Monday, December 3, 2012

The obligatory obituary for The Daily

Anyone surprised by the new that Rupert Murdoch will be closing down The Daily, the company's experiment in tablet newspapers, has never launched a new publications. The odds are long, even when properly funded.

But now that the words is out, The Daily will be shuttered on December 15, its app already pulled from the App Store, it is time to rehash the reasons why this first big experiment did not pan out.

Too Big

Every start-up wishes they had the funding that The Daily had. Back in July, when the first rumors of The Daily's demise were first heard, estimates were that the digital newspaper was costing the company half a million dollars a week. That is an incredible commitment by News Corp.

But that number, $500,000, is also the biggest reason The Daily never had a chance. That level of funding is incredibly old school, what a media company would expect to spend on a print start-up, not a digital start-up to be read by tablet owners – which in early 2011 was a pretty damn small market. In fact, at the time of The Daily's launch, there were only seven or eight million iPads in circulation in the U.S. – did Rupert Murdoch know this at the time? At the time of The Daily's launch he spoke of 50 million Americans owning iPads, though exactly when was not specified.

Apple only revealed its U.S. iPad sales when forced to at trial. Up until recently the only sales number available for the first three quarters the iPad was available said that 15 million units had been sold - but that was the worldwide figure.

"Unfortunately," Murdoch admitted in the company's announcement today, "our experience was that we could not find a large enough audience quickly enough to convince us the business model was sustainable in the long-term."

The right approach, if it were to have succeeded long term, would have been to go small: a small, dedicated staff supplemented with the power of other News Corp. media outlets.

One reason the go-small approach wasn't taken was that if The Daily had the content input from the WSJ and other titles those publication's own tablet efforts might have been compromised. But having a large staff, estimated initially at 100 people, and a budget of $30 million, while a good thing from a production standpoint, doomed the digital paper from the start.

A Small Market Made Smaller

So if the iPad market was pretty small in early 2011 then the only way to succeed would have been to appeal to as wide an audience as possible. I'm sure that many years ago, when Rupert Murdoch first started in the business in Australia, this principal was ingrained in his thinking and shaped the products he created.
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Hired to run The Daily were staff from the NY Post, a widely read, but unprofitable tabloid. Estimated to lose $70 million a year, the Post is not the poster child for modern profitable newspapering.

News Corp. newspapers may be said to appeal to a "wide" audience, with their dumbing down of the news, their sensationalism, and their extreme right-wing slant on events, but it is not a broad market approach as evidenced that the company is splitting off its newspapers to protect the profits generated by its film and broadcast properties.

By bringing that approach to digital newspaper, The Daily was already carving out a niche in a market too small to be niched. One day this might work, but certainly not in 2011 and 2012.

Remember, we are talking about digital-only newspapering – not multi-platform products. The Daily could only reach a total market the size of NYC. To get the high number of subscribers needed it would have to appeal to a very high percentage of them.

I cancelled my own subscription to The Daily early on, outraged by its editorial content and partisan politics. One wondered immediately if the purpose of the tablet-only newspaper was simply to extend the reach of the Murdoch press into the digital arena created by the iPad, not to find a profitable way to produce a tablet newspaper. Is it a coincidence that The Daily is being shuttered right after the 2012 Presidential election? Probably, after all the move is certainly tied to the split of News Corp, no new company would want to be saddled with such a money loser – but the same could be said of other News Corp. newspaper titles, as well.

Production

Many newspapers, such as The New York Times, chose to go in a completely different route when creating its first tablet editions. Instead of creating a natively designed tablet publication with custom layouts, many papers went with apps that brought in the RSS feeds of the paper's website. The other option was the replica edition.

The rationale behind those decisions is simply that the production process is automated. RSS feeds populate preexisting layouts, or replicas take PDFs of preexisting print pages and creates a new tablet edition.

The Daily did it the hard way, creating a portrait tablet magazine-like publications, close in look to newspaper tabloids. The Daily was attractive (at least initially) and custom built. This required staff, of course.

Many weekly magazines have been slow to move to tablets for precisely this reason – production. No surprise, then, that Crain Communication would want to create an app that automates the process rather than try and reformat their weekly trade newspapers into a native tablet design.

Advertising

Well, there wasn't much advertising going on in tablet editions back in February 2011, and sadly, not much has changed. The ad agency community has gotten on the digital bandwagon, but that has not translated to tablet editions. Most ads appearing in tablet editions remain digital copies of the print ad, not brand new copy specifically designed for the tablet experience.

This will change, that much I am sure of. But it will take time. The ad game is a young person's business, and young people are going digital. But tablets skew upscale, which is why iPad owners are not simply an under 30 crowd. Eventually this will work itself out, but in the meantime tablet publishing is not a new gold rush.

The News is Changing

Some argue that the way consumers get their news means that publications that mimic the print experience, as The Daily did, are out of step with readers.

I'm sure I agree with this, but I certainly can not say it is 100 percent wrong either. Certainly a digital newspaper, produced by print veterans seems like a recipe for disaster. But it is not the case that The Daily did not have bright digital as some personnel came from digital properties.

But the approach was certainly taken from the existing Murdoch press – whether that approach is valid has not been proven.

Too Early

In the end, Rupert Murdoch spent $30 million+ on The Daily, good for him, nice try.

But the experiment was like putting down $100 at an arcade where the prize if you topple all the bottles is a $2 stuffed animal. The investment never could match the possible return – at least not yet anyways.

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