The Daily turns 1 with 100k subscribers, but may be years away from profit

A year ago today Rupert Murdoch stood on a stage at the Guggenheim Museum in New York City and unveiled the first “newspaper” built exclusively for the iPad — The Daily.

The News Corp. CEO set a high bar. He said The Daily would be a success “when we are selling millions.” With expenses running at about a half million dollars a week, the publication would need near 500,000 subscribers at $3.99 a month or $39.99 a year just to break even.

Twelve months later, the publication is not yet at that goal. But Publisher Greg Clayman is optimistic. He tells me by e-mail that The Daily has acquired more than 100,000 paying readers. Subscribers have grown 25 percent in the past four months. It’s expanding to Android tablets soon, and the iPhone may not be far off.

The Daily may have suffered more from overinflated expectations than from the publication’s own execution.

At launch, Murdoch said the target audience was the “more than 50 million Americans” who were expected to own tablet computers like the iPad by the end of 2011. In fact, only 10 percent of U.S. adults (roughly 23 million) owned tablets by December, according to the latest Pew Research Center survey. By January, strong holiday sales pushed ownership to 19 percent (roughly 44 million) — impressive, but still short of Murdoch’s anticipated 50 million.

In January, an executive acknowledged that The Daily may have launched a bit early in an immature tablet market, and financial success may take longer than expected. Which is fine, as long as News Corp. is willing to stick out the losses while the market develops.

Clayman gave me the same outlook. The Daily may need a few more years, but it’s on the right track and doing all it can in the current market. Below is our exchange about lessons learned in year one, and what’s ahead.*

Jeff Sonderman: The original benchmarks discussed last year were that 500,000 subscribers were needed to break even. Is that still the case? How many paying subscribers are there now? What is the current expectation of how long it will take to grow subscribers to that goal, and is News Corp. willing to fund the project at a loss for that amount of time?

Greg Clayman: We have 250,000 monthly readers and 100,000 paid subscribers, which have absolutely met our expectations. It generally takes a new publication an average of five to seven years to break even, and we’re operating well ahead of that curve.

How much additional support is coming from advertisements?

We’ve worked with dozens of advertisers over the past year who have created a large collection of really interesting and engaging ads for the platform. What was once seen as “experimental” is now very much a part of a standard media plan. We’re now seeing advertisers running creative across many publications, including The Daily, thus amortizing their creative development. Advertisers are an important part of our business and our overall revenue mix.

Overall, how do you describe the current condition and future prospects for The Daily?

So far so good! We were the third top grossing iPad app in all of 2011, and we’re consistently in the top-grossing spot for Newsstand apps on a daily basis. We have an established brand and a national footprint and are well-positioned for the future as the tablet market continues to boom.

We’ve been laser-focused on developing the best news publication possible for the iPad, and so far it’s working well. One thing we’re focused on for 2012 is how we migrate what makes us unique to other platforms such as iPhones and other smartphones. It’s something we’re working hard on, and you can expect to see more from us here within the next few months.

Has the style of reporting or the subjects covered changed since launch?

Sure, we’ve changed a lot since launch. We added a Travel section on Saturdays, a Book section on Sundays and a Business section seven days a week, edited by Tom Lowry. Our Flash gossip section, helmed by West Coast Bureau Chief Richard Johnson, has proven immensely popular so it has expanded. We’ve added a Daily Briefing page to the front of every issue, giving our readers the top stories in small nuggets that they can read and click for more info. This has been a hit thus far.

Any other interesting changes or findings to share with the world?

The great part about being out in market vs. launching something from scratch is that we now have a large number of daily readers who are constantly providing us with feedback. What’s worked best for us is listening to them and responding to their needs and requests. From everything to the download process to navigation to the type of content we publish. They’ve got lots of ideas and they’re not shy!

We’re also seeing a lot of interest in our special edition apps. We did a stand-alone app for the launch of the football season and one for college bowls. We did a Gadget Guide that was very popular around the holiday season as well. All told we’ve had a few hundred thousand downloads of these issues with tremendous engagement. We’re working with advertisers on some other branded stand-alone concepts; expect more of these in 2012.

* Clayman chose not to answer one of my questions, about whether The Daily has made adjustments such as cutting costs or changing the business model since launch.

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