Apple News: A Lesson to Be Repeated?
November 15, 2019
Many years ago, there was an online service called Predicasts. The company had offices in Cleveland, Ohio, a city notable for its burning river and an interesting American football team.
But in the world of online, Predicasts was famous. File 16 on Dialog would provide a summary of numerical data located in magazine and trade journal articles.
The company discussed creating its own service in order to disintermediate itself from the commercial online vendors. I assume that most of the gentle readers of this blog do not recall Dialog Information Services, SDC, ESA Quest, and other online intermediaries. Don’t worry. I can’t remember these gatekeeper companies. Think of these outfits as the equivalent of today’s cable companies. Instead of providing access to the vast wasteland of television, users paid to look at commercial databases like Predicasts.
The anecdotal evidence which filtered to me was that Predicasts wanted to set up its own online service. But the hurdles were technology, marketing, and the lack of information about the power of the brand. Predicasts online service went no place or, at least, no place that moved the needle in the online world.
Lesson: Online was hard in the 1980s. Online is hard today. Especially when one wants to make oodles of money.
There’s a lesson here, and it is one that Apple is now trying to understand. “Apple News+ Has Struggled to Add Subscribers Since First Week of Launch in March, Sources Say” makes clear that after the “must have” subscribers signed up, others (the “we don’t care” crowd) have stayed away.
The write up states:
Apple signed on 200,000 subscribers to Apple News+ in its first 48 hours in March, but has been stuck in neutral since that time, according to people familiar with the matter.
What does this tell us?
A bunch of customers are not interested in certain types of information when it costs more and requires extra steps. These steps can be tiny, but the anti step barrier is formidable. The costs more problem is different. Price cuts will not significantly increase sign ups.
The Predicasts’ thought process may be a precursor to what Apple assumed; that is, “We are so big, lots of people will sign up.”
Nope. They won’t.
That’s the problem online presents. A monopoly has to extract revenue in a number of ways, preferably selling something like a mobile phone and a big, juicy bundle of extras as part of the deal. Another approach to wait until there are no other choices, and then introduce a text centric online service that forces those who don’t want to pay to cross over into the “okay, we will pay” zone. There are other angles as well.
But the point is: Text requires mental effort to consume. Who wants to pay for extra work. Must have information is different. No one has a choice. A lawyer has to pay to see some data. A doctor has to pay to keep up with some medical information.
News? Maybe a broker, but there is Bloomberg, Factset, and other specialists.
General news?
Apple’s lesson is that more work is needed. The MBA assumptions, the nifty Keynote decks, and the confidence of a big sleek company—obviously wrong. Back to school and repeating a grade to catch up on what was missed the first time through the course.
Stephen E Arnold, November 15, 2019
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