Google, Apple seek a cut as publishers' subscription options expand

Brief:

Google in a statement to TechCrunch denied that it’s seeking a 30% finder’s fee for subscriptions it generates. The search giant said hasn’t determined its fee structure but that the terms will be very generous in favor of publishers.
Google earlier this month announced article limits intended to encourage people to subscribe to paywalled sites like the New York Times, The Wall Street Journal and the Financial Times. Previously, Google had required publishers to post at three stories a day for free on Google Search.
Meanwhile, Apple and Facebook have reached an impasse over how to share subscription revenue with publishers, Recode reported. Apple wants 30% of any subscription revenue Facebook helps generate, while the social network is willing to let publishers have all the money. Facebook in the next few weeks will introduce a version of its subscription tool that puts paywalls on some articles for Android phones, skipping iOS for now.

Insight:

The news highlights the ongoing power struggle between publishers and digital platforms as content consumption moves online and readers expect free articles. As news consumers shift their media consumption to mobile devices, publishers are facing difficulties in monetizing the platforms. Mobile apps account for 57% of digital media usage, according to a 2017 study by tracking firm Comscore, making the monetization of mobile media more imperative for publishers. About 45% of U.S. smartphone users have Apple iPhones, with most of the remaining 55% using Android devices, Comscore data show.

Facebook’s subscription tool will let publishers use two kinds of paywalls around “Instant Articles” that the social network hosts on its mobile apps: a “metered” version that limits free articles to 10 a month, and a “freemium” version with paywalls around individual articles. Users who reach the paywall will be sent to a publisher’s site to pay for a subscription. Apple, which has always demanded a 30% fee for subscriptions generated through its apps, isn't treating Facebook any differently than other apps it works with. If Facebook continues to withhold its subscription tool from iOS — and the tool proves a success on Android — or if Google comes in with a lower revenue-share fee on its site, this could pressure Apple to negotiate with Facebook. However, if Facebook's tool continues to face push back from publishers — as it already has — and from Apple, then it's influence may be limited.

Facebook, which has said its efforts to help publishers sell subscriptions are an outgrowth of its Facebook Journalism Project, has faced publisher complaints about how many articles are made available for free before a paywall is introduced. The Wall Street Journal and the New York Times aren’t participating in Facebook’s subscription plan.

Meanwhile, Facebook, Google and Twitter are facing greater federal scrutiny for their role in distributing propaganda and misinformation during the 2016 U.S. presidential election. Investigations of Russian meddling in the election may lead to requirements that social media companies and search engines label political advertising and paid editorial content to make it more transparent to voters.