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Apple (AAPL) News Services Loses The New York Times Content

Zacks Equity Research
·5-min read

Apple AAPL News services has lost a major publisher as the New York Times NYT abandoned its relationship with the iPhone maker.

Effective Monday, stories from the New York Times will no longer appear in the curated feed of the Apple News app that has roughly 125 million monthly readers.

The NY Times is prioritizing adding new subscribers and said the Apple partnership did not give it enough of a direct relationship with subscribers to justify continuing relationship. As far as sending readers to its site is concerned, Apple News does not redirect users to publishers’ site where the original article is hosted. Instead, the entire piece is read through Apple’s app within the iPhone, iPad, or Mac app.

The New York Times also cited that advertising on the Apple News app did not generate expected revenues for the news organization. Nonetheless, the newspaper will continue to work with Apple on podcasts and other apps.

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus
Apple Inc. Price and Consensus

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Apple News Services Struggles With Publishers

The New York Times started pulling back on the number of articles it was serving to readers through the News app last year.

While the New York Times only offered a few free articles to Apple News, its departure still makes it one of the biggest names to abandon Apple’s service since The Guardian left in 2017 only to rejoin the service in March this year.

It is not the first time that the New York Times has turned its back on Apple News. Times had previously declined to join Apple News+ — the paid tier of the service that bundles access to a range of 300 publishers, including the Wall Street Journal, Conde Nast and Vanity Fair, in a single $9.99 per month subscription.

Apple News+ is a hard sell when there are other news sources available for free on the web but may be worth it if you want unlimited access to digital magazines. The New York Times skipped out on joining the service, mostly because Apple takes 50% of the revenues from Apple News+, leaving the remaining 50% to be distributed among all its news partners.

Tech Giants Step Up Efforts to Support News Publishers

Apple's cut of transactions in the App Store, and proprietary apps such as Apple News, have come under scrutiny in recent weeks. Developers have long complained that the fees are excessive, and various courts and regulators are in the process of evaluating whether Apple's fee and terms amount to monopolistic conduct.

It is noteworthy that Apple takes a 30% cut for any subscriptions originated on its app, cutting heavily into the publisher's take.

Earlier this month, the European Union announced two separate investigations of Apple's terms, conditions and other measures relating to the App Store and Apple Pay.

The New York Times’ exit from Apple News comes as news publications are increasingly at odds with the tech giants that seek to profit off the news that others create through their more expansive delivery platforms.

In the recent months, Facebook FB and Alphabet’s GOOGL Google have stepped up efforts to help news organizations, following criticism that their dominance of online advertising has made it difficult for media to profit from digital operations.

Google will provide $340 million in Google ad credits to small and medium businesses active on its platform and $250 million in ad grants for the World Health Organization and many government agencies.

New York Times articles will continue to appear in Google News, which sends users to its website, and Facebook's News tab, with the social network paying the publisher to feature its articles there.

Moreover, Facebook is investing $25 million in grants for local news organizations via the Facebook Journalism Project. The first round of grants went to 50 local newsrooms located in the United States and Canada. The company is also offering $75 million in marketing spend so money is moved to news organizations across the globe.

Meanwhile, Apple has been rumored to bundle its services together before, with a Bloomberg report claiming that the company was negotiating deals with publishers and music producers to bring a suite of content into a single monthly cost.

Moreover, a new Apple News+ Audio feature will be added to the existing Apple News application soon. The new Audio tab will provide News users with access to recorded versions of news stories through an interface that will be similar to that of Apple News.

We believe that this Zacks Rank #2 (Buy) company’s bundled services offering in an affordable package could boost subscriber growth and the appeal of its upcoming iPhone 12. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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