In light of New Corps launch of their first all digital publication ‘The Daily‘, industry pundits have panned it across the board. Many feel it is too expensive an experiment. After all $30 million to launch an iPad based newspaper seems rather extreme. Once you factor in the a year’s worth overhead costs for journalists and media, the price balloons to over $50 million.
The price of each publication seems to all so be a sticking point. At $1 a week or $49 a year, will internet users accustomed to free news sites and blogs cough up the money for premium content? Rival publications are already referring to digital publication as a gimmick, after a while the allure of a shiny new app with video content will wear off. What then?
To staff The Daily, Rupert Murdoch and Co. have gone out and hired an army of 100 seasoned journalist to crank out timely posts rich with multi-media elements. They’ve invested heavily in iPad app that offers an interactive magazine experience, with rich photos, streaming video, and even Twitter integration. All this for just 14 cents a day. You have to wonder how they plan to turn a profit on the thing.
Advertising is one of the means by which they plan to break even. But you have to wonder how long people will put up with advertising in a paid app. The internet has trained us to accept the freemium business model. Free versions of a product has ads to compensate for the cost, while paid products are ad free.
If we step back for a second and stop viewing ‘The Daily’ as an iPad app and more as a startup newspaper, the $30 million investment starts to make more sense. In comparison to the Flipboard iPad app the raised $10 million dollars in funding to basicall wrap content in pretty skin, News Corps spending looks a little more sensible.
When you look further back at old media mergers and acquisitions by News Corp, The Daily looks cheap in comparison. They paid over $1 billion dollars for the Boston Globe News Paper and $5 billion dollars for The Dow Jones Media empire.
With this early investment in The Daily, News Corp will have full creative control over what is essentially an internet startup for the tablet age. To Rupert Murdoch $30 million is a small price to pay to be at the forefront of digital publishing.
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