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If Apple wants to sell services, Apple can sell services very well.
That should be, but it is not, the title of today's Wall Street Journal article, which technically speaks of Apple's superiority over Spotify in the race for American subscribers for their respective music services. For the record, the newspaper sources estimate that Apple Music has 28 million US subscribers and Spotify has 26 million.
But the real story is buried in several paragraphs, where the newspaper says that the silent part is out loud: If Apple can sell a lot of music subscriptions – after starting years after the entry of Spotify on the market – using free trials for its huge installed base, imagine what it can do when it starts selling other subscriptions.
The growth of Apple Music is one of the strongest validations of Apple's strategy to increase revenue by selling services on its devices – a shift after decades of focusing on hardware sales. Last week, the tech company announced new subscription offers for magazines, TV shows and video games.
Or, if you do not trust the Journal, perhaps opt to hear Oprah Winfrey at the launch of Apple Services in March:
There are two different audiences for this argument. Part of this message is intended for investors, who are trying to figure out how much money Apple can earn by selling products such as its gaming service, news service, and all the content of its video service.
The other group is the people and companies that Apple needs to partner with to ensure the proper functioning of these services by providing content and support for those services.
Whether it works or not seems to depend on the public.
Magazine publishers, for example, seem happy to let Apple sell a bundle of their titles for $ 10 a month, then split half of those costs between them. The theory is that magazines have been unable to sell themselves many digital subscriptions and that Apple could convert several million customers into subscribers, and that owning a small piece of a very large cake might have a meaning.
Some calculations that I made at the back of the laptop can illustrate the best of the scenarios: Let's say that Apple is able to find 10 million subscribers for Apple News Plus – about 20 % of the paid audience that she has subscribed for Apple Music. After Apple made its decision, participating publishers would have an annual business turnover of $ 600 million to share between them.
For the context: Time Inc., which was once the largest publisher of magazines in the United States, has likely generated subscription revenues of about $ 800 million in 2017. "Additional revenues of a few Hundreds of millions of dollars for publishers, if they evolve, are worth it. risk of cannibalization, "says an industry leader, optimistic about Apple's plan and not worried about people who exchange subscriptions to individual magazines for the Apple package. *
From another side: the New York Times and the Washington Post are not reprimanded for the moment by Apple 's argument and do not participate *. You can see their logic: they build themselves significant digital subscription businesses – the New York Times now. has 3 million digital subscribers only – and they prefer to keep all (or almost all) the money generated by these subscriptions. (Newspapers have other reasons to go astray, including a reluctance to let Apple interpose themselves and their customers.)
You may also find that this is also happening in other areas: some very large and high-performance video services, such as HBO, Showtime and Starz, are willing to let Apple sell subscriptions for their services directly to consumers. But Netflix, whose total of 139 million paid subscribers is greater than the sum of these three rivals combined, does not intend to participate in the Apple package. "Apple is a great company. We want people to watch our shows on our services, "said Netflix CEO Reed Hastings in March.
An entirely separate question is whether Apple should be able to use its size to deploy its own services, at the possible expense of competitors such as Spotify and Netflix. Spotify does not think so and filed an antitrust complaint with European regulators. In the United States, the presidential candidate, Elizabeth Warren, said that she would prevent Apple from operating a store and selling its own services. But for now, doing both things is at the heart of Apple's strategy.
* Vox.com, which, like this site, belongs to Vox Media, sells some of its content via Apple News Plus.
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