1 Year Later: Murdoch’s The Daily, New Media Business Models

Megaupload provides a partial clue about how many feel about (over) paying for content. Right or wrong, it signals an alarmingly different era for new media and publishing models.

The Daily Launch
Rupert Murdoch launches The Daily news app, February 2011
The Daily Launch
Rupert Murdoch launches The Daily news app, February 2011

If you follow new media, and publishing then you’ll know one of the biggest ventures of 2011 (at least in terms of hype) was magnate Rupert Murdoch’s The Daily. The digital newspaper was launched in New York, with Murdoch confidently forecasting a grand new era of (presumably profitable) digital publishing. It was such a big deal that Apple exec Eddy Cue, subbing in for an ailing Steve Jobs, made the flight out to the snowy East coast. iPad… in search of content.

About this time last year I wrote, “It should make for a really interesting test (to the tune of $30 million) of consumers’ interest in paying for content that is mostly already available free across web sites, other news sites and blogs.”

Over the weekend, Peter Preston at the Telegraph questioned whether The Daily has “got off its launch pad” (well, we at least know it’s gotten off the “iPad” because it’s now available on Android, albeit in limited capacity). Though he doesn’t specify the source, he reveals the numbers, one year in to the project: 100,000 subscriptions at $39.99 per year. Not all subscribers pay $39.99. But even if we work the math using the best case scenario that equates to a top line of approximately $4 million. Preston notes that’s only 20% of Murdoch’s goal. Worse, it will take 5 to 7 years to break even by his estimation. Pretty dreary stuff, dear chaps.

A lot of analysts, pundits are watching The Daily to see if there is any business model that will work in this era of massively abundant information.

The early answer appears to be no.

Megaupload provides a partial clue about how many feel about (over) paying for content. Right or wrong, it signals an alarmingly different era for new media and publishing models.

I gave The Daily a spin last year and enjoyed the experience. It lacks a marquee editorial voice, granted, but it’s a light-hearted, slick way to read a digest of important and interesting news stories.

What do we value more: a strong, consistent editorial voice or a mash-up of perspectives and sources?

The Canadian in me would suggest both have their place. If I had to choose one, though, I’d say the world is clearly moving to the latter. Free apps like News360, Flipboard and Pulse have led a cottage-industry of news, rss and social aggregators that are catching on like wild fire.

Then there’s the business model.

Traditional media seems to approach funding top-down. Throw a bunch of money at a venture, hire lots of staff, sell ads, and try to achieve break-even before everything blows up.

New media sites like TechCrunch (pre-AOL acquisition) and Mashable were grown organically, scaling and adding staff as revenue increased.

Here in the San Francisco Bay Area, the Bay Citizen is another interesting model to watch. A non-profit, it includes a unique, quality approach to hyper-local news, and partners with the Berkeley Graduate School of Journalism and The New York Times; not exactly chump change. They continue to pump out stories across a variety of topics including local news, arts, sports and government/politics. The problem? (aside from the fact that their editors have a curious preoccupation with stories related to marijuana) The clock is ticking – big time. Early on they raised approximately $7 million (2010). Then they followed the non-organic, fat-cat approach: hire writers, lease nice office space, launch a pretty web site, etc. Then the cash started to burn, as it always does. Fast. The race then begins, as management atttempts to bolster the top line with donations. Voila, PBS 2.0. If TBC can achieve break-even then great, and I wish them well, and hope they can pull it off. But I wouldn’t bet on it. Regardless of talent, throw too much money at something and consider it destined to fail. Remember Ishtar?

Our conception of ROI and payback has changed dramatically.

As Preston points out in the Telegraph, Facebook is only 8 years old, and is on the verge of being valued at $100 billion.

Waiting 5-7 years for break-even on a shaky business model that relies on us paying for content that is available freely in abundance (much of it on par quality-wise) is a questionable proposition.

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