Is News Ripe for Disruption?

The most successful companies are those who are able to transcend single products and services and realize the monetary rewards of providing their customers with way more than the original proposition in a credible, branded platform. For example, imagine if P&G stuck to selling soap and candles without expanding beyond.

It’s no different today. Just look at Facebook. Conceived as a way for users to find friends and dates in their college hallways, the company now develops tech and media, and has become one of the largest advertising platforms in the world. Spotify is now producing its own content and audio, with its founder recently stating, “More than 10 years ago we founded Spotify to give consumers…music anytime, anywhere, and at the right price…what I didn’t know when we launched to consumers in 2008 was that audio — not just music — would be the future of Spotify.” And let’s not forget that Amazon was once when it was “The Earth’s Biggest Bookstore”?

Apple, which has historically been focused on tech hardware, i.e. computers and phones (and the apps inherent to its singular platforms such as iTunes and iCloud), has expanded its focus in an apparent effort to combat declining iPhones sales. Based on numerous leaks, its rumored that Apple is planning to launch a monthly subscription service for aggregated news across multiple outlets and publishers.

To be clear, the company currently offers a feature called Apple News, which collects news stories across various journalism outlets, but most of the articles provided operate behind pay walls (meaning you must pay to read them). The new service, it would seem, offers a one-stop-shop subscription service which grants readers access to all articles provided, as an alternative to the current news subscription model available to all of us, which is currently pay-per-digital-news-subscription that you want.

Apple’s reported plan to collect around 50% of the subscription revenue—as well as its plan to limit sharing customer data with publishers—doesn’t seem like it holds any real benefit to news publications like The New York Times or Washington Post. If Apple somehow amazingly achieves its goal of keeping 50% of the revenue from this subscription service, limiting the amount that serious journalists earn for their reporting, the quality of the journalism and news itself is bound to suffer. But, again, this is all a big “if.”

With the limited information available about Apple’s new offering, it’s hard to understand what the long-term benefit is to anyone, including Apple. In the short term, consumers might have easier access to aggregated content and Apple will get a flood of revenue. In the long term, the serious news outlets will not be able to sustain themselves, and fold. Not a great value exchange.

According to Axios, Apple’s “plan to create a subscription service for news is running into resistance from major publishers over the tech giant’s proposed financial terms.” And although Apple is in the early stages of negotiations, it’s unclear if they can make this platform work to the economic benefit of giants like The Wall Street Journal and The New York Times, whose non-discounted subscriptions cost anywhere between $15 to $40 a month. Unless Apple charges a huge premium for this subscription service, it seems unlikely that large publications would ever agree to hand Apple access to their content, especially since it carries a risk that their own existing customers could unsubscribe in favor of Apple’s.

That being said, digital publishers have been—and continue—to face struggles in the continually changing media landscape.  As I wrote about last month, newsrooms across the country cut about 2,100 jobs. And while much of the issues in journalism stem from the dangerous phenomenon of “free content,” it suffers from the fact that “two very large companies [Google and Facebook] have taken the advertising revenue that journalism outlets rely on and replaced it with nothing.”

As Axios pointed out, “Many news execs feel they've been through this before with Facebook — first with Instant Articles, then with Facebook Live: trade data and monetization opportunities for a chance to expand audience; end up with little if any of those things.” It doesn’t seem like giant news publishers stand to gain anything from handing over their content at a far-too-low cost—they can’t allow this to be their only choice. We need new thinking. Something bold and fresh. And before the next election.

 If Apple’s “Netflix for news” does take off (which of course is a huge “if”), we are still left contemplating this question—what is the future of news reporting? Free or overly-discounted news content is not sustainable, and at a time where we’ve never been more in need of accurate, informed, well-researched news, allowing anything less would be criminal…Listen:

“There ain’t no such thing as a free lunch”- Milton Friedman

Whatever ends up happening with Apple’s experimental foray into the news space, the fact remains: the value of news content has been cheapened by offering it for free or at an unsustainably low cost. Google, Facebook, Amazon and now Apple, pose formidable threats to the standard news model as we know it. And traditional news giants like The Times, WSJ, and Washington Post confront their own mortality on a daily basis (although The Times seems to have picked up steam).

So, while it doesn’t seem like Apple’s latest news endeavor is anywhere near a sure thing, what does seem sure is that the industry is facing a moment of reckoning. There will be a “disruption” to the current model, the only question is—what will it look like? “Netflix for news” or something that we haven’t yet thought about coming directly from the news sources themselves?

What do you think?