App Store fees are being dissected while Apple News makes important changes

By L. Carol Christopher

INMA

Pleasant Hill, California, USA

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Apple leads the news this week with stories on its App Store dealings with developers — highlighting the inequitable Apple tax that news publishers pay — and changes to Apple News/+, including more local news/audio and a pending change that will opt users out of data sharing.

Beyond that, outgoing New York Times CEO Mark Thompson suggests dealing bilaterally with digital platforms is the best course of action for news publishers and cautions against giving too much control over the media to “regulators and politicians,” while The Sydney Morning Herald reports that sources describe a loophole in Google’s Australian news licensing initiative that would allow the company to pull out of its deals with news publishers in the event of a change in law or — the establishment of a code of conduct.

Questions are arising on who gets charged one by Apple.
Questions are arising on who gets charged one by Apple.

App Store update: preferential treatment for some, new report issued

Following up on our recent report on the App Store, we have this piece from Forbes, suggesting “two massive elephants” in the App Store:

  1. Preferential treatment: While news publishers and others are paying Apple a ripe 30% of their platform-derived revenue, video entertainment apps like Amazon, Altice One, and Canal+ (and Uber and Airbnb, according to The Wall Street Journal, along with a much longer list provided by the BBC) are each breaking the App Store rules by accepting payments “in-app without paying Apple any percentage or royalty,” which, according to Forbes, flies in the face of Guidelines 3.1.1 and 3.1.3(a).
  2. Alternative models: The App Store guidelines were not written in stone, and “there are other revenue models that could work and be fair for all parties.” Possibilities listed include:
  • One-time commission.
  • App Store listing fee.
  • Sliding percentage for different industries or verticals.
  • Sliding percentage by number of users/customers.

Not only would these solutions benefit App Store developers — such as news media publishers — but it would, according to Forbes, “offer a better hedge of protection for antitrust lawyers and legislators who are looking for ways to bring down Big Tech. Or, in Europe, to shake down big American tech for every Euro they can …. Fairness, flexibility, and openness are Apple’s biggest protections against antitrust investigation now.” 

Meanwhile, Apple, “commissioned economists at Analysis Group to compare its App Store with other digital marketplaces,” reports The Wall Street Journal. The report is meant to offer data to support the testimony of Apple’s CEO Tim Cook before the U.S. House Judiciary Antitrust Subcommittee scheduled for today. 

A separate report co-authored by European competition attorney Damien Geradin and mentioned in the Journal’s article argued Apple has monopoly power because the App Store is the only pathway developers have to the more than 900 million iPhones worldwide. 

According to the Journal, Apple says it is not monopolist and that its fees are a small percentage of what developers paid to reach users prior to the 2008 inception of the App Store. It also says its commissions are lower than those paid to some other distributors, such as those servicing the video game, newspaper, and magazine industries.

With iOS updates, Apple News expands and IDFA opts users out of data sharing

An imminent update to Apple’s iOS will bring about a change likely to cause some deep rethinking among news media publishers: Apple’s announcement regarding its change in approach with IDFA (Identifier for Advertisers), which opts users out of all data sharing, thus requiring them to “opt back in.” Digiday provides an excellent analysis of the details. 

Apple has added an audio option to Apple News.
Apple has added an audio option to Apple News.

In an article for INMA’s Mobile Strategies blog, Lorna White, digital associate director at London’s MediaCon, predicts “the impact for advertising is likely to be huge. With users being opted out, data points available for advertiser brands will see a huge drop in volume … [they] need to prepare and educate themselves on the options available.”

Also, with its most recent update, Apple added an audio option to Apple News.  There is now a fourth icon along the bottom of the home screen — a small audio headset that nestles between “News+” and “Following” — and will take readers to a screen touting “Apple News+ Audio,” and a list of 30 Apple-created audio previews of print stories available in “Apple News+.” 

