Monday, January 10, 2011

The Daily: the question is not when will it launch (answer: soon), but how long will it be allowed to be in the red?

Update: Yahoo's The Cutline is reporting that Apple CEO will join Rupert Murdoch on stage when the News Corp. head unveils their iPad-only daily news product. The event will be at the San Francisco Museum of Modern Art, according to the report (which is why the attendance of Jobs would make a lot of sense.)

Original post:
One report by Jeff Bercovici at Forbes has spawned a bunch of posts about The Daily, Rupert Murdoch's iPad-only daily news product, each repeating the new launch date Bercovici believes is correct -- January 19th.

The 19th or the 17th (the date the WSJ's Peter Kafka said a few weeks ago the product would launch), really who knows. Frankly, knowing Apple, someone will forget to approve the app and it won't show up until Memorial Day.
But we all know it will launch one day, right? And as someone who has been through their share of product launches, I can tell you that the big question isn't when? or what? or if? but how long? As in "how long will Murdoch allow The Daily to run in the red before he pulls the plug or incorporates the staff and the product into another unit?"

We all know that many, many start-up fail. But a successful start-up on a new platform is even a bigger challenge. In order to succeed The Daily will need to sell subscriptions and lots of ads. While everyone is pretty much focused on the subscription side of things, most publishers would be losing sleep over the advertising prospects, unless Apple CEO Steve Jobs has said "hey, Rupe, don't worry about it, our iAds have you covered". (Frankly, if he said that I really be nervous.)

So what are the prospects for this new iPad-only product? Few seem to want to speculate, and fewer want to publicly say that Murdoch's new baby will fail.

The MacObserver gave the editors some advice concerning the potential audience and their wants and needs, but few have really discussed the business side of this launch.

The New York Times's David Carr has written the best piece so far, and that was back in late November when he speculated that getting 100,000 readers out of the gate would be a good number to shoot for. That's the number that crossed my mind, and is certainly far lower than the number Murdoch says be is shooting for (half a million after five years). Carr calculated that 100,000 readers would translate into less $20 million in revenue. I agree, it would be less than $20 million, probably a lot less. Because at $20 million, The Daily would have to cost $200 per year -- will iPad owners be willing to pay this much to read The Daily?

Word is that the entire project has a budget at $30 million, without a doubt the biggest investment tablet media so far. But with a staff of 100, this level of funding will only guarantee so much time, so the revenue achieved through subscriptions and advertising will really be used to extend out the time when The Daily can run in the red, not so much about getting in the black. To achieve that milestone, The Daily will need to see iPad sales explode, as well as to port over its product to those Android tablets, as well as other platforms.

One approach we know this start-up won't take is this: launch, promote, then sell out to a large media firm. That's one scenario we can dismiss right now.