Why The Daily will succeed – or not
Rupert Murdoch, the last swashbuckling publisher of our time, will shake up the media world on Wednesday when he introduces the first iPad-only news product, which is expected to be sold in subscriptions costing 99 cents a week.
While it is too early to tell how well The Daily will do, here are the key factors that will determine its fate:
Why it could succeed
:: No baggage. As an all-new product built specifically for the iPad, The Daily can take advantage of the full multimedia and interactive capabilities of this exciting new platform. Thus, The Daily can avoid the common mistake among the legacy print and broadcast media of trying to replicate their existing products on the iPad, instead of creating something refreshingly new.
:: Wealth of content. As the pet project du jour of Mr. Murdoch, The Daily is likely to be able to pull from the global, cross-media content resources of News Corp. This includes not only such varied publications as the Wall Street Journal, The Times of London and the New York Post but presumably also the rich media and reporting produced by Fox Cable News and the Fox Television Network, which has outlets in almost every market in the United States.
:: Powerful promotion. The unsurpassed reach of News Corp.’s diversified media properties means The Daily will have millions of free (or deeply discounted) marketing impressions every hour of every day, around the world and around the clock.
:: Deep pockets. With $33 billion in sales and $5.7 billion in operating profit, News Corp. is well positioned to subsidize The Daily for as long as Mr. Murdoch cares to pursue the project.
How it could fail
:: It’s not free. While publishers from the Augusta Chronicle to the New York Times increasingly are moving in the direction of charging for the news they digitally delivered for free for 1½ decades, any number of alternative news sources are likely to eschew charging for content for as far as the eye can see. The business models of ventures like Huffington Post and Patch.Com call for them to generate as many page views as they can to build their ad inventories. HuffPo, among many others, specializes in summarizing stories originating at other sites. When The Daily publishes worthwhile stories, it’s likely that HuffPo will want to crib from it, too. And they’ll be free.
:: Embedded competition. Widely presumed to be a general-interest national news product, The Daily will compete with well-established brands ranging from Google News to the digital edition of every local newspaper in the land. Each of the incumbent media already has a following because it fulfills the needs of its readers. Further, many of the incumbents are freely accessible on not only iPads but also on desktops and via the mobile media. In other words, The Daily will have to be a breakout product to break the long-standing habits of avid news consumers.
:: Finite market potential. Regardless of the quality of The Daily, its audience necessarily is limited to those who own iPads. With iPad sales brisk in the 12 months since the product was introduced, there will be perhaps 40 million of the machines in the hands of global consumers by the end of this year. If 2% of those users subscribe to The Daily, the project could generate approximately $40 million a year in subscriptions, which would be augmented by an equal or greater sum in advertising. As such, it could be a respectable and profitable business. If only 0.5% of iPad users sign up, however, the project would reap some $10 million in subscription sales, which, in turn, would seriously reduce both its advertising potential and chances of profitability. If the response were even weaker, The Daily in all likelihood would not achieve commercial viability.
:: The chasm challenge. The Daily, like any other start-up, will have to cross the chasm of anonymity and consumer indifference in order to amass the critical number of readers it needs to generate adequate subscription and advertising revenues. The longer The Daily takes to break even, the more expensive the venture will be for News Corp. While the 79-year-old Mr. Murdoch likely is prepared to underwrite many millions in losses, his patience and lifespan are not inexhaustible. At the end of the day, the fate of The Daily may depend most heavily of all on the disposition of the mercurial Mr. Murdoch.