Prominent Digital Newspaper May Fold After 18 Months. That's Not Good News For Online Journalism

In early 2011, Robert Murdoch's News Corp took the wraps off The Daily, a new, iPad-centric newspaper that was supposed to revolutionize the digital news business. Murdoch himself described the paper as "unique mix of text, photography, audio, video, information graphics, touch interactivity and real-time data and social feeds provides its editors with the ability to decide not only which stories are most important." It was also the first app to use Apple's in-app subscription system, which allowed charges to be billed directly to your iTunes account without needing to open another window or register a separate billing service.

Now, the company is said to be on the virtual chopping block, with News Corp evaluating whether it can be saved. The company has been losing an estimated $30M per year, and matters have come to a head as News Corp prepares to spin off its publishing companies, including The Times and The New York Post, into a separate entity. Up to now, the media giant's battered newspapers and other publications have been shielded by the success of properties like Fox News.

News Corp hasn't said much about the earnings of its digital ingénue, but told reporters in February that the company had 100,000 subscribers paying $39.99 a year as well as an average of 250,000 unique readers a month. At that time, the paper was predicted to break even in five years. Since then, News Corp has been battered by further allegations of fraud (the company allegedly hired hackers to disrupt rival pay-TV companies worldwide), the initial phone hacking scandal hasn't ended, and Apple's digital subscription business, while not a bad thing, failed to materialize as the deus ex machina many publishers were hoping it would be. iPad subscriptions haven't flowed in at a rate that would stem losses at a number of dead-tree publications, and online advertising continues to sell at much lower rates than its real-world counterpart. The economy, meanwhile, is nearly moribund.


The Times, News Corp's other major experiment in online distribution, hasn't done particularly well since raising a paywall in 2010. In October 2011, the paper reported 111,000 subscribers to its various digital products. That's not bad for an Internet site, but the site's traffic is down to 2.7 million unique visitors a month, down from a height of 21 million before the paywell went up.

For journalists, these trends are unsettling. Murdoch may be slime -- certainly some of the people he hired were -- but News Corp got where it is today because it was very, very, good at making money. The Internet's impact on the music and movie industries is widely discussed; the impact on reporting and newspapers gets less column space. If The Daily can't turn a profit, with the resources and expertise of News Corp behind it, it's hard to see how many other major publications will be able to do so. To date, newspapers and magazines have reacted to the Internet's encroachment by slashing job positions and writing more fluff pieces and fewer features. If a six-month investigation into corporate skullduggery and a 30-page slide show of cute kittens get the same number of clicks and earn the same advertising rate, which one do you think a news company is more likely to invest in?

The economics are blunt enough to worry any journalist, no matter what medium they work in.