By Lukas I. Alpert 

The Wall Street Journal is a launch partner for Apple Inc.'s $9.99-a-month news service, marking a significant shift in strategy meant to draw in new readers and paying subscribers without undercutting the publication's core business.

Apple unveiled the news app, Apple News+, at an event Monday. It will provide access to articles from more than 300 magazines including Vogue, GQ and Sports Illustrated. In addition to the Journal, the Los Angeles Times and Toronto Star will be the other North American newspapers joining the service.

Apple will take a substantial cut of the revenue -- it was seeking a 50% share in talks with publishers, people familiar with the discussions say. Media partners will get a portion of the monthly fees based on readership of their stories.

Journal executives declined to comment on the terms of revenue sharing.

Other major news outlets including the New York Times and Washington Post engaged in talks with Apple, people familiar with the situation said, but chose not to join the new service.

The Journal for years has focused on building its digital subscriber base, appealing to a core audience of people interested in business and financial news. The paper finished 2018 with 1.71 million digital subscribers, with a full-priced subscription costing $39 a month. Its print subscribers totaled about 840,000. The Apple partnership is viewed as an opportunity to bring in revenue from a broader audience.

William Lewis, chief executive of Dow Jones & Co. and publisher of the Journal, said at a meeting for newsroom staff that the deal "will enable us to get our journalism in front of millions of people who may never have paid for our journalism before."

Robert Thomson, chief executive of Journal parent News Corp, has been among the most vocal critics of tech companies such as Alphabet Inc.'s Google and Facebook Inc. He said the Apple deal was a measured and smart bet. "It's important that we partner with tech companies when that makes sense" and "pursue them" when necessary, he said at the newsroom meeting.

The partnership carries risks for the Journal, since each Apple user will generate much less subscription revenue for the company than a full-priced subscriber. Journal executives said they weren't concerned about existing subscribers canceling service to shift to the Apple service, because the two offerings will be fundamentally different.

The Apple app will surface stories thought to be of interest to a general reader -- that could be national news, politics, sports and leisure news, but also some business news, people familiar with the situation said. The paper's entire slate of business and financial news will also be searchable within the app, but the thinking is that most users won't consume much beyond what is actively presented to them.

Apple users will have access to only three days' worth of the Journal's archive, the people said. The Journal also negotiated terms that would allow it to drop out of the service, they said.

"I have not entered into this deal lightly," Mr. Lewis said in his newsroom talk. "It was never worth doing a bad deal."

Apple didn't immediately respond to a request for comment.

Mr. Lewis said the shift by the Journal was a milestone as significant as the launch of a paywall on the Journal's website in 1996, more than a decade before most of the news industry.

To meet the needs of the Apple product, the Journal will be hiring around 50 additional newsroom staffers, the people familiar with the situation said.

While Apple won't share customer data with the publishers, participating news outlets will be able to see what is being read and target regular visitors with specific offers for things like newsletters, said Suzi Watford, the Journal's chief marketing officer.

The Los Angeles Times is also hopeful that the Apple partnership will jump-start its digital business.

"We have every confidence that the Apple affiliation will spur the growth of our digital subscriptions," said Patrick Soon-Shiong, owner and executive chairman of the Times.

Write to Lukas I. Alpert at lukas.alpert@wsj.com

 

(END) Dow Jones Newswires

March 25, 2019 19:48 ET (23:48 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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