Apple (NASDAQ: AAPL) announced a slew of new offerings at its opening WWDC keynote this week. Many of these new apps or services take direct aim at rivals big and small. For instance, all of the improvements to Apple's Notes app could potentially threaten popular apps like Evernote. With the announcement of Apple's brand new News app, what are the implications in the marketplace?
Farewell, Newsstand, we hardly knew you
Creating a new News app is a tacit admission that Apple's Newsstand has been a failure. Launched in 2011, Newsstand is little more than a bona fide folder for news apps. Apple had hoped to bolster the flailing publishing industry by helping publishers sell digital magazine subscriptions, but it's unclear whether or not publishers saw much uplift from Apple's efforts. My guess would be "no."
What Apple is trying to do is address the often disjointed experience of hopping between multiple apps to get the latest news. The Mac maker has created a new Apple News format for publishers to use to create interactive and engaging content. Recognizing how most news publishers make their money, advertising is also integrated.
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One of these is just like the other
Instant Articles are meant to improve loading times by up to 10x, reducing the risk that a user will get tired of waiting and click away. Facebook is similarly allowing publishers to keep all revenue from ads that they sell, or they can also choose to use Facebook's Audience network to fill ad inventory.
Apple and Facebook are offering the exact same split of revenue sharing, where publishers keep 70% of revenue for ads sold through their respective networks, but keep 100% of revenue for ads that the publishers sell themselves. Even as both offerings are very similar, Facebook will likely win out over the long term.
Facebook cares a whole lot more
While Apple's goal of unifying the user experience of reading news is noble, ultimately, it's still more or less an afterthought. In contrast, winning over publishers to distribute content on its platform is core to Facebook's advertising business.
At the same time, Facebook's News Feed algorithms already aggregate a wide range of content that users follow, and they're already accustomed to consuming news there. The biggest difference is that Facebookers might see the occasional post about what a friend had for lunch in between article links. Going forward, Facebook will devote a lot more effort into Instant Articles than Apple will into its News app.
It's true that some journalists fear what these moves signify: publishers losing control of distribution, and where people consume news. But what the skeptics don't realize is that, if this is what the consumer wants, this is what the consumer will get.
Evan Niu, CFA owns shares of Apple and Facebook. The Motley Fool recommends Apple and Facebook. The Motley Fool owns shares of Apple and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.