A look at the ramifications of the new iPad-only newspaper


iPad-only newspaper
iPad-only newspaper

AAfter a one-month delay, Rupert Murdoch's iPad-only newspaper, The Daily, launched recently in the United States promising “a patriotic American newspaper which believes in free markets, and freedom for everybody.” At present, The Daily content is U.S.-focused and only available to download for those with an account at the U.S. iTunes store. But will The Daily engage the American people in sufficient numbers to ultimately make money for News Corporation? Let's look at some interesting facts:

1. Costs:

  • US$30 million is reported to have been invested in set-up costs.

  • Weekly costs are thought to be about US$500,000.

  • The title employs 100 journalists producing 100 pages of content daily.

  • A substantial marketing campaign has included a 30-second TV commercial during the Super Bowl (watched by 111 million) where half-minute spots are estimated to cost the range of US$2.5 million.

2. Revenues:

  • Currently downloadable for free for two weeks thanks to a sponsorship deal with telecom company Verizon.

  • Thereafter, subscriptions are US$0.99 a week or US$40 for a year (of which Apple takes 30%). This is a cover price low enough that other U.S. newspapers gearing up to charge for content will find it difficult to compete.

  • Virgin Atlantic, HBO and Range Rover are among the initial advertisers signed up. These revenues are expected to grow in importance.

  • News Corporation has ambitions of a 50:50 subscription revenue and advertising split.

3. Will it make any money?

  • Rupert Murdoch has stated 800,000 subscribers will be needed to cover the weekly half-million in costs (he does not mention advertising revenues in this calculation).

  • An estimated 8 million iPads were sold in the United States in 2010. So The Daily would need 10% of current U.S. iPad owners to subscribe in order to break even. A subscriber base of this level would put The Daily among the top circulating U.S. newspapers.

  • The potential customer base will expand. Sales of iPad are forecast to increase ten-fold by 2014, and Murdoch has a stated long-term goal of garnering a bigger audience than his Fox TV show American Idol (26 million viewers). Apple has agreed to alter their payment structure for News Corporation and is allowing recurring subscriptions via iTunes. In return, News Corp has agreed to make Fox programmes available on Apple TV for just US$0.99. As of this writing, an announcement is due from Apple as to what happens with subscription models for everyone else.

4. Availability on other tablets:

  • At the launch event, Murdoch stated News Corporation's intentions: “As other tablets get established we will develop the technology to go on them. We will be on all the major tablets.”

  • He went on to imply that device proliferation will not happen in 2011, although rumours persist that this is a possibility.

5. My opinion:

The Daily shows off the power and interactivity of the iPad itself very well, and it does so very cheaply to the consumer. However, it feels more like a magazine than a newspaper and the amount of “actual news” seems limited (see CNN, New York Times or the Los Angeles Times for that!).

I am struggling to understand who The Daily is targeted at as it doesn't seem geared towards any specific individual, industry or profession-type. That said, the reading interface does let you flip through pages easily and the Apple “carousel” gives an easy page-browsing experience, rather like Cover Flow in iTunes. It's early days yet. Much money has been spent to launch it and much more will be needed to get anywhere near the needed subscription levels.

What's particularly interesting is what happened here in terms of subscription model, that is, the automatic renewal and a request to the user to allow the publisher to contact with further info. Could this be a model for the future? Watch this space ...

(Speaking of iPad, click here to check out what has been leaked/known about the forthcoming iPad2.)

Finally this week, I must mention the excellent INMA initiative which takes place this week: a roundtable on monetising tablets. It's at a London Heathrow airport hotel so it's easy to fly in and out for many. I will be there putting my ramblings into the mix. See you there?

Keep taking the tablets!

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