Taking It One Day at a Time at The Daily

Why Rupert Murdoch's Audacious iPad Newspaper Can't Wait for the Future to Come

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"After the election" became a running joke in the newsroom at The Daily this summer when rumors erupted that News Corp.'s grand iPad experiment, running $30 million in the red, would be "reassessed" once the country voted Nov. 6, thus wrapping the national news event of the year.

"At that point we all figured we should get our résumés out," a former editorial staffer said. Gallows humor surfaced. An employee who wanted to catch up on watching "Breaking Bad," for example, might shrug and say: "Maybe after the election." But the knowing tone belied how poorly anyone could predict events: The Daily laid off a third of its staff on July 31.

The Daily Publisher Greg Clayman and Editor-In-Chief Jesse Angelo
The Daily Publisher Greg Clayman and Editor-In-Chief Jesse Angelo

The Daily needs time if it is going to help "make the business of newsgathering and editing viable again," as Rupert Murdoch said when he introduced his audacious iPad newspaper in February 2011. But time seems to be growing shorter instead.

Next year The Daily will find itself part of News Corp.'s planned publishing spinoff, a company already nicknamed "Bad News" by an unenthusiastic stock analyst and less able to indulge losses than the larger News Corp. today. Now the question is whether even the streamlined Daily can hold out long enough for more potential customers to come along.

The reality is that it can't grow much faster than consumers' willingness to pay for news or the number of tablets in their hands. Another experiment, a weekly iPad magazine from The Huffington Post, recently abandoned its effort to charge after just five issues.

"You just have to figure out, why is it a better place for the user to get their daily news and content than another place that 's free?" said Porter Gale, who gained a reputation for testing emerging digital-advertising opportunities when she was VP-marketing at Virgin America.

"In my household I have a 10-year-old, and our daughter is on the iPad all the time," Ms. Gale said. "That's all she uses." But it will be years yet before her daughter's generation of tablet natives is old enough to even consider buying a tablet newspaper. "I think maybe they're just a little bit too early."

The Daily's fate will inform many publishers' opinions on precisely that risk. Jim Gaines, former managing editor at The Daily, considers tablet media "manifest destiny." But he also previously worked at a pair of interactive startups that foundered. "I discovered in that process that to be early is to be wrong," Mr. Gaines said. "There really is no difference."

Since its splashy February 2011 debut at the Solomon R. Guggenheim Museum in New York, where Mr. Murdoch proclaimed that "new times demand new journalism," The Daily's only certainty has been torrents of press coverage. Reporters and bloggers have tackled the app's "highly flawed" typography, counted the seconds to download an issue, pondered "a blossoming romance" on staff and scrutinized the publisher's new co-op in Brooklyn Heights this summer ("ill-timed"). Even news satirists joined in. "You get all the convenience of using your iPad to read the news online," Stephen Colbert said, "but without the internet's annoying habit of being completely free."

As it happens, The Daily bundles three fascinations into one: Mr. Murdoch, Apple technology and the Future of Media. "When we launched The Daily, when you launch any product, you're like, 'I hope people notice, I hope people keep talking about this,''' said Daily Publisher Greg Clayman. "It turns out that they did, and they have." He laughed. "That was an unfounded concern."

The Daily aims to capitalize on the growing sense, advanced partly by a Wired cover story in 2010, that specialized apps are slowly taking over from the wide-open, browser-based web. There are plenty of reasons to believe that 's correct, particularly on tablets. People spend a lot of time with tablet apps, and a lot of money too. "Tablets are proving to be a very effective e-commerce platform," said Michael Collins, CEO at Joule, a mobile unit in the media-agency conglomerate GroupM. "Some of the big online retailers are seeing twice the average order value per order on tablets as on their websites."

Best Buy and Coach, indeed, have recently run shoppable ads in The Daily, where a sampling of other past and present advertisers includes BMW, IBM, Delta, Tiffany, Verizon, Virgin Atlantic Airways, Exxon, Fox Broadcasting, HBO, Range Rover, The Economist and Big Fish Games. "We're just seeing the early beginning of what I believe will be a rush into tablets by advertisers," Mr. Collins said.

But advertisers won't go there before consumers do. Although more than 53 million people in the U.S. use an iPad at least once a month, they are only 16.8% of the population and 22 .2% of the people on the internet, according to eMarketer. In 2015, iPad users will be 35.3% of people on the web, eMarketer projects; tablet users across devices will be 51.9%.

Even at this thin edge of the wedge, The Daily has achieved some impressive feats, not the least of which is pioneering subscriptions on the iPad. According to Mr. Clayman, active readers of The Daily average 25 minutes a day with the app -- a figure the web can't touch. The Daily usually ranks second or third among top-grossing paid apps in Apple's Newsstand, behind The New York Times but ahead of People, The New Yorker, Time and Wired. And this January it said it had accumulated more than 100,000 paying readers, a couple of months before Cosmopolitan became the first magazine to hit that mark with digital editions. For all of that , however, The Daily hasn't provided a new paid-circulation figure since January. Cosmopolitan's individually paid digital subscriptions, meanwhile, have climbed to 135,000. "We're above 100,000 subs at this point, but not quite at Cosmo levels yet," Mr. Clayman said.

Last month The Daily began an ad campaign seeking subscribers with the slogan, "News That Pops." But execs are also eagerly anticipating help in the form of new tablets and new tablet owners. "If you believe what you read, over the next couple of months we're bound to see another spike," Mr. Clayman said.

Hours before Mr. Murdoch was scheduled to take the stage at the Guggenheim to introduce The Daily, Apple rejected the app.

