Roger Lynch has only been CEO of major magazine publisher Conde Nast for a little over six months, following Lynch's exit as CEO of Pandora Media in the wake of the music-streaming company's acquisition by SiriusXM earlier this year. Conde Nast's stable of publications includes household names like Wired, GQ, Vogue, The New Yorker, and Vanity Fair, among many others.
Meanwhile, Apple (NASDAQ:AAPL) is currently taking its latest shot at shoehorning itself into the publishing industry with Apple News+. The service has reportedly struggled to grow beyond the 200,000 subscribers it garnered within the first two days after launching. Lynch still isn't quite sure what to think of Apple News+.
"I think it's too early to tell."
Speaking at the Code Media 2019 conference this week, Lynch discussed the media industry's ongoing unbundling. Consumers have more choices than ever before as legacy distribution channels become antiquated and digital platforms have risen to prominence. As media companies start appealing to consumers more directly, the industry will see a sort of modern rebundling, in Lynch's view.
When asked about Apple News+, which bundles hundreds of magazines together for $10 per month, Lynch replied:
I think the jury's out. I think that the paid side of [Apple News+] has had some adoption, and Apple will continue to focus on that. Whether it's good for publishers like us or not is to be determined.
Lynch also noted that he inherited the relationship, since he was appointed chief executive in April after Apple News+ had already launched in March. When asked whether or not Conde Nast could exit the partnership with Apple, the CEO declined to discuss specific terms other than saying that "over time we have options." Bloomberg reported last week that publishers are able to pull their content from the service after a year if they aren't satisfied.
Apple News+ carries high cannibalization risk for media companies. Apple keeps half of subscription revenue, with publishing partners splitting up the remaining half based on reader engagement. At the same time, $10 per month can easily translate into significant savings compared to subscribing to all of the included publications, depending on how many a consumer would otherwise sign up for.
Lynch was asked if Conde Nast has observed consumers running into paywalls for its various outlets, who then sign up for Apple's service instead of subscribing directly. "Now we haven't seen that effect," Lynch said. "That will be a difficult effect to measure." Lynch clarified that he does worry about cannibalization, but Conde Nast simply hasn't "seen anything to indicate that that's happening yet."
"I hope that Apple News+ is wildly successful and becomes a great distribution channel for us and that we can make a lot of money from it," Lynch concluded regarding the tech company's service. "I think it's too early to tell."