Epic battle lies ahead for news publishers to get a fair revenue share from tech platforms

News publishers can only look on with envy at the success of Epic Games – the US-based tech firm behind addictive online team shoot-em-up Fortnite.

With revenues thought to exceed £2bn a year – that is more than all the money made from UK national and regional newspaper brands combined.

But everyone who cares about finding a sustainable future for quality news should be rooting for Epic in its battle royale with the world’s biggest company (by market cap) Apple.

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Around £1bn is thought to have been spent on Fortnite through the Apple store over the last three years, with Apple taking a 30% slice of the action as it does with all App Store purchases.

Epic is currently suing Apple in the US courts seeking what it sees as a fairer deal after being kicked out of the App Store for contravening Apple’s payment rules.

Epic Games chief executive Tim Sweeney said last month: “Apple has no right to take any percent of any company’s revenue just because they made the phone people use to access the stuff.”

It is a sentiment that many in the news industry might share.

After all, mobile phone companies don’t take a share of the display advertising that appears on newspaper websites accessed through their devices any more than TV makers take a cut of the advertising revenue made by broadcasters.

With around 50% of the UK phone market, Apple has a market position that would be considered monopolistic if it was a newspaper publisher.

As the portal through which most of us see the world, mobile phone manufacturers are the new media giants – replacing the likes of News Corp, DMGT and Reach as the most powerful media players in the UK.

News publishers have had to contend with the Apple tax since the App Store first launched in 2008.

In general, what this means is that if they sell a subscription direct they get to keep all the money. But if they sell it through Apple they lose 30% and have to take it on the chin.

Credit and debit card companies do very well charging merchants a fee of around 0.12% per transaction when we buy anything online or in shops.
Compared to this, the fees charged by Apple just look greedy.

US publishers have written to Apple this week, with Jason Kint of trade body Digital Content Next saying: “The terms of Apple’s unique marketplace greatly impact the ability to continue to invest in high-quality, trusted news and entertainment particularly in competition with other larger firm.”

As with the Australian news industry’s battle with Google, another aspect to all this is data. The right to collect and own data from your own customers and do with it as you will.

All these platforms – the virtual ones like Google and Facebook – and the physical ones, like Apple and Samsung phones, need quality fresh daily content to keep people coming back and spending their time and money. The news industry provides this.

We could be entering a golden age for journalism, but only if the platforms can be persuaded (or forced) to give a fair share of revenue to publishers. A truly epic battle lies ahead.

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