Monday Musings - 17

First off let me say that it has been awhile since the last Monday Musings, like almost a year! This time I would love to say that it is going to be different and you will see a musing every Monday for the rest of the sites existence but guess what, I would probably be lying. We all live in the real world and know how things pop up in life that take precedent over a blog. All this now out in the open, let’s get to what I am thinking about on this 1st day of the work week.

Apple launched some new services at the end of March and let me go ahead and say it, I love News +! Over the past week I have been using it on my iPad and didn’t realize how much that I miss reading magazines and newspapers. The Wall Street Journal is a constant frequent of mine the last 7 days, something that I normally pick up while in line at Starbucks, awkwardly tell the barista I am not purchasing it, then place it back in its little metal holder to never be seen again. Now it is simply a click away (not the whole thing…I know). I know that it always had been with a subscription to the WSJ, but the new price tag that includes things like Fortune, Entrepreneur, ESPN, Fast Company, etc. means that the magazines I once read occasionally are not just for me to pick up at the airport anymore. They are something that I can frequent.

That being said, let’s take this with a grain of salt. Not all articles from every magazine listed is available and the content of some of these magazines/periodicals/papers is just the tip of the proverbial iceberg of what is available with a “real” subscription. All this being said, according to Mobile Marketer Apple had over 200k subscribers in the first two days! How many are just taking the trial for a run? I don’t know that but that at least sounds promising.

How will this effect the landscape of revenue though? Well according to The Verge Apple is receiving about 50% of the revenue and magazines are to be paid by reader frequency. So in terms of Apple’s first 48 hours the revenue would lay out like this:

200,000 x $5 x 12 = $ 12 million in revenue per year.

To be honest this doesn’t sound like a lot of money when we are looking at a company that is as profitable as Apple. I really want to know just where this platform is leading. Is there going to be other content at add on prices (ex: The entirety of the WSJ)? How many subscribers is it going to cost to make a substantial difference in earnings? According to a 2018 article by Apple had 1.3 Billion devices worldwide in use. It was actually reported in September by that Apple had sold 2 billion iOS units.

Let’s do some math on that!

We will take the 1.3 billion active number to start. Now let’s assume 10% of currently active users are computer users. I base this on the total revenue of Apple from computer sales was about 10% of it’s revenue from devices sold this past quarter.

Roughly 66.1b between iPad, iPhone, and Mac. Mac was about 7.4b which equals 11%. Let’s make it 10% for my easy math.

Now let’s discount them from News plus (no clue if we should or not). That leaves us with 1.17 billion users. Now let’s just spitball here and say that 25% of them sign up for the News Plus service.

1.17b x .25 = 292.5 million users

292.5m x 5 x 12 = $17.5 Billion dollars of annual revenue.

Last year the company reported a total of $265 Billion in revenue. At this math (very crude may it be) it is showing that just from News Plus reaching 25% of the iPhone/iPad Cult Apple could see revenue growth of about 6%. Now that is something to get excited about!

This of course is a rough scenario that played out in my head and I am in no way shape or form saying that News Plus is a reason to buy Apple stock right now. What will they do from here? How many users will they actually get to subscribe? What is their cost for the platform? Are there other ways to make money from this?

Obviously there are a lot of questions that I have about the service but one that I already know the answer too:

Do I love it?

This my friends is a resounding yes.