Why Apple Is Buying A Digital Magazine Service

by Trefis Team
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Apple (NASDAQ:AAPL) recently announced that it will acquire Next Issue Media and its digital magazine subscription service Texture, as it looks to play a larger role in the content distribution space while augmenting its fast-growing Services business. Texture offers a subscription to a bundle of magazines including Vanity Fair, Sports Illustrated, and National Geographic at a fixed monthly fee of about $10.

Services Business Continues To Grow

Apple has been betting big on its Services business, which includes offerings ranging from music streaming to mobile payments. The company has set a target of increasing total revenue from Services to more than $40 billion by 2020, up from about $30 billion in the fiscal year ended September 2017. While a significant portion of the company’s Services revenue comes from the commissions Apple gets on the sale of apps and the commission (typically 15%) from content providers for subscriptions made on its platform, content distribution is also a major part of the company’s Services strategy. Although it’s not clear as to what Apple intends to do with Texture following the acquisition, given that it already distributes magazine and related content apps via its App Store and Apple News service, it’s possible that the deal could enable to company to increase the recurring revenues of its content business. For instance, Apple already runs the Apple Music streaming service and the company is also planning to launch a streaming video/TV services in the near-future.

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