The Other McCain

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


UPDATE II: Welcome, Instapundit readers!

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


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