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'The Daily' - No, You Can Not Wrap a Dead Fish in It

By Rob Walch MacNewsWorld ECT News Network
Nov 26, 2010 5:00 AM PT

I am an on again/off again subscriber to The Wall Street Journal. Typically, I wait for that letter to come from one of the airlines that says I have some leftover frequent flier miles that I can use to subscribe to various magazines or the WSJ. I then cash in a few frequent flier miles and get the WSJ and then ignore the letters asking for me to pay to extend it. Eventually, it stops showing up in my driveway and I repeat said process.

'The Daily' - No, You Can Not Wrap a Dead Fish in It

One thing that always bothers me when the WSJ is being delivered is that I have to get out of the house and get the paper and bring it in every day. Being that I work from home, that is not something I would do otherwise -- at least not every day. When it is cold, raining, snowing or 100+ degrees out, it really is a task to get said paper. And I really hate when I get the paper in and it is soaked from the rain. Plus, anytime I go out of town and forget to stop delivery, it is a big sign no one is home.

Having a paper automatically delivered to my iPad and formatted for my iPad seems so much nicer and easier. It will never get wet in the rain, and it will not attract would be burglars.

Rupert Murdoch realizes this, and he is betting at least US$30 Million dollars that he can bring a "newspaper" to your iPad -- one that is available only for tablets (the iPad, specifically, to start). This venture is rumored to be called "The Daily" -- because, you know, The Daily Planet was already taken and "The Daily" is shorter and sounds more hip and fits better on an iOS icon.

Plenty of Potential

A lot of pundits have been quick to pooh-pooh this venture -- questioning whether the iPad has a large enough customer base to support such an offering. Well, a quick look at the numbers shows the following: Apple sold 3.3 million iPads in Q2 2010 and 4.2 million iPads in Q3 2010, for a total of 7.5 million iPads. Add in Wall Street estimates of 6 million in Q4 for a total potential reach of 13.5 million iPads on Jan. 1, 2011. The low-side iPad sales estimates for 2011 put total iPads sales at 40 million by the end of 2011. Granted, not all are in the U.S. -- but at least half will be. That allows a conservative estimate of around 22 million U.S. iPads by the end of 2011.

If "The Daily" were to convert 1.5 percent of all U.S. iPad owners by the end of 2011, that would mean it would have a subscription base greater than all but 12 newspapers in the U.S.

To put that in perspective, that would be more than The Arizona Republic, or the Chicago Sun-Times, or The Plain Dealer in Cleveland, or The Boston Globe, or the San Francisco Chronicle -- all of which have a daily circulation of less than 330,000. So -- yes, the iPad user base does appear to be quickly growing to the point where it could theoretically support "The Daily."

Also, 330,000 subscribers at 99 US cents per week, after Apple's cut, would generate $11.9 million per year in subscription revenue -- pre ad sales revenue -- and I am sure iAds would be in the app.

Bring On the Zombies

On the technical side, one big issue with iOS and the current rules is that zombie subscriptions are not allowed. Zombie subscriptions are those that get you to sign up one time and then you keep getting billed until you remember to take the effort to cancel them. Think Netflix and now Hulu+.

Zombie subscriptions are the lifeblood of any business model built on subscriptions, and those businesses need a system that allows users to subscribe once and be billed forever. The last thing "The Daily" wants is a system that requires users to remember and then make a conscious effort to sign up again each week or each month so they can send more money.

Apple has been against these type of subscriptions as they are not user-friendly, and to get Apple to change its stance may require a quid pro quo -- like, say, allowing for 99 cent TV show rentals -- just sayin.

Another issue raised is that "The Daily" would be an app only -- hidden behind a pay wall. As such, many claim it would miss out on the interactivity most papers try to encourage on the Web. However, I think having articles and comments only accessible from an app will eliminate spambot comments. It will also curtail a lot of the wacko comments, as they could block those that abuse comments more easily and permanently.

Civil Discourse

Imagine a newspaper in which comments were civil -- it is almost a utopian dream. I do believe the "lack of interactivity" argument falls short if the right tech is put in the app.

Another potential downside with an app is on the SEO side for individual articles. But I am guessing "The Daily" will do something similar to what the WSJ does with its articles that are behind a pay wall. Make the title, keywords and first paragraph available on the Web for the spiders -- then add a link to the app in the App Store where you can purchase a subscription if you want to read more.

So, the real question should be this: Will anyone spend money on "The Daily"? That will, of course, greatly depend on the quality of the product Mr. Murdoch puts out. But one thing that will not stop "The Daily" -- or any other iPad-specific "newspaper" -- from succeeding is the inability of people to spend money.

iTunes is one of the greatest marketplaces in the world for getting people to spend money. Oftentimes, they don't even view it as spending their own money. They're using iTunes gift cards, which, like my frequent flier miles, are just credits sitting in an account.

Rob Walch is host of the Today in iOS podcast.

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