Paper is dead; long live the news

Charlie Martin Contributor
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Yesterday, Rupert Murdoch and Apple made Murdoch’s new all-iPad publication The Daily available to the public for the first time. The announcement had all the usual hype, with Murdoch himself (and Apple Vice President Eddie Cue standing in for Steve Jobs) showing the demo to a New York audience.

The Daily breaks new ground, and frankly, who knows if it will work. First reactions to its interface and content have been mixed. Mashable, one of the leading websites in the world of highly-interactive Web content, called it “a second-rate iPad magazine.” Over at the Tatler, Steve Green says “what a mess” and Roger L. Simon asks, “Will they concentrate on looking pretty or will they have something to say?” I look at it as a sometimes web developer and ask how they managed to spend all that money — a rumored $30 million to start.

No matter. If The Daily isn’t the first success in digital news, something else will be. Murdoch laid out the reasons in his own talk.

First, there is still a market for news. That’s obvious: The Daily Caller, The Daily Beast, Pajamas Media, The Huffington Post, Politico and The Washington Examiner all prove it. But Murdoch makes a good point about news: it must be new. It must surprise, or there’s no value in it. New content costs money, and that money has to come from somewhere.

Second, no one has figured out how to make money from online news. The initial business model for online publications was advertising supported, with occasional attempts at paid content — and those, like Salon’s and The New York Times’s, largely failed. Internet businesses can work on an advertising-supported model, as Google does, but ad rates have dropped dramatically.

Third, pulp is dead. The infrastructure of publishing, from free local weekly papers up to The New York Times and big New York book publishers, is built around the manufacture, distribution, and sales of big bundles of processed wood pulp. Existing publishers are struggling to deal with that, and they will fail. They simply can’t compete with electronic delivery, when it costs one one-billionth as much to deliver a page to a Web browser or iPad app than it does to deliver a page on paper.

Fourth, paper is dead. Moribund. Lifeless. Electronic delivery can provide color, motion, sound, interactivity.

Murdoch’s Daily is confronting all four problems. The content is new. The delivery is wholly electronic, which means no more massive multimillion-dollar presses or monstrous shipping operations, and the content is colorful and lively, with embedded video, special 360-degree panoramic photos, and lots of touch-sensitive applications from sports scores to sudoku.

That leaves the business model. According to The Folio, a media website, News Corp spent $30 million to launch The Daily, costs which have been written off. Now, The Daily costs about $500,000 per week to operate. Compare that with The New York Times, which costs more than $51 million per week — a hundred times as much.

Murdoch says he hopes The Daily will eventually divide revenue about 50-50 between advertising and subscriptions, but he expects subscriptions to provide the lion’s share to start. Currently, The Daily costs subscribers 99 cents a week, or just over 14 cents a day — which means that it will require a little over 500,000 subscribers to break even. That may seem like a large number — that’s nearly half of the Times’s paid circulation — but Murdoch has the whole world as a market.

It is far too soon to predict whether The Daily will actually be successful. News Corp needs to find truly interesting, original, exciting content, and needs to deal with an application that so far isn’t exactly drawing rave reviews. It’s unclear whether their intended model of having once-a-day major updates will work; in other web publications, new content throughout the day is needed to attract and keep an audience. But whether or not The Daily succeeds, the business model of application-delivered original content at Internet prices is the future of publishing.

Charlie Martin is a computer scientist and freelance writer who covers science, technology, politics, and their intersections. He has been published in PC Week, CIO, Pajamas Media, the American Thinker, and was a regular contributor to Right Network.