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The Daily: Lessons on how to build a business

The hype around Rupert Murdoch’s newest pet project, The Daily, is a big strength. Few general interest publications could gain mass media attention.  But any dot com survivor can tell you, hype alone does not build a business.

Murdoch and his News Corp. empire do not lack for funds, but the $30 million outlay for the iPad only newspaper is a shocking number. Not to mention the estimated weekly $500,000 operating budget, The Daily is no boot-strapping start up.  And this is the first flaw.

The dream of Murdoch and other publishers is The Daily will somehow return users to paying for news content.  So Murdoch is spending the amount he would spend on a paid publication.  And this is the flaw in his economics.

It’s not simply will people pay for news, but how much is that worth?  For math fun, several have tried to estimate how many readers The Daily needs to make money, saying, oh, they only need X many or they only need X% of iPad users.  Hoping a certain number of people give you money is incredible limiting and not how you build a growth business.

Yes The Daily gets hype from being iPad only, but what is the gain? What can you do on an iPad but not on the web (even if the website is paid for) unless someone shares it, and even then its missing the multimedia?  You can’t even get The Daily on the iPhone or iPod Touch. How is this maximizing your earning potential?

Hype is The Daily’s only unique element. None of the content is revolutionary thus far – and for all the money spent, they still include AP articles, just like every other free news website.

When I and others claim news and content want to be free, it isn’t because we’re cheap (most of us did shell out a lot of money for iPads and smartphones).  Rather, we see the economics at work. There is more competition. Competition pushes prices down.

This also means costs must come down. No printing or delivery trucks cut huge costs, but many ambitious start-ups run on a few million over their first few years. This allows you to be nimble and respond with dollars and time in accordance to the marketplace. By investing so much money upfront, The Daily is already locked into technology and likely methodology that if ineffective, will be expensive to replace. That and it requires a lot more readers at the start rather than letting growth happen naturally. Just another example of the legacy publishing mentality rather than finding more efficient ways to deliver news.

But people pay for the Wall Street Journal and Financial Times, you say.  Well both of those are not general internet, but specialized business papers that cater to a need-to-know first crowd. Plus, both have decades of history and credibility built up to prove their value.  How does The Daily plan to convince people to read it instead of the New York Times or CNN or the USA Today? Hype is not enough of a reason.

Of course, if you really want to read The Daily for free, there’s http://thedailyindexed.tumblr.com/. Sorry Murdoch, you can’t uninvent the internet.

One Comment

  • Danny |

    Thank you for the info, very informative and interesting. I learned something today 😉