What are Murdoch’s tablet/mobile plans for Australia?


Interesting news out of the US last week. News have announced plans to launch a paid/subscription newspaper that is exclusive to tablets/mobile.

Article here – http://www.latimes.com/business/la-fi-ct-newscorp-20100813,0,3467576.story

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.

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17 responses to “What are Murdoch’s tablet/mobile plans for Australia?

  1. Gawker. Great, great company with excellent content, and ability to break big stories (i.e. iPhone 4 leak at Gizmodo). Would be a great acquisition for lots of companies, but not sure this would be so good for Gawker themselves. Cashflow would be a plus for Gawker – I assume it’s the reason they don’t have an iPhone/iPad app yet. But could Gawker (or any of these startups) survive having to shoulder responsibility for being not only News Corp’s great white hope, but also the saviour of paid journalism? Or from a left-field perspective – might make more sense to make a number of smaller content acquisitions and invest in curation (i.e. Flipboard)?

  2. If Little Dick has been “given a wider role” then Fairfax has heard some good news at last.

  3. Steve Browning

    Ben,

    Steve Browning, director of corp affairs for NDM and The Australian here. Hello.

    We don’t usually comment on speculation, and clearly I’m not going to talk about our strategy here, suffice to say your gut is very badly off the mark in pretty much every guess and assumption it’s led you to.

    As a small example – your maths on The Australian’s iPad app is spectacularly wrong.

    Firstly, you’ve significantly underestimated sales. We announced that we sold 8500 subs in the first month alone. We’re now in month three.

    Ignoring that, your maths costs the thing at somewhere between $1.4m – $2.8m dollars. That’s clearly nonsense. Our developers don’t know whether to laugh or ask for a massive pay rise!

    And you’ve completely ignored advertising. As previously announced we sold an incremental $1m worth of advertising at launch. The second round of advertising packages are in market now.

    So your line that it is ‘another large drain on Murdoch’s finances’ couldn’t be more wrong.

    As, unfortunately, is much of the rest of this blog.

    Cheers
    Steve

  4. Steve Browning

    Steve Browning again…. I should clarify my last line – I meant this blog posting, not the entire blog.

    Cheers
    Steve

  5. talkingdigital

    Hi Steve,

    Thanks for the comment. $1m of advertising for something that sold 8500 subs in month 1 feels odd to me. That’s extraction for ads alone of around $117 per user which is pretty impressive (I’m sure it was packaged into a deal that involved digital as well as print) but how were the advertisers feeling about these results (there appeared to be 5 of them so that’s a $200k investment each).

    That said, I don’t expect you to answer that question.

  6. Steve Browning

    Hi Ben,

    There were four partners, and the campaign ran across print, online and in app.

    The bottom line is that $1m revenue would not have happened if the app didn’t exist. It came about because of the app.

    As mentioned, the second round is in market now. You might wish to prepare your gut for some more surprise.

    Cheers
    Steve

  7. Pingback: Tweets that mention What are Murdoch’s tablet/mobile plans for Australia? | talking digital – Ben Shepherd -- Topsy.com

  8. RT from LA Times:

    youseeit at 10:47 AM August 14, 2010

    Impossible. No one who reads Murdoch’s media is smart or advanced enough to own such devices.

  9. Interesting thoughts Ben. There clearly no doubt that News is yet to make their online models work profitably. But one thing you have to give them credit for is having a crack.

    While plenty of other traditional publishers are either slowly whittling away a family fortune while sitting on their hands, or simply shutting up shop, Murdoch is working to come up with a sustainable model. Will he succeed? Only time will tell. But he doesn’t have a great record of failing, so I certainly wouldn’t bet against him.

    KF

  10. My 2 cents:

    The iPad ad component of The Oz was $50k per advertiser (the rest was print/online). Sorry Steve @ News, but that isn’t revenue you would have already got, all four advertisers already spend bucketloads in Nationwide News and these iPad deals just absorbed part of that larger spend. But if that is how you need to sell investment in innovation internally, cool. I’m all for it.

    Anyway, net ad revenue for Oz iPad = $200k for three months.
    ~ Est. 15,000 app DLs @ $4.95 = $74,250

    I am a fan of the Australian iPad app. It isn’t perfect. It is only a three-star app. But it is cheaper than 2 weekend papers.

    On the other hand, the rest of News Corp’s tabloid/free papers are completely embarrassing. You won’t find anyone willing to pay for an app that spews up daily Jason Ackermanis and Shappelle Corby. Let’s face it, with a few exceptions, News does news and classifieds BADLY these days.

    If News wants to be successful here, it needs to invest more in entertainment. Casual/mobile gaming, music, pay-per-TV episode maybe even adult.

  11. talkingdigital

    Thanks Sam … even at $50k per advertiser (for ipad component) … the return for the advertiser appears to me like an afterthought. $50k for 8 thousand odd users … it’s a lot to pay no matter how you look at it. Ultimately the ipad and other tablet type advertisements will become subject to the same intense by numbers rigour that applies to other digital channels (righly or wrongly) and I’m unsure many other advertisers will be willing to pay 6 or 7 dollars per unique to reach the same person they can get on the web for 0.1% of that price.

    I too am all for innovation and admire that News is trying things in digital and investing in content … but the Oz app feels like they’re trying to polish something that perhaps isn’t able to be polished.

  12. @Ben “re: intense by numbers rigour” God save the industry as a whole if it does. This so-called rigor is misunderstood and narrowly calculated by both agencies and clients who use it.

    Reason for advertisers spending $50k on an app is experimental spending – I guess – is no different to them punting $50k for an OOH spot at an exciting new location. Desired result is association with innovation, leaders and reaching (in part) a wealthy audience who might be thinking of buying a luxury car in the next 3 years or flying business to Europe soon. If it doesn’t work it doesn’t matter, it’s only 0.1% of their annual budgets – if it works they get first rights to rinse and repeat.

  13. talkingdigital

    i agree – the ‘rigor’ is probably a sign of inexperience/ignorance if anything – and if the industry is going to nurture the choice/selection/diversity that makes it appealing to marketers then one dimensional rigor needs to evolve beyond look at a few acronyms that have been passed down.

    In principal I understand the $50k thing … but same logic could be applied elsewhere. The ‘test/learn/evolve’ thing often is misunderstood for what is really ‘test’ … not much learning or evolving, in my experience anyway (both sides)

  14. steve browning

    Sam G – you’re wrong, but it is impossible to argue with someone who thinks they know our business better than we do so I shall gracefully retire 🙂

  15. I work with 18-25 year olds in my industry alot and no one I know has bought an iPad unless they are in digital/social media

  16. Pingback: John Hartigan gives us some idea of where perhaps News is heading … | talking digital – Ben Shepherd

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