The huge obstacles facing Murdoch’s new tablet newspaper

By Felix Salmon
August 13, 2010
launching a new national newspaper, which will be "distributed exclusively as paid content for tablet computers such as Apple's iPad and mobile phones".

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Rupert Murdoch is launching a new national newspaper, which will be “distributed exclusively as paid content for tablet computers such as Apple’s iPad and mobile phones”.

The interesting thing here is the “paid content” part — most iPad news apps are free, but Murdoch is evangelical about the need for consumers to pay for online content.

If this succeeds, it will be against all odds. A few reasons why:

  • There’s not much in the way of an existing brand on which to piggy-back. People know and value the Wall Street Journal, which is why they’re willing to pay for it online. But a brand-new publication doesn’t have any brand equity, so it’s hard to see how News Corp is going to try to persuade people to pay for it. I imagine that it’s going to have to be free at the beginning, or for some kind of trial period.
  • The new newspaper will be devoted to “offering short, snappy stories that could be digested quickly”. It’s hard enough getting an audience for that kind of thing when it’s free, since there’s a huge amount of competition in the space, much of it from low-cost aggregators who don’t even have a newsroom.
  • This content doesn’t help people make money, it isn’t porn, and it isn’t a game. Which, again, makes it much harder to charge for it.
  • The target audience is young, and therefore social. But apps make it hard to share content, and paywalls make it almost impossible; put the two together, and there’s pretty much no way that any of the content here can be shared or go viral.
  • There could be a fight with Apple, which is a bit capricious when it comes to the publishers who want to give apps away for free and then charge for subscriptions within them. (As opposed to charging for the apps themselves in the iTunes App Store.) Time Inc is having big problems on this front, and although the WSJ iPad app seems to be OK in the eyes of Apple, that’s no guarantee that this new product will be able to use the same model.
  • More generally, WSJ users are OK with the idea of charging three-digit sums to their credit cards; the broad mass of people who buy apps, however, are much more comfortable with buying things for less than $10 directly from the App Store. How to turn that kind of behavior into a regular income stream for a news organization, with subscribers paying regularly to retain access to the content, is a nut no one has yet cracked.

My feeling, then, is that this is a project born more out of ideology — “people must pay for news online and on tablets” — than out of any particularly compelling business model. I’d never be foolish enough to bet against Rupert Murdoch on anything. But I will be very, very impressed if he manages to make this work.

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