Interesting news out of the US last week. News have announced plans to launch a paid/subscription newspaper that is exclusive to tablets/mobile.
The article states the outlet will have its own editorial/production resources and staff. In other words – it will be like any other self sufficient newspaper like the New York Post or the Herald Sun. The paper would also take stories from News’s other properties around the globe.
Murdoch is pumped. At the Newscorp concall on August 4 he said “We’ll have young people reading newspapers. It’s a real game changer in the presentation of news.”
Seems like Murdoch is trying to tackle two pretty significant issues. The first is making money from the Internet (something he has not done and something not many have been able to do – especially content plays). The second is getting younger people to read newspapers or newspaper-like content (and pay for it)
The first issue is one Murdoch needs to fix for his own well being. His web properties as a collective don’t make any money. One in particular loses a heap (Myspace) and another (Careerone) somehow managed to lose $17.5m in the last FY. 15 years on since the Internet really ‘happened’, News is still struggling to find its feet. At the same time, despite pronouncements around the death of the medium, their cable TV businesses are killing it – seeing healthy revenues from both subscription and advertising.
Murdoch feels paywalls and subscription services are a possible solution worth exploring – it makes sense as this is what works so well for the cable businesses. So far the results are lukewarm.
The Australian ipad app to date has had around 8,000 downloads. Revenue wise this is around $40,000 gross based on a $4.95 retail. Take Apple’s cut and it’s more like $28,000. If this covers any more than 1-2% of the costs incurred so far in developing and executing the Australian app I’d be surprised. In short, right now it’s another large drain on Murdoch’s finances.
Regardless, to me it seems pretty clear what News are looking to do in the US (start a tablet only paper) is something they are planning here despite the to-date success or otherwise of the Australian app.
They have moved Richard Freudenstein into a wider role in the company. They’ve recruited Ant Hearne from Virgin Mobile into a role that revolves around paid services. Selected people within News Digital Media are starting to incorporate the word ‘Paid Content’ into their titles.
My guess is News will need to create a new brand if they want to tackle the second burning issue – getting young people reading newspapers.
They can make native apps for The Australian, Herald Sun, Daily Telegraph etc … but the likely outcome is they will transition the already older print readers onto the digital device. Ultimately there’s no real gain there. I can’t see a 21 year old suddenly thinking the Herald Sun is more relevant to them if on an Apple device but I can see a 45 year old regular Herald Sun reader trial the paper using the tablet (if they own one)
My gut tells me if Murdoch wants to attract young people to his ‘word based’ content he’s going to have to buy companies who already have trust with and access to this audience. Yes, he tried this before – myspace – but he would have learnt some valuable lessons from the journey so far (we will see how well myspace can re-re-re-re-launch in November of 2010). Whilst the myspace mistakes have been costly, they could ultimately help turn the brand around.
In addition, he needs to stick to companies that have similar traits to his already successful brands (short, sharp, punchy, broad) but play in areas News punches softest in (Music, Entertainment, Technology Lifestyle, Fashion). There are at least 20-30 businesses that fit this criteria here and abroad. A business like Gawker in the US springs to mind. Or a Mashable. Or even a HuffPo. Or a Kidspot. Already successful, operationally lean and cash positive web businesses with the potential to expand into other areas – tablet/mobile/events/print.
You would have to assume given their movements to date, what News is planning for tablets in AU is more than The Australian and native apps for their classifieds and newspaper brands. It’s something a lot bolder and bigger. But what? And how?
And whilst it might seem that News are a bit directionless when it comes to digital … Murdoch’s track record and understanding of media means he is someone it’d be foolish to dismiss.