Apple Inc. (NASDAQ:AAPL) is seeing success with the re-vamped version of Apple News on its iOS devices. However, the increased readership hasn’t necessarily panned out for publishers.
According to AdAge, Apple is planning to fix that problem, making it easier to add advertising to their posts to boost their Apple News revenue.
The company is also considering supporting micropayments that would see consumers pay a few cents to read articles.
Apple News Is Delivering Eyeballs
Apple first released Apple News in 2015. The idea was to build a news aggregator app as part of iOS, allowing publishers to directly reach iPhone and iPad owners. Something along the lines of Facebook Inc’s (NASDAQ:FB) Instant Articles, but integrated at the operating system level and part of the standard install on every Apple mobile device.
With Apple News, publishers could present readers with content that looks just like the material on their own website, all in one place, and without the user having to launch a web browser and go searching.
Apple News got a major revamp with last year’s iOS 10 release. Besides improvements for users, the company also made it easier for smaller websites to publish posts and customize their look. The investment has been paying off for AAPL stock.
Last October, it claimed 40 million users. In June, comScore released its stats on the top smartphone apps in the U.S. and it placed Apple News at number 15. Apple’s news aggregator reached 27.3% of all smartphone users in the U.S., which is especially impressive given that, unlike number one app Facebook, it’s not available to Android users.
That’s 47 million monthly users, which makes Apple News a serious force.
But Publishers Aren’t Seeing the Ad Revenue
However, the publishers of that content have been complaining that they aren’t seeing the Apple News revenue they were hoping for. Every time an iPhone or iPad owner reads one of their articles in the Apple News app, they’re skipping the step of going to the publisher’s own website.
The app supports multiple Apple ad revenue options — including the ability for publishers to insert their own ads and keep 100% of generated revenue — but the problem has been that significant effort is required to do so.
With the prospect of ad creation that’s too costly in terms of effort and lost revenue from paywalls, Apple runs the risk that Apple News is becoming too popular with consumers who are hungry for free content. Content publishers could leave the platform.
Boosting Apple News Revenue for Content Publishers
According to the aforementioned report in AdAge, Apple is working on addressing the problem.
The first step is allowing the publishers to use their existing advertising technology with Apple News. For example, the popular DoubleClick from Alphabet Inc’s (NASDAQ:GOOGL) Google. Doing so would mean publishers make the same amount of advertising revenue from an article read on Apple News as they would if it were read on their own website, without having to jump through the additional hoops of using Apple’s own ad publication tools.
AdvertisingAge also says Apple has told one of its publishing partners that it is planning to enable micropayments for Apple News. This would allow publications that use a paywall to charge a small fee to read an individual article on Apple News instead of giving it away for free.
These are big changes to the way Apple is accustomed to doing things. The company likes to keep control of its platforms and is also opposed to aggressive online advertising. However, the publishing partners that have made Apple News such a success are growing restless.
As one of those partners noted, “There’s a ton of scale there but no dollars. So Apple has to do something soon or publishers will pull out.”
Whether the new approach makes its way into Apple News in time for the iOS 11 launch in September isn’t clear. However, knowing its coming will go a long way toward keeping publishers happy.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
