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The Daily Quest for Online Profits

Posted on Monday, March 21, 2011 at 5:30 PM

Part II. Success of The Daily launch is in question. The publisher is mum. Who knows if the start-up is a hit or a flop?

By William Dunkerley

The Daily, the new iPad-based multimedia publication of News Corp., is off to a quixotic start. In Part I, we covered the February 2 launch and focused on a number of possible pitfalls ahead. Now, as the publication is about to enter its third month of operation, there is very little to indicate that things are going well.

First, a free two-week trial period was extended to almost 7 weeks. PC Magazine indicated that the extension was issued as a result of "some stability issues and bugs." The original trial was credited to the sponsorship of Verizon. There's been no word on who's footing the bill for the extension.

Despite the extensively extended free trial, News Corp. has been evasive about the extent of readership. Publisher Greg Clayman told The Independent, "We're not disclosing the exact numbers (of downloads) but it's in the hundreds of thousands." He also declined telling exactly how many paid subscribers there are, except to say there are "more than one and less than 1 billion." Cute.

However, The Guardian reported "Although the Daily has been free so far, it is understood that a few thousand people have already signed up to the year-long subscription. News Corp has not released any numbers, but it is estimated that the figure is in the region of 5,000."

Meanwhile, AFP, the French news agency, reported that The Daily "has tallied hundreds of thousands of downloads since its launch a month ago its publisher has said." Beyond the ambiguous claim of "hundreds of thousands of downloads," there doesn't seem to be consistent and reliable information about readership.

It's hard to imagine that The Daily would be so tight-lipped about its audience size if the news were good. It's also hard to understand how it can be conducting a credible advertising sales effort while keeping the audience size a virtual secret.

In other advertising-related news is the puzzling absence of any information on the publication's website on how to advertise. There is no link to an advertising contact. There is no link to a media kit. Not even a rate card. It seems like quite a strange advertising sales strategy.

"Strange" may indeed be the byword for the orchestration of this launch. In addition to all the aforementioned concerns, there is the matter of what devices The Daily will work on. PC Magazine claims they were told that an application will be released for Android-based tablets within months. However, The Daily's own website claims that the publication is intended exclusively for the iPad. More apparent confusion.

Is It Even Legal?

The Daily uses the highly-controversial new Apple subscription system. It's touted as being as convenient as buying a song on iTunes. The Federal Trade Commission and the Department of Justice, however, are looking into the subscription scheme, according to Information Week. There has been a lot of speculation that it is basically unfair, if not even illegal. The Wall Street Journal ran the headline "Apple's Subscription Rules Raise Possible Antitrust Issues." What's more, Apple's demand for a 30 percent cut of revenue from subscribers who are new to the publication has raised a lot of eyebrows. Legal analysts seem to believe that the final result will depend on whether Apple is deemed to have a dominant position in the marketplace.

As a publishing issue, the 30 percent doesn't really seem problematic. Publishers are used to new subscriber costs often running several times that. What's more, Apple claims that if the publisher recruits a new subscriber, Apple will process the order at no charge. (At least that's what Apple seems to be saying.) But if Apple and the publisher are both out there selling subscriptions, that makes them competitors in that activity. And if competitors are conspiring on the subscription price, is that price fixing? Perhaps the legal analysts should be looking into that angle.

But It May Be a Moot Point

All this worry over whether The Daily's subscription arrangement with Apple is legal may be for naught. It won't really matter if the publication does not survive. Despite all the hype that the iPad is the up and coming substrate for magazines, some preliminary figures speak otherwise. They seem to be saying that the hype is -- well, just hype.

Media Post reports that, in 2010, "sales of digital magazines on the tablet computer have fallen significantly." Data cited indicates that Wired magazine's digital copies went from over 100,000 for the first iPad issue to 23,000 copies just 5 months later. Vanity Fair took a dive from selling 10,500 digital magazines down to 8,700.

While the numbers were tanking for these and other publications, the total sales of iPads jumped 565 percent through the end of the year.

I don't know what people are doing with all those iPads, but it doesn't seem to be reading magazines. Indeed, there is quite a dearth of objective data available about what iPads are really being used for. There's a lot of hype about what they might be used for. But not much hard data on actual usage.

Nonetheless, The Daily remains a pioneering effort in multimedia publishing, one worthy of our continued interest. News Corporation's Rupert Murdoch says he believes The Daily "will be the model for how stories are told and consumed in this digital age." Indeed, it may become that. But, for now, it seems to be hitting snag after snag. Unless things change, it may be the model for how not to orchestrate an innovative launch!

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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