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Is Apple News+ a Game Changer or Too Little Too Late?

By Danny Vena – Apr 1, 2019 at 8:48AM

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The iPhone maker debuted its long-awaited subscription news service. Will it matter?

At an event early this week, Apple (AAPL 4.86%) debuted a long-rumored subscription news service, which the company dubbed Apple News+. The service will live inside the company's free Apple News app, which is thriving in its own right. Apple CEO Tim Cook said that users currently read more than 5 billion articles each month, making it the No. 1 news app. Now the company is hoping to extend that success by offering curated news from a host of big-name publishers for a small monthly fee.

The new platform will be headlined by The Wall Street Journal and Los Angeles Times and will launch immediately in the U.S. for $9.99 per month and can be shared by up to six family members. The service will be available in Canada in both English and French for $12.99 per month after a free month. The service will be rolling out to Australia and Europe later this year. 

The Apple News Plus app showing on a Mac, iPad, and iPhone.

The Apple News+ app will be available on Mac, iPad, and iPhone. Image source: Apple.

The details

The service is also bringing magazines to Apple News+. This will include more than 300 publications across a wide range of interests, including business and politics (Time, The Atlantic), style and beauty (Vogue, InStyle), food (Bon Appetit), and sports (Runners World, Sports Illustrated). It will feature periodicals about travel (Conde Nast Traveler), entertainment (People, Vanity Fair), and science and technology (National Geographic, Scientific American). The service will also include several well-known digital publications like TechCrunch and Wired. Customers will have access to current and past issues, and Apple said it will be the only place where readers can get all these magazines in a single package.

Apple has taken several steps to ensure its news service stands out from the crowd. Articles would be personally curated for the individual reader, but execs were quick to point out that the news would come from trusted sources and that neither Apple nor the publishers would know exactly what users read, and they wouldn't be tracked by advertisers -- maintaining the company's trademark emphasis on user privacy.

The digital versions of these magazines will also include what Apple calls "live covers," which feature moving photographs that deliver an interactive experience. The presentation of the articles was also specially revamped by each publisher to capture the design, typography, and photography of each magazine in a digital setting to provide a familiar look and feel to readers.

Groundbreaking or too little too late?

Apple's News+ service doesn't have to be a game changer for Apple in order to be successful. The company has been placing a greater focus on its services and particularly on recurring revenue in the face of slowing sales of its flagship iPhone, especially as the smartphone market nears saturation.

Earlier this year when Apple released its first-quarter results, Cook revealed that the installed base of iPhones had topped 900 million, while the total count of all active Apple devices had crested an all-time high of 1.4 billion. That was a metric that was echoed on stage at the event this week, illustrating the significant potential customer base that could support its new wave of services. Apple News set a record last quarter with more than 85 million active users, and it's currently only available in the U.S., U.K., and Australia. That number will certainly rise as the service makes its debut across the world stage.

Apple is well on its way to fulfilling its goal of doubling its annual revenue from services by 2020. The company generated $40 billion -- nearly 16% of Apple's total revenue -- from services over the previous four quarters, up from $25 billion just two years ago. The launch of Apple News+ alone likely won't move the needle, but combined with the company's other efforts, it will help Apple become less reliant on future iPhone sales.

Danny Vena owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

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