Guest author Cameron Yuill is CEO of AdGent Digital, a digital media and technology company.
The reason News Corp. has shut down The Daily, its iPad-only newspaper, is due to a simple math problem: not enough subscribers to cover the cost of production and distribution. The Daily had reportedly 100,000 subscribers at $40 per year which, by my math is only $4 million annually.
The mistake News Corp. made was hiring (expensive) editorial, journalists and technologists to build and provide content for the newspaper. On top that cost structure, The Daily had to pay Apple 30 cents on the dollar to distribute the newspaper via iTunes. No doubt overhead was way in excess of income.
Murdoch obviously made the decision that The Daily was not growing fast enough to ever have a chance of covering its costs, let alone making a profit. So The Daily bites the dust. Fair enough.
But what could have News Corp. done that might have had some chance of surviving or at least have been a less costly experiment?
Syndication Versus Creation
Across the News Corp. portfolio, the company is producing a ton of content that could have been syndicated to The Daily. The team to run the iPad-only newspaper could have been a whole lot smaller (and less expensive) which would have given it a chance of, at least, covering its costs.
There is no guarantee that consumers would have ultimately paid for the iPad-only newspaper but with NewsCorp’s marketing muscle it might have been able to attract a respectable number of subscribers.
And herein lies another problem that The Daily faced. In the offline world there is no way you can launch a new newspaper, put it in the distribution channel and expect customers to find it. Media companies spend tens of millions of dollars to launch a new paper. You have touts lining up on the streets to give you free copies and paid media to support a launch. In the offline world that is a defined market: distribution is in one city. A single market that is easy to cover.
How To Find Subscribers?
Online, it can be a far harder proposition to find customers. The market for The Daily is global. To find subscribers can be a costly exercise. And because the market is global, content has to be more generic so that is appeals to all potential readers. Offline, because distribution is usually limited to one city, content is tailored to local tastes. Online this would have been impossible as there are simply too many markets to cater for and the cost of providing such content would have been stratospheric.
Faced with a low subscriber base, a paper that by definition had to offer broad generic content and a math problem that was getting worse, News Corp. made the only sensible decision it could. The Daily is no more.
Kudos must go to Murdoch for sticking with it as long as he did. It was a worthy experiment in a rapidly transforming distribution environment.
Image courtesy of Shutterstock.