The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

TheDaily.com: How to Lose $10 Million on a Startup Web Site in Three Months

Posted on | May 4, 2011 | 19 Comments

Step One: Get $10 Million. After that, the rest is easy:

Asked to comment on The Daily’s performance, [NewsCorp chief operating officer Chase] Carey says it’s a work in progress, which lost $10 million last quarter. Then, in the background, someone — most likely [chief financial officer] Dave DeVoe — mentions “800,000 downloads.”

So: 800,000 people have downloaded the iPad software needed to read NewsCorp’s online newspaper. And at the current burn rate, they’ll chew through $40 million in their first year of operation. When the site launched in February, there was a lot of world-historical blather:

“News Corp. is redefining the news experience with The Daily,” says Steve Jobs, Apple’s CEO. “We think it is terrific and iPad users are really going to embrace it.” . . .
The Daily is the first application made available on the App Store as a subscription — which will be billed directly to an iTunes account. And because this paperless paper requires no multi-million dollar presses or delivery trucks, it will be priced at just 99 cents a week (or $39.99 for an annual subscription).
“The Daily launches at a moment when advances in technology are changing the job of the modern editor,” says Mr. Angelo. “These advances are giving us new ways to tell stories. We intend to take advantage of all of them, and make The Daily the new voice for a new era.”

From their “about” page:

The Daily launched on February 2, 2011 with the mission to provide the best news experience by combining world-class storytelling with the unique interactive capabilities of the iPad.
Led by Editor-in-Chief Jesse Angelo and Publisher Greg Clayman, The Daily is a category first: a tablet-native national news brand built from the ground up to publish original content exclusively for the iPad.
The Daily is incisive, optimistic, and independent. It’s not just an app — it’s a new voice.

How many people have paid for TheDaily.com subscriptions? We don’t know. But however many it is, it’s not enough to keep them from losing $10 million in the first three months of the year.

You should hit my tip jar for $10.

Because this blog is at least 1/1,000,000th as good as those guys. And you don’t need an iPad to read it.

UPDATE: More background from TheDaily.com’s launch:

Murdoch says the company spent $30 million to develop it, and operational costs will run around $500,000 a week . . .

Good Lord. Half a million bucks a week? For a Web operation?

UPDATE II: TheDaily.com has been bleeding staff — three of their four hires on the culture beat left within two months. Maybe it has something to do with getting crazed memos like this from the editor-in-chief:

Folks, Egypt is over – time for us to get focused on covering America.  We need to get out there and start finding more compelling stories from around the country – not just scraping the web and the wires, but getting out on the ground and reporting. Find me an amazing human story at a trial the rest of the media is missing. Find me a school district where the battle over reform is being fought and tell the human tales. Find a town that is going to be unincorporated because it’s broke. Find me a story of corruption and malfeasance in a state capitol that no one has found. Find me something new, different, exclusive and awesome. Find me the oldest dog in America, or the richest man in South Dakota. Force the new White House press secretary to download The Daily for the first time because everyone at the gaggle is asking about a story we broke. Get in front of a story and make it ours – force the rest of the media to follow us. It’s good stories that will keep people coming back to The Daily – we’ve assembled a crack news team, so let’s show the world what we can do.

Yeah. good luck with that. Here’s a profile of the editor:

Angelo has already spent most of his life in the Murdoch orbit. He’s known Murdoch’s son James since they were in kindergarten. They went to Harvard together . . .
Angelo was born in 1973 and grew up on Central Park West. His father, John Angelo, founded the firm Angelo, Gordon & Co., which today manages about $23 billion in assets.

Joshua Benton analyzed social-media activity generated by TheDaily.com and suggested the site faces “a tough road ahead.” A similar estimate by Jeff Bercovici of Forbes:

Jeff Jarvis did a back-of-the-envelope calculation and estimated The Daily will need 750,000 subscribers at its current price of 99 cents a week or $40 a year before it starts breaking even.  It’s fair to say they have a ways to go.

Indeed.

UPDATE II: Welcome, Instapundit readers!

UPDATE III: Mary Rose Maguire: “Why Newspapers Online Are Still Failing.”


Bookmark and Share
Category: Blogging, Journalism

Comments

  • http://2011.ak4mc.us/ McGehee

    I knew from the start it wouldn’t do well if it remained a one-platform vehicle — even though the iPad owns the tablet segment, tablets have relatively little market penetration overall. TheDaily.com could only make money by branching out, assuming it could make money at all.

    Which, maybe it can’t.

  • Anonymous

    Wait, $10 mil/3 months?

    What the heck took so long for them to lose that kind of money?

    Somebody needs lessons from the Feds!

  • Pomme

    Oddly, I am reading this story on my iPad…

    And I didn’t pay a dime!

  • http://www.solitudeholdings.com/blog1/ Dan C

    They should do some hard hitting investigations on Obama. Break a big story on that!

  • Anonymous

    The “burn rate” is way too high. Murdoch reportedly staked them $30 million for the startup, they’ve spent 1/3 of that, and haven’t come anywhere close to developing the kind of readership necessary to break even. The e-mail memo from their editor suggests a deficiency of news judgment and/or poor personnel decisions. If the editor has to tell his staff that the goal of the game is to break exclusive stories — hello?

  • http://twitter.com/CathPrdDaughter Mary Rose

    Stacy, I’ve been following your venture with great interest. After reading books like The Long Tail and listening to Seth Godin talk about the coming paradigm shift for the book publishing industry, I knew you were on the right track.

    I recently wrote a post with the title: Why Newspapers Online Are Still Failing. (Not on personal blog, but professional one.) This has to do more with local newspapers shifting their content to online platforms and still finding it’s “not enough.” The way we consume news is different.

