A month after disclosing an agreement to buy digital magazine app Texture, Apple (NASDAQ: AAPL) announced plans to create a new premium subscription Apple News product, integrating it with Texture. According to Bloomberg, the goal behind the strategy is to generate new revenue from content and services. Apple is in the process of acquiring Texture for an undisclosed sum. The magazine app, previously called Next Issue, gives subscribers unlimited access to up to 200 magazines for $9.99 a month. A source reports that Apple laid off 20 Texture staff.

Bloomberg reports that Apple will integrate Texture technology and Texture’s remaining staff into the Apple News team who will work on the new premium subscription, which is expected to launch sometime in the next year. Part of the subscription revenue generated will be shared with magazine publishers as part of the deal, says Bloomberg.

Not much else is known about the new Apple News product, and Apple declined to comment on the story. Previously, Apple had a Newsstand app, a built-in app initially released in 2011. In 2015, it was replaced by the Apple News app, currently a free app for iPad and iPhone, in 2015. The Next Web speculates that the new premium app will cost the same as the Texture subscription – $9.99 a month – and that the service will be ad-free.

Founded in 2010, Texture was owned by Conde Nast, Hearst, Meredith, Rogers Media and KKR, before selling the app to Apple. Texture subscription includes access to magazines including Bon Appetit, Vanity Fair, National Geographic, Parents, Esquire, GQ, The Atlantic, Rolling Stone, Cosmopolitan, InStyle, Architectural Digest, Cooking Light, Vogue and Fast Company. It is not known which of these magazines might be included in the news app.

‘We’re excited Texture will join Apple along with an impressive catalog of magazines from many of the world’s leading publishers,’ said Eddy Cue, Apple senior vice president of Internet Software & Services, of the acquisition in a news release. ‘We are committed to quality journalism from trusted sources and allowing magazines to keep producing beautifully designed and engaging stories for users.’

In February, Apple reported its fiscal first quarter 2018 for the period ended December 30, 2017 with record-breaking quarterly revenue and quarterly earnings per share. Highlights from the quarter include:

• Quarterly revenue of $88.3 billion, a 13 percent increase year-over-year and an all-time record
• International sales accounted for 65 percent of the company’s revenue for Q1
• Earnings per diluted share of $3.89, a 16 percent increase and an all-time record
• Services represented $8.47 billion in revenue, or 9.6 percent, products represented the remaining $79.82 million, or 90.4 percent.
• In January, the company hit a milestone with 1.3 billion active installed devices, an increase of 30 percent from two years ago.

Insider Take:

To date, Apple has not had great success with a news app, so it is an interesting choice for them to work on a premium news app now, especially with other news subscriptions available. We wonder how Apple will structure the program. Presumably if news magazines are to be included and will receive a share of revenue that news organizations would get the same consideration. Will news organizations like Washington Post and The New York Times – who have their own news apps already – want to participate? Will Apple earn its standard 30 percent revenue share for year 1 and 15 percent for subsequent years? It will be interesting to watch this product take shape.