"We literally worked until the last hour," said Eugene Yee, one of the developers who helped build The Daily from nothing. The team asked Apple to approve The Daily at around 2:30 a.m. on the morning of the presentation, calling in every possible favor. "That review usually takes about two weeks," Mr. Yee said. "We were asking for about an eight-hour turnaround. We were telling them we had to launch this today."

Assured that Apple would work quickly, the team relaxed. Some even started talking about going home. "And then we got rejected," Mr. Yee said, "at 3 o'clock in the morning with our Apple contacts already asleep."

A cascade of frantic phone calls later, the developers got through to the right person at Apple, fixed a layout problem and won approval. But early adopters, industry analysts and reporters would soon find more glitches, a long download and fewer initial features than they had expected. The ascendant app ecosystem, meanwhile, was proving less forgiving than the web, where developers often first release a "minimum viable product," or "MVP," and improve it as web surfers ride through. Apps need to be found and installed; disappointments risk deletion -- and bad reviews in the app store.

"The MVP works great on the web," said Scott Michaels, a partner at Atimi Software, an app developer that discussed building The Daily but did not bid on the work. "But on mobile, because of deleting the app, the bar for what that MVP product is -- in terms of quality and its feature set -- is just higher."

"The decision to put it out before it was ready was probably one that they regret," Mr. Michaels added. "They did a lot of work to correct it but they lost a lot of steam."

Mr. Yee, who flew to California to work on stabilizing the app from a windowless Apple conference room, said that in this case more time might have meant diminishing returns. Mr. Clayman agreed. "You've got to launch at some point," he said.

Frames from The Daily's new ads
Frames from The Daily's new ads

Editor-in-Chief Jesse Angelo delivered a sunny editorial voice, bubbly packaging and high interactivity, but The Daily's deliberately minimal web presence and high paywalls obscured its visibility. "It was like we were writing for each other," said the former editorial staffer. Subjects and sources weren't sure how much impact The Daily really made, another former newsroom employee said. "The biggest challenges were getting folks to talk to me," he said.

The Daily also proved surprisingly true to the newspaper metaphor, publishing just once a day, weaving in occasional updates but mostly leaving the morning product intact. Traditional newspapers now fight for digital audiences around the clock, so in this regard the ultra-modern Daily evokes a prior era.

It turned out that many Daily subscribers read it at night, the former Daily staffer said. If the app isn't going to follow the news all day, he suggested, maybe it should adopt an even older newspaper model and publish an evening edition. "When it first launched, Murdoch said this is the future of journalism," he said. "And it's not. It's not the future of journalism because we were, and they are, still delivering old news."

Executives at The Daily say they're presenting something with a new appeal. "There's a lot of news out there and places to get news," said Rebecca Grossman-Cohen, VP-marketing. "A lot of them are free. And a lot of them reach people at work all day. But for us the offer is a special place. For people who aren't constantly on HootSuite or TweetDeck, we're a new, compelling way to see what's going on in the world. I think people value that . Once they get in and check out The Daily they tend to really love it."

The Daily has enjoyed some powerful friends, including former Apple CEO Steve Jobs, who participated in early development meetings. Jonathan Miller, chief digital officer at News Corp. from 2009 until the end of September, recalled one session where Mr. Jobs -- sharing the room with Mr. Murdoch, Mr. Clayman and Mr. Angelo -- argued successfully for clean design, down to the borders on photographs. "He was definitely directly involved, then and at other times," Mr. Miller said. "That's really unusual because he didn't get involved in other people's business."

(The design may actually be too clean when it comes to the app's sharing tool -- a crucial marketing mechanism for a product with high paywalls -- which is relegated to an unobtrusive icon in the upper right corner of the screen.)

Despite criticism, The Daily has done many things right. "Do I think The Daily is a good product today?" said Mr. Michaels. "Absolutely. It's stable, it has compelling writing, it has nice interactive features."

The app has edged in directions this year that could help even if another iPad is never sold. It arrived on a few Android tablets in January and the iPhone in May (although paid circulation continues to comprise iPad subscribers). It also began experimenting with a "freemium" approach on its iPhone app, offering some articles free in the hope that consumers will decide to buy the premium product.

Then came the decision to split News Corp., the rumbling about "after the election" and an article saying The Daily was "on probation." Mr. Clayman said he never heard of any "probation" or ominous timeline outside press accounts. Mr. Miller said the same.

News Corp. Chairman Rupert Murdoch introduces The Daily in February 2011
News Corp. Chairman Rupert Murdoch introduces The Daily in February 2011

The reports probably originated in this summer's budgeting effort for the new fiscal year, Mr. Clayman said, which would ultimately cost about 50 employees their jobs. "When we looked at what we were spending, specifically on production, and we looked at the revenue for the past year, we were looking for ways that we could get to profitability faster," he said.

Improvements in production processes meant The Daily didn't need as many staffers there as it did at the start, executives decided. ("The best thing The Daily has done for publishing has been to work out the kinks in the iPad as a publishing platform," Mr. Gaines said.) The Daily's original sports and opinion coverage, areas with a particular surplus of free competition and a corresponding lack of readership, went over the side as well.

Mr. Clayman said The Daily is on track to beat new publications' traditional five-to-seven-year path to profitability. Asked whether The Daily would consider publishing news throughout the day or bringing the "freemium" strategy to tablets, he defended the current approach. "We're definitely open to new models if we see something that we think works better," Mr. Clayman said. "But as we're currently in the top two or three paid apps with our current model, we aren't seeing many examples of that ."

Joule's Mr. Collins said more time for The Daily would benefit the industry. "Don't give up," he advised. "When we all finally crack this nut, there's going to be great value to be had."

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