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1 big thing: Publishers balk at Apple's subscription plan

Apple CEO Tim Cook. Photo: Stephanie Keith/Getty Images

Apple is set to debut a news subscription business at a March 25 media event, according to BuzzFeed News. But there's a hitch: A number of key publishers are balking at the terms Apple is offering, per the Wall Street Journal.

Among the concerns are both Apple's reported take of almost half the revenue and access to customer data.

The big picture: The news industry is already reeling from the massive shift of ad dollars to the two digital advertising giants, Google and Facebook. Now it looks to publishers as if Apple wants a cut of their subscription cash, too.

Why it matters: For Apple, subscriptions to news, video and other content are a way to grow revenue in an era of slowing iPhone sales. News publishers, too, want new revenue opportunities, but are mindful of giving away the store to a tech company.

Flashback: Similar concerns were raised the last time Apple tried to offer subscriptions as part of Newsstand, an attempt to sell individual publications for reading on iPads and other iOS devices.

Details: Apple told publishers it plans to take roughly half of subscribers' fees and then split the other half among participating news outlets based on story views, according to the WSJ.

Between the lines: Several publishing executives told my colleague Sara Fischer that a 50% revenue-share agreement was way too high. Most, though, said Apple was probably just starting negotiations high.

  • Even assuming Apple took a far lower cut, though, it's not clear the economics would be great for large publishers.
  • The New York Times, for example, gets $15 per month for a non-discounted digital subscription. WSJ fetches close to $40 a month.
  • It's not clear what Apple might charge, but it's hard to see it getting much more than that. Publishers would then face a high risk of losing existing customers to the service while likely collecting a much smaller amount from Apple.

Publishing execs also stressed their unwillingness to give up the business advantages of a direct relationship with customers.

  • Data: With Apple News, Apple will own audience data and insights, as well as transaction data, leaving publishers less able to market to customers, whether for subscriptions or other revenue streams, like events or commerce. 
  • Branding: On Apple News, publishers now give up a measure of design flexibility to fit Apple's formats and style, making it harder for them to stand out.
  • Deja vu: Many news execs feel they've been through this before with Facebook — first with Instant Articles, then with Facebook Live: trade data and monetization opportunities for a chance to expand audience; end up with little if any of those things.

Yes, but: So far, Apple News' free offering has helped some publishers attract new readers to their content, even if it's not yet a clear money-maker. And one way or another, bundled news subscriptions look inevitable.

What’s next: Apple has a little over a month to get publishers on board before the announcement.

2. Newsom proposes data dividend for consumers

Newly inaugurated California Gov. Gavin Newsom proposed Tuesday that consumers should get a cut of the revenue that tech companies make off their data. The move would go beyond a strict privacy law passed in the state last year.

"I applaud this legislature for passing the first-in-the-nation digital privacy law last year," Newsom said in a statement. "But California's consumers should also be able to share in the wealth that is created from their data."

Why it matters: California is home to many of the tech companies that would be affected, so this early move by the governor to take on the industry is notable.

What they're saying:

  • James Steyer, CEO of Common Sense: "Governor Newsom is spot on that consumers deserve full transparency about how their data is being used, what their data is worth, and the right to share in the profits that companies are making off them. While platforms are fast and loose with consumer data, they are not so willing to share what they are doing with the data or how much they are profiting."
  • Mahsau Daee, spokesperson for the Internet Association: "Free and low-cost, data-driven online services offer Californians and all Americans enormous benefits. We look forward to reviewing the Governor's proposal."
3. GAO: It's time for privacy debate

The Government Accountability Office, which gives nonpartisan advice to Congress, said in a report yesterday that it's "an appropriate time for Congress to consider comprehensive internet privacy legislation," Axios' David McCabe writes.

Why it matters: The finding adds fuel to calls for a national privacy law, as state and foreign regulators crack down on data-hungry companies like Google and Facebook.

Details: The report includes interviews with people linked to Big Tech companies like Google and Facebook as well as outside academics and privacy advocates.

What they found: The authors identified a split between many industry representatives who believed the current system worked fairly well, while outsiders said it needed to be modified to protect consumers. Per GAO...

"Comprehensive internet privacy legislation that establishes specific standards and includes traditional notice-and-comment rulemaking and broader civil penalty authority could enhance the federal government's ability to protect consumer privacy."

The big picture: The release of the report coincides with a bigger push among lawmakers of both parties — including now-in-charge House Democrats — to craft a privacy agenda.

  • "From the Cambridge Analytica scandal to the unauthorized disclosures of real-time location data, consumers' privacy is being violated online and offline in alarming and dangerous ways," House Energy and Commerce Chairman Frank Pallone said in a statement.
  • The committee also announced Wednesday it would hold a hearing later this month on privacy. Its Republican-controlled Senate counterpart will host its own hearing in February as well.

What's next: House Democrats have yet to coalesce around a single piece of privacy legislation or a group of bills.

Go deeper: Read David's full piece here.

4. Jack Dorsey defends Twitter — on Twitter

Twitter CEO Jack Dorsey gives himself a "C" grade for "taking responsibility," which was one of the most specific answers he gave during a live Twitter Q&A with journalist Kara Swisher Tuesday, Axios' Kia Kokalitcheva writes.

Why it matters: Twitter remains an obsession for many journalists and one resident of 1600 Pennsylvania Ave., but many users have grown deeply unhappy with the prevalence of harassment and abuse in many conversations, along with the company's seemingly inconsistent enforcement of its own community rules.

Highlights from Dorsey's discussion with Swisher:

  • Twitter's top priorities: "In the past I think we were trying to do too much. We’re better at prioritizing by impact now. Believe the #1 thing we should focus on is someone's physical safety first. ... Doxxing is a good example which threatens physical safety. So does coordinate harassment campaigns."
  • Users leaving Twitter: "I want people to walk away from Twitter feeling like they learned something and feeling empowered to some degree. It depresses me when that’s not the general vibe, and inspires me to figure it out. ... I also don’t feel good about how Twitter tends to incentivize outrage, fast takes, short-term thinking, echo chambers, and fragmented conversation."
  • Suspending President Trump or other newsworthy public figures: "We hold all accounts to the same terms of service. The most controversial aspect of our TOS is the newsworthy/public interest clause, the 'protection' you mention. That doesn't extend to all public figures by default, but does speak to global leaders and seeing how they think. ... I don't believe our service or business is dependent on any one account or person."
  • On 2016 rumors of selling the company: "We ultimately decided we were better off independent. And I'm happy we did. We've made a lot of progress since that point. And we got a lot more focused. Definitely love the idea of opening more to 3rd parties. Not sure what that looks like yet. Twitter is close to a protocol."
  • On not having a No. 2 executive at Twitter: "I think it's better to spread that responsibility across multiple people. It creates less dependencies and the company gets more options around future leadership."

Yes, but: More than anything, Dorsey and Swisher's conversation highlighted how poorly suited Twitter's design is to this type of interaction.

  • More than once, Swisher had to create new threads, and observers' ability to interrupt the conversation made it even harder to follow their back-and-forth.
  • Recode's Kurt Wagner dives deeper into this.
5. Take Note

On Tap

  • IBM Think continues in San Francisco, as does Goldman Sachs' invite-only tech conference.

Trading Places

  • Chef has hired former Microsoft, Salesforce and Splunk marketing executive Brian Goldfarb as chief marketing officer. Suggested first task: Getting the world to realize it's a tech startup and not a rival to Blue Apron.

ICYMI

6. After you Login

Rudy the bulldog wasn't best in show at the Westminster Dog Show. He didn't even win his category, but he is fun to watch.