Opinion

Jack Shafer

The Daily didn’t fail–Rupert gave up

By Jack Shafer
December 3, 2012

When you’re as wealthy as Rupert Murdoch ($9.4 billion) and you control a company as resource-rich as News Corp (market cap $58.1 billion), shuttering a 22-month-old business like The Daily doesn’t signify failure as much as it does surrender.

Murdoch knew what he was getting into when he launched the iPad-only (and then smartphone, Android tablet, and Kindle Fire) publication in February 2011. At a press conference, the mogul claimed to have invested $30 million pre-launch and assumed running costs of about $500,000 a week. According to a report in the New York Observer, attributed to a “source,” the operation was amassing annual losses of $30 million. But again, for someone like Murdoch, $30 million is chump change. His New York Post loses up to $70 million a year, according to some accounts, and you don’t see him closing it. Such losses are rounding errors in the company’s entertainment budget.

To place The Daily venture in scale, the last attempt to start a national, general-interest print newspaper from the ground up—USA Today—lost $600 million over the course of a decade before turning its first profit in 1994. (In today’s money, that’s more than $1 billion.) The National, the national sports daily, lost $150 million (about $250 million, corrected for inflation) in 18 months before closing in June 1991. In the late 1990s, when Murdoch was trying to crash the China satellite TV market, he had invested $2 billion and was losing $2 million a week according to his former right-hand man in that enterprise. So, please, let’s not obsess too much over Murdoch’s squandering of $30 million a year on a failed experiment. In the history of journalistic bets, this was a trivial gamble.

There are almost as many diagnoses of what killed The Daily as there are dollars lost. And most of them are right.

Peter Kafka captures the corporate reason behinds its demise, writing today that the split of News Corp into two companies—a newspaper company into which The Daily was corralled; and a broadcast-film group–meant that the struggling titles in the Murdoch portfolio would have to perform or face ejection. My colleague Felix Salmon cites the structural “impossibility of tablet-native journalism” as the cause of The Daily’s death: that is, the iPad is a clunky vehicle for a package like The Daily, inferior even to newsprint; the Web is more a flexible and easier platform on which to develop content; and Murdoch failed to “leverage the wealth of rich and valuable content within News Corp” into The Daily. Former Daily contributor Trevor Butterworth, among others, faults the paywall, complaining that you can’t create demand for a new Internet brand that you’ve sequestered behind a paywall. Philip Elmer-DeWitt of Fortune claims to have had a vision of The Daily’s funeral at its birth. Tom McGeveran at Capital New York offers that The Daily would have survived had it given Murdoch the same “voice” and influence as the New York Post, the Wall Street Journal, and his British tabloids give him. Alex Wilhelm of The Next Web points to, among other things, the steep 30 percent vig that the iTunes Store was collecting on subscriptions.

Nieman Journalism Lab Director Joshua Benton argues that The Daily’s glass was actually half-full, that despite all of its structural faults and daily newspaper blinders, it still attracted 100,000 paying subscribers. That was still short of the 500,000 it needed to break even, but 100,000 isn’t anything to scoff at for such a caged and constrained offering.

So if the losses were so relatively small, and a base of customers had been attracted, why did Murdoch give up so quickly on The Daily? The innovative, swashbuckling Rupert that I admire usually likes to lose $100 million on a new project just to get comfortable.

For one thing, the man has been preoccupied with other matters, including the phone-hacking scandal in the U.K., which has been sucking the life-force out of Murdoch since it broke wide in 2011, and his bid to buy the remainder of BSkyB (which failed). I’m not suggesting that had the scandal never been revealed and that he’d scored the rest of BSkyB that The Daily would be thriving. But with his entire empire at risk, he probably didn’t pay much attention to the child that he demanded that his underlings create, and yet never cared about. That’s the way he treated the string of U.S. tabloids that he purchased in San Antonio, Chicago, Boston, and New York when they created a regulatory obstacle to his ambition to build a TV network. (He later repurchased the New York Post.)

But portfolio shuffling probably isn’t a sufficient explanation for Murdoch’s decision to spike The Daily. I imagine you could get him to admit that his neglect did undermine the publication’s chances. He would admit that he should have escaped the iTunes Store yoke, and built a web app like the Financial Times has for the iPad and iPhone; that in addition to leveraging other News Corp content for The Daily he should have offered Wall Street Journal subscribers—folks accustomed to paying—heavy discounts and generous free trial subscriptions. As Jeff Jarvis suggests, The Daily could have benefited by adding a news-wire to its one-a-day offerings.

As long as The Daily was losing millions and churning readers, it had nothing to lose by experimenting with the form and substance of its journalism. That Rupert wasn’t there to give them license and cheer them on, that he continues to run his world-wide newspaper empire as if it’s 1975 and nothing has changed, is a shame.

Instead, The Daily remained true to its roots, giving few potential readers a reason to come see what it was up to. I consider myself a journalistic omnivore, one who will read anything on a dare, a Tweet, or an email suggestion. The number of times somebody told me to go read The Daily in the last 22 months could be counted on one hand of a veteran stamping-press operator. It’s not that The Daily never published good stuff. Peter Ha, who was at The Daily from the beginning, brags about some of big stories it broke in his piece for Gizmodo today. Why did I never hear about them—unless The Daily was the roach motel of journalism: Readers who went in never came out!

The Daily demonstrates for the umpteenth million time that big media isn’t very good at creating new publications, be they new magazines, new newspapers, or new Web sites. Most big media operations have come to accept this, and instead of creating new properties they acquire them. So today, let’s both toast and damn Rupert Murdoch for trying but not trying hard enough to make something new, valuable, and profitable on the Web.

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PHOTO: News Corp CEO Rupert Murdoch arrives to unveil News Corp’s new iPad news publication “The Daily” in New York February 2, 2011. REUTERS/Brendan McDermid

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