publishers' direct subscriptions. For example, the standard (before promotions) digital subscription price for the Wall Street Journal, owned by News Corp., is over $30 per month. The New York Times standard digital subscription costs $15 per month. The Gray Lady has been making progress growing its subscription business, reporting an 18% jump in digital-only subscription revenue to $101 million in the third quarter. Partnering with the Mac maker could risk undermining that progress.
Apple's pitch to publishers has been that what they may lose in per-subscriber revenue, they could make up for in volume, according to the report, with services chief Eddy Cue pointing to the potential for subscriber growth. The company said earlier this year that its overall installed base had reached 1.3 billion devices, and it brought Apple News to its Mac platform in macOS Mojave this fall.
Apple is focusing on paid subscriptions
Paid subscriptions are a core pillar of Apple's strategy to grow its services business, so it comes as no surprise that the company is looking to launch a premium news service. The tech titan now has over 330 million paid subscriptions, many of which are for third-party services, and has been adding roughly 30 million subscriptions per quarter like clockwork.
Whether or not Apple can coax both publishers and consumers to get onboard remains to be seen.
Evan Niu, CFA owns shares of Apple and NFLX. The Motley Fool owns shares of and recommends Apple and NFLX. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends NYT. The Motley Fool has a disclosure policy.