Frederic Filloux: Apple will cost mags 50% per reader

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From Filloux’ Monday Note: Apple News+ could lead to a massive value destruction for the magazine industry.

To assess the impact of a fully deployed Apple News+ I did the following calculation.

  • In the United States, the magazine industry generates annual revenue of $27B, a loss of more than 40 percent in ten years.
  • Divided by 225 million readers of magazines (according to the trade association), the Average Revenue per User (ARPU) amounts to $120 per reader and per year, all sources included.
  • The revenue promised by Apple News+ is $9.9 a month => $119 a year. Minus Apple’s 50 percent cut, it gives a net income per reader of $59.

By joining Apple News+, the US magazine industry will lose 50 percent of its revenue per reader…

We don’t know how Apple News+ intends to distribute the subscription revenue. So let’s assume the platform will go for a revenue distribution based on the time spent per reader on a given publication. It will come to this:

filloux magazines apple news plus

These publications will have to split Apple’s meager net ARPU of $59 as opposed to a rate card of $227. They will collectively lose $168, a 74% evaporation of value for being on Apple news+.

My take: Having watched the value drain out Time Magazine through wave after wave of layoffs over nearly 30 years, I know that Apple isn’t to blame for the industry’s decline. But it still breaks my heart.