    Your path is a smart one. You’ve built a community that is engaged and appreciates the obvious hard work you put into it. You’ve developed relationships and this to me is super cool. Cool because for many of us, journalists seemed far removed from the rest of the great unwashed. I’d see a name in a byline but wouldn’t really know the reporter. With blogs, we get to know a reporter and his or her preferences, motivations, bent, etc. To me, this is much more compelling than reading a news item written by some nameless, faceless news corp cog.

    Another issue is that I no longer trust traditional news organizations. I live in “fly-over” country and am conservative. So all I’ve received from the MSM are insults and mockery. Guess what, MSM? I have happily tuned you out and tuned in to sites like this. I’ll give money to sites like this. Because we now have choices.

    And I choose you, Stacy. God bless and get well, soon. :-)

  • Anonymous

    Don’t bet against them yet. Dave DeVoe is a very sharp guy.

  • Anonymous

    We’ll bill you for $39.99.

  • Pingback: Instapundit » Blog Archive » STACY MCCAIN: How to Lose $10 Million on a Startup Web Site in Three Months. No, he’s not speaking…

  • Anonymous

    “Bet against them”? This suggests:

    1. I actually enjoy watching them lose money, which I don’t.

    2. I’ve got a dime to bet, which I don’t.

  • http://twitter.com/phillydkidder Kevin McCarthy

    They are using the Huffington Post Model of Promotion lose lotsa Money then lose More then Sell for a Killing.

  • Anonymous

    Let me say this: If somebody gave me $10 million to start an online news venture, the first thing I’d do is buy a plane ticket, fly to South Florida, and buy lunch for Matt Drudge: “Hey, Matt, what do we have to do to get you on board?” And if Drudge did not smile on the venture, I’d fly back home and refund the rest of the money to the investors. Ask anybody in the news business: If you’re not getting linked by Drudge, you’re dead.

    People keep trying to re-invent the wheel, to squeeze Drudge out of the equation, and these attempts keep failing.

  • Pingback: » Fluff Talent and Too Much Money

  • http://twitter.com/CathPrdDaughter Mary Rose

    Amen, Stacy. You know it. If one can’t get an industry leader on board then prepare for either slow growth or none. I love the fact that Drudge isn’t owned by some liberal news org.

    I also have been impressed with your inventiveness regarding linkage. I don’t have the nerve to do what you have done, but maybe I should try. You took obvious, intentional actions to increase your web traffic and it’s worked. Congrats on that.

    Um. I could be brazenly obvious and host male candy pics but I don’t think I can do it. Daniel Day-Lewis and Alan Rickman has been my standard for a long time and few celebs can match it. Plus, most male celebs have turned into girlie-girls. Damn, I miss John Wayne.

    (My small contribution to “Offend a Feminist Week.”)

  • http://twitter.com/CathPrdDaughter Mary Rose

    Amen, Stacy. You know it. If one can’t get an industry leader on board then prepare for either slow growth or none. I love the fact that Drudge isn’t owned by some liberal news org.

    I also have been impressed with your inventiveness regarding linkage. I don’t have the nerve to do what you have done, but maybe I should try. You took obvious, intentional actions to increase your web traffic and it’s worked. Congrats on that.

    Um. I could be brazenly obvious and host male candy pics but I don’t think I can do it. Daniel Day-Lewis and Alan Rickman has been my standard for a long time and few celebs can match it. Plus, most male celebs have turned into girlie-girls. Damn, I miss John Wayne.

    (My small contribution to “Offend a Feminist Week.”)

  • Anonymous

    So the website launched mid-quarter but expended a tremendous amount of capital in the launch and ~2 months following it. You think it’s burn rate is going to be the same in subsequent quarters, when it launched mid-quarter and STARTED gaining revenue at some ill-defined point therein? You are just gonna project forward an even burn rate of $10mm a quarter in that scenario?

    I have no idea why they need $500,000 a week to be sustainable…maybe that includes their profit need forecast to be a wise investment originally (i.e. a 30% net income or something), but if they’ve even got 250,000 subscribers 60 days post launch, I can tell you that they are doing pretty well.

    Start-ups can easily burn cash for a few years before becoming profitable, and still be wise investments. It depends on their long-term outlook.

    I’m surpised at the amateurish reaction of this blog on this honestly.

    Lastly, I agree that the editor’s memo should not NEED to be sent, but that memo read like someone wanting to inspire their troops and was typing it off a blackberry or iPad. It wasn’t crazed, it was saying “Hey, think about this, what about this, have you taken this angle”

    Regardless of how you position yourself as not wanting them to fail one way or another, your posting reads like you looked for reasons why the current results are portents of doom….rather than calmly analyzing the info.

  • http://pointofagun.blogspot.com/ Dave C

    What they need to do is hire Conor Friedersdorf.. Then he can do for them what he has done for Culture 11 and True/Slant..

  • SteveS

    Don’t know who first said it, but it was true in 1990 and still true today:

    For every ugly website founded on millions of dollars of venture capital
    with a shaky business plan and appeal to at least zero people worldwide, there is another one that is just as ugly and appeals to just as few, but has more funding and no business plan whatsoever.

  • SteveS

    Don’t know who first said it, but it was true in 1990 and still true today:

    For every ugly website founded on millions of dollars of venture capital
    with a shaky business plan and appeal to at least zero people worldwide, there is another one that is just as ugly and appeals to just as few, but has more funding and no business plan whatsoever.

Performance Optimization WordPress Plugins by W3 EDGE