News Corp's The Daily Is Doomed

rsmiller510 writes "After all of the hype, it was surprising how much The Daily, the new News Corp. iPad daily newspaper, looks like a conventional news magazine. Ultimately, though, it's an old model in a new package and as such will fail."

Comments

Drop in the Bucket to Be Shoved Down Our Gullets

[eldavojohn]

Unfortunately for News Corp, as VentureBeat reports, it's already invested an astonishing $30 million just to launch this thing, and it will cost another $500,000 a week to keep it going. While Murdoch says the right things about taking the presses and the trucks out of the equation to produce a leaner operation, I'm left wondering how many subscribers and advertisers it will take to make the initial investment back, never mind make it profitable -- especially with Apple taking half of the subscription revenues.

News Corp has a quarterly revenue of around 8 billion dollars but their net income has been steadily declining (duh). To risk a one time cost of thirty million followed by a weekly liability of half a million to save that hemorrhaging is a bit of non issue in my opinion. I think Murdoch could give up one of his twenty yachts and reduce his yacht insurance to offset that if he wanted to pay for The Daily out of pocket.

The Apple comment further mystifies me. While terrible that they should lose so much money to Apple, it does give Apple incentive to see this succeed since it's designed for their product. So consider first how amazing Apple is at promoting products and how terribly backward News Corp has been as of late. It might turn out to be a paltry sum to have Apple selling their product with interest of seeing it succeed.

Regardless, if I've learned one thing from Microsoft and their initial XBox and Zune attempts, it's that a very very wealthy company that wants to shove something down the consumer's maw will not let up until it has turned a profit. The problem is that News Corp has what, eight billion sitting around in cash? Let the blood letting begin with this pin prick!

It's not going to fail

[goombah99]

The argument seems to be that people want a proliferation of new sources. Yes I'm sure that's why fox news and CNN and MS nbc all are watched by the same people eager for a proliferation of points of view. Or why readers of Huffpo also hang on the words of powerline blog and littel green footballs. Or how the readers of Hagee and the middle easter armageddonist news sources are widely read in the Slashdot crowd.

People do not channle surf these days. they find a few news aggregators they like, say huffpo, boingboing, andrew sullivan, fark nad slashdot, and then they follow the links one deep from there. But it's the aggregators that they come back too. A well constructued newsmag stands a chance. But if it is no more than the New york times or newsweek then it will also have plenty of competition.

Shocked

[mark72005]

Color me shocked that the writer for another website, marketing itself as a "macrosite for news", predicts the failure of another news aggregator.

GPS enabled

[wooferhound]

I saw a TV interview with Murdoch yesterday, and he was trying to say that the most innovative thing about his iPad News service was it's GPS functionality. Supposedly no matter where you take the thing, it will give you news and weather that is relevant to the area that you are at.

This could backfire, Steve

[linhares]

Ok mods will burn me for this... but I think that their move to charge 30% off of the dying news industry might seriously backfire. Consider this:

i) the media industry has friends in high places;
ii) given enough time, they will become desperate and have nothing to lose;

To bet against Steve has been a surefire loss for a long time. But I would never fight against those with friends in high places, desperate, with nothing to lose.

I think it's only a matter of time between the news cycle starts turning all "Apple the subject of antitrust laws?" or the classic "Should Apple be broken up?". Neither AT&T nor IBM nor MS had a good run with the state dept. Perhaps Apple is overstreching a bit too far here; I for one think the backlash isn't worth that 30% cut.

Content HAS to be paid for in SOME way

[DavidinAla]

I don't have an opinion about whether The Daily is going to make it or not. I've spent maybe 15 minutes looking at it so far (yesterday), and I'm going to give it more of a chance over the next couple of weeks while it's free. My initial thoughts weren't especially positive, but it's the content, not the business model, that didn't impress me. The content looked OK and was arranged decently, but I wasn't especially interested in most of what I saw. I didn't see that it was anything unique that I couldn't find anywhere else. If it continues to feel generic, it's going to die. However, if it dies, it's not going to be because people won't spend $1 a week on it. If content is unique and interesting, I'll easily pony up money for a week of it that's less than the cost of a soft drink these days. Some people won't pay anything, ever, for content. But I think that's shortsighted. SOMEONE has to be paid to produce content. It doesn't just magically appear from the Content Fairy. Just as people have to be paid if you want your grass cut or your hair cut or your plumbing fixed, you have to pay the people who produce content. I don't know what the best model is for paying those people, but the idea that you can forever get content for free isn't logical or reasonable. Content companies are losing money by giving away their material on the web. That is NOT going to continue forever. Anybody who understands business understand it you can't invest massive amounts of money into something not producing a return, especially while your traditional lines of business dry up. Those of us on the web have gotten a free product for years because we've been subsidized by the people who pay for printed and televised versions of the content. That subsidy won't last forever. SOMEONE has to find a way to get content producers paid. To simply declare that the future model is free is shortsighted and is a misunderstanding of what's happened on the web so far.

