Virtual life on the line, The Daily launches WKND

News Corp.’s(s nws)(s nwsa) digital tabloid The Daily has been on borrowed time since it was an idea, given enough resources and backing by Rupert Murdoch to launch with a flourish but no guarantee that it would last. Given the way some projects have gone, getting launched and then through the first year was an achievement. Add in News Corp.’s plans to spin off publishing assets and it’s no surprise to hear rumors that The Daily may not get through the five years publisher Greg Clayman has said it needs to break even.
The New York Observer brought up “internal rumors” “that The Daily has been put ‘on watch,'” repeating a source’s claim that “the status of the groundbreaking iPad tabloid — which loses $30 million a year — will be reassessed after the November 6 election.” The New York Times followed with confirmation that News Corp. “is deciding the fate of The Daily” and that other small operations are under review as the company prepares to spin off its publishing assets into a separate company.
Not so, says The Daily Editor-in-Chief Jesse Angelo. In a letter to staff posted online Friday afternoon, he wrote of having “over 100,000 paying subs” renewing at a 98 percent rate and urged employees to ignore “the haters”:

As for the latest misinformed, untrue rumors of our imminent demise, I would urge you to ignore them. Since before we launched, our dear friends at competing media outlets have done their best to wish us ill and gleefully ‘report’ on what they think is going on here. The truth is we have over 100,000 paying subs who are renewing their subscriptions at a 98% rate and fantastic advertisers who love our brand and keep coming back for more because they get results. Pay attention to them, not the haters.
This is the truth about the modern media business – all outlets, including the ones writing about us, are under pressure to prove themselves as businesses. We are no exception, and to be sure, we will need to continue to evolve, adapt and change in order to compete and be successful. As something new and different, we are an easy target for erroneous wishful thinking. But make no mistake, we will be nimble and we will compete.

(If that approach sounds familiar, Rupert Murdoch told News Corp. employees when the spin plans were announced to “ignore the naysayers.”)
It doesn’t help that The Daily has been vague in sharing its numbers or that amounts like “over 100,000” are not far removed from the 100,000 mentioned earlier this year or the 80,000 of last fall even as iPads and other tablet use expands. True, it’s an achievement to go from zero to 100,000 or more paying subscribers.
But Murdoch said it would take 500,000 subscribers to make The Daily pay off; last fall it was averaging 120,000 unique readers a week; of those, I was told then that nearly two-thirds were paying while the rest were on two-week trial subscriptions. More than half of the paying subs — about 60 percent — were on the weekly rate of $0.99, the rest on the annual $39.99 plan. Publisher Greg Clayman later told Advertising Age that it actually had 80,000 paying subs.
That was before it expanded beyond iPad. Android users have a monthly option for $3.99 instead of weekly but the app is limited to certain Verizon Samsung devices. It’s hard to believe the number is meaningful. The iPhone version is $1.99 a month or $19.99 a year.
And despite support from Verizon and some other advertisers, one knock on The Daily has been its inability to attract advertising at the consistency and volume needed be successful on that front.
That $30 million loss figure is the number that stuck after Rupert Murdoch said that’s how much was being spent in the 2011 fiscal year including launch investment and a run rate of about $500,000 a week. I keep seeing it repeated but haven’t seen any confirmation of the amount, which would be about $26 million a year at that same run rate. That would put the investment so far at just under $60 million.

The Daily, however, was a trademark Rupert Murdoch brainstorm to create the first daily newspaper designed for a tablet and committed to making it a subscription-only app. The financial investment by News Corp. and the personal commitment by Murdoch plus the timing got it on the inside track with Steve Jobs, who made sure it had Apple’s support for the iPad. Jobs was supposed to be at the launch but was too ill; Apple’s Eddy Cue took the stage instead. The Daily stayed exclusive to the iPad for its first year, only recently adding an Android version and an iPhone app. It’s also has a Facebook app with just over 6,146 users.
Part of The Daily‘s conceit from the start has been to use its website for promotion, not as a destination, allowing stories to be shared as pdfs of the tabloid pages but not providing intact issues anywhere but the app. For some, that plan instantly spelled doom. But it made The Daily not only a truly digital-first newspaper — it was truly device-first and pushed innovation in design and photography. It also provided some major tech challenges. The Daily struggled with tech problems for months — its dense issues took too long to download and there were persistent crashes. Those glitches when the spotlight was the brightest came with a serious opportunity cost.
The Daily also has had a hard time finding its footing editorially. As a subscriber from the start, I appreciate the often-deft tabloid covers and the way they’ve stretched presentation. I enjoy watching The Daily respond to breaking news with new covers during the day, the features about tech catch my eye and I think the overall package works as a concise read of daily news. (Ok, I also read the gossip section when I have time, although if you like the New York Post, it’s probably not mean or tawdry enough.)
It’s not a shock to me that the same people I know who dismiss USA Today don’t see any value in The Daily. Then again, they aren’t the target audience and neither am I. The Daily staff boast of writing for people outside the media capitols; news-wise it’s for people who back in the day might have subscribed to USA Today. Sometimes the writing style is bright and incisive; sometimes it’s stiff or shallow. The stories tend toward short and snappy because that’s what its readers want but it also runs historical features you wouldn’t expect in most papers with that focus. Its opinion sections tend towards conservative although every so often there’s a surprise.

The Daily also keeps evolving. This weekend it’s adding an in-app weekend magazine called WKND and sections for real estate and cars.
At the risk of getting my hand smacked for self-quoting, I wrote last fall:
No one at News Corp. expected it to be profitable this year or next; it’s always been a multi-year plan and it is still very much in start-up mode. (The cynic in me thinks Murdoch would like to keep it running at least through the 2012 elections.) … But with a weekly run rate of nearly $500,000 and a threshold of 500,000 subs, the tablet tab is going to have to show not only that it can keep subscribers but that it can grow. And it has to hope that corporate patience holds

The cynic in me still has corporate patience lasting at least through the presidential election this November.
When I asked News Corp. Chief Digital Officer Jon Miller at paidContent 2012 about The Daily as a template for News Corp. digital news. “What we’re trying to figure out is how far it scales. If it can really scale, then it becomes a model,” he replied.
If it can’t scale, it won’t survive.

About closures

Another News Corp. experiment is already closing: the Newscore wire, designed to make better use of the work being done by News Corp. media outlets globally. Founder John Moody is going to along with the technology, according to the Observer, while the other 20 or so staffers get the chance to apply for internal jobs.