There are lots of magazine previews, but only one — from the Los Angeles Times — representing the news media showed up in my feed on Sunday, although Publishing Insider reports The Wall Street Journal is also participating. The app is also expanding local news coverage in “select markets” in the United States — the wider San Francisco Bay Area, New York, Los Angeles, and Houston, says Tech Crunch, which also reported the subscription service will soon include an expanded selection of local and regional news with access to:

  • The Charlotte Observer.
  • The Idaho Statesman.
  • The Kansas City Star.
  • The Miami Herald.
  • The News & Observer (Raleigh, North Carolina).
  • The State (Columbia, South Carolina).
  • Le Devoir (Canada, French language).
  • The Globe and Mail (Canada, later this summer). 

“The Globe has offered audio options in three languages (English, French and Mandarin) for over a year on its Web platform and on its Android app and weve seen interest from our readers in accessing our journalism through audio,” Andrew Saunders, chief revenue officer at The Globe and Mail, told INMA. “Because of the reach of Apples news app and the convenience of listening to audio on-the-go, we see a great opportunity for growth in this area and look forward to Apple News audio stories launching in Canada.”

The Tech Crunch report also said Apple is producing its own 10-minute news briefing, called Apple News Today, with two journalist-anchors. The briefing can be found under the Audio tab on weekdays. Apple’s team of editors will produce about 20 stories most weeks. Publishers are paid based on engagement.

Nonetheless, Apple News+, Apple’s subscription news service, appears to continue to struggle to gain a foothold. Apple Insider reports Apple is offering past subscribers a free month to come back.

NYT CEO sees risk in regulating Google, Facebook to help news media 

In an interview with Reuters, Mark Thompson, who is stepping down in September as the CEO of The New York Times Company, expressed the view that regulatory scrutiny of digital platforms is reasonable, although he sees risk in ceding more control of the media to regulators and politicians.

“My own view,” he told Reuters, “is the more we can get the major platforms to work bilaterally and voluntarily to help support journalism at every level, the better it will be. …The more it becomes part of a long extended, regulatory, and political process, the less likely it is to help in time, and the more likely you are to get different kinds of adverse consequences.”

In Australia, Google issues statement ahead of code deadline

The deadline for a mandatory code of conduct between news publishers and digital platforms is set for sometime this week in Australia. You can see what’s led up to that here.

In a Monday-morning statement reported in The Sydney Morning Herald, Melanie Silva, Google’s Australia managing director, said this: 

“It is critical that the Code is grounded in commercial reality if it is to be fair, transparent, and sustainable, preserve the shared benefits created by the Web, operate in the interests of Australian consumers, and balance the competing interests of large and small publishers.” 

She continued: “We believe there is a workable path for publishers through bilateral agreements — as we’ve recently demonstrated — and we’ve sought to engage constructively with the ACCC to advocate for this. We keenly await further detail on the extent of the Government’s proposed regulatory intervention in these markets — and what this may mean for general business and investment confidence.” 

When we contacted Nathaniel Bane, head of digital media at Australia’s Herald Sun and INMA blogger, he had this to say: 

“Currently there is a power imbalance between the big tech giants, like Google, and news publishers in Australia. Our executive chairman at News Corp, Michael Miller, has said it’s estimated Google and Facebook drive about AU$6 billion in ad revenue in Australia, about 10% of that from news content. That is AU$600m a year that could have been going to the media to support the vital pursuit of journalism across the country.

“And, as Mr. Miller has said, a code of conduct is more than just about revenue. It's about transparency on issues like data, how algorithms work, and fair recognition and reward for original journalism.”

The Herald reported that sources familiar with Google’s news licensing arrangements, known as Publisher-Curated News, have said that “there is a loophole in its agreement that allows the tech giant to terminate a deal if there is a change in law or if a code of conduct is established in Australia.” The company is also arguing that “search engines should not have to pay for indexing or displaying links or extracts of Web sites.”

Banner image courtesy of Simon Steinberger, Photo Mix, and Pexels from Pixabay.

About L. Carol Christopher

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