Re:Content HAS to be paid for in SOME way

[narcc]

Those of us on the web have gotten a free product for years because we've been subsidized by the people who pay for printed and televised versions of the content. That subsidy won't last forever.

The same thing happened to an old technology called "radio". It's biggest problem was that content produces had no way to bill their listeners. Once they bought a "radio set" they could consume all the free content they wanted!

Sure, it enjoyed a huge boom in the 1920's, but By the 1940's, all the money dried up and radio became a distant memory.

If my memory serves me correctly, a similar technology called "television" met the same fate in the 1960's -- To be fair, it never really stood a chance with its short-sighted "give all the content away for free" business model.

Obscure, I know, but you can find information about them on the web ... for now ...

Re:Content HAS to be paid for in SOME way

[Locke2005]

SOMEONE has to be paid to produce content. It doesn't just magically appear from the Content Fairy. Just as people have to be paid if you want your grass cut or your hair cut or your plumbing fixed, you have to pay the people who produce content.

100 million free videos on YouTube and 10 millions lines of open source software appear to argue that people don't need to be payed to produce content. What is needed is methods of separating the 99.99% crap from the 0.01% of content that is actually worth consuming, despite the fact that which 0.01% is worth it varies from person to person. I'd give Google a much better chance of aggregating personalized content than Rupert Murdoch. Traditionally I would have argued that you still need to pay editors, but Wikipedia is founded on the principle that you don't, so now I'd say it's still an open issue.

Re:Drop in the Bucket to Be Shoved Down Our Gullet

[ArcherB]

News Corp has a quarterly revenue of around 8 billion dollars [google.com] but their net income has been steadily declining (duh).

Has it?

From the article titled "News Corp profit doubles despite MySpace charge"

The charge on News Corp’s digital media group came after MySpace cut half its staff and marred otherwise strong results in which rising cable and broadcast television profits more than offset declines in film and digital media.

Net income for the fiscal second quarter more than doubled to $642m, or 24 cents per share, from $254m, or 10 cents, a year earlier, when results included a $500m litigation settlement. Excluding one-offs, adjusted earnings per share rose 16 per cent from 25 cents to 29 cents.

Although I think the rest of your comment is spot on.

Not My Problem (Re:Content HAS to be paid for in)

[EXTomar]

If these guys really believe in capitalism as purported, then it isn't my or any other person's or even Apple's problem for News Corp to make money on anything let alone an iPad app. If these guys really believe in capitalism as purported, News Corp or Murdoch may recognize a demand but have no way to capitalize on it today then it isn't our problem to solve either where both we or Apple should be free to walk away from what News Corp wants to do if they think it is a bad idea or bad deal. Failing to make money is a normal part how capitalism works were laying the blame at the feet of others is not interesting if one really believes in the virtues of capitalism.

But this is something that has always bothered me about Murdoch. Those conservative values are near and dear and paramount and we will beat that drum and sing those praises about them...until those values work against us then it is entirely utterly unfair and not our fault. If it turns out this time the market is working against News Corp, it is a good time for News Corp should rethink their strategy instead of News Corp crying we and Apple rethink ours. It is not our or Apple's problem that News Corps sunk $30M US plus $500k US a week into something where telling us and Apple how wrong we are flies in the face of capitalism.

Re:Drop in the Bucket to Be Shoved Down Our Gullet

[Americano]

Many users find they are bored with the iPad and use it less and less each month.

It's funny you should make that assertion! Too bad it's completely baseless.

From the link I just provided: "77.6 percent of the users found their iPad usage went up after their initial “honeymoon” period."

That doesn't mean *this app* will be successful, but it certainly won't fail for the reason you suggest.