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.