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December 4, 2012updated 05 Dec 2012 12:00am

Lesson of The Daily? Don’t start from here

By Jon Bernstein

Much advice has been heading Rupert Murdoch's way since he announced that News Corp's digital-only newspaper will be no more. The demise of The Daily, launched less than two years ago, is a useful reminder that Murdoch doesn't always get it right. Useful because one of the most common arguments in favour of the paywalled digital publishing model goes along the lines of: "Murdoch knows how to make money from subscriber content. He's done it before, he'll do it again." Not this time, he didn't.

Joshua Benton on Nieman Journalism Lab does a fine job capturing all the competing reasons offered for The Daily's premature closure but he nails it when he notes: 

Here’s the thing: The Daily had over 100,000 paying subscribers. That ain’t nothing! With most subscribers paying $39.99 a year (others paid 99 cents a week), minus Apple’s cut, that’s around $3 million in annual revenue — and that’s before you add in advertising revenue. At various points, it was the highest-grossing app in the App Store in 13 different countries. In the United States, it’s been in the top 5 of news apps by gross since launch and, until this summer, consistently in the top 20 of all apps — even including Angry Birds and the rest. You can absolutely build a real online news organization on that kind of revenue.

You just can’t build one that has 200 staffers. Or 150 staffers. Or 100 staffers.

It's admirable that News Corp was willing to invest so heavily in the journalism that underpinned this iPad-only publication. But The Daily would have needed 750,000 subscribers just to break even (according to Jeff Jarvis's calculations) so why start with such large overheads? Surely it would have been better to build the team once he could prove the title could survive and thrive.

Murdoch's legacy titles (notably the paywalled Times and Sunday Times) have little option in this regard and are handicapped by costly, print-era infrastructure.

The Daily, on the other hand, really didn't need to start from here.

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