Why The Daily Failed

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The end of the The Daily, the iPad-only newspaper from News Corp that is closing in two weeks, comes at a time where there are two trends changing the landscape of online news today: (1) mobile and (2) social.

With the first trend, readers' attention is flowing from print to desktop to desktop plus smartphone/tablet, forcing old news organizations to chase us onto smaller screens with cheaper ads and tougher paths to profit, as the (very general, but very compelling) graph below illustrates.

Screen Shot 2012-05-30 at 6.26.25 PM.png

The second trend is the "sharing economy" of links on the Web. To a degree that might be unappreciated for people who don't work in journalism, traffic for the vast majority of sites is overwhelmingly dependent on readers sharing our stories: on Facebook; on Twitter; on editorial communities like Reddit and LinkedIn and Hacker News; and on email/chat/dark social. Unless you are one of a handful of destination sites -- the New York Times, the Huffington Post, Yahoo News -- with homepages that push traffic like fire hydrants push water, this social web is your most important source of clicks.

With the advantage of hindsight, it seems The Daily made two fundamental, conceptual errors. First, it built an expensive, subscriber-only newspaper that cost $30 million a year in a weak U.S. economy, in a weak publishing industry, in a troubled News Corp company that is taking its best cross-subsidy for expensive journalism -- its booming TV/movie/video-entertainment business -- and turning it into a separate company, called Fox Group.

The second error is more subtle: The Daily doubled down on the mobile trend to the expense of the sharing trend. The social web is on the Web. The Daily isn't. You can create a web page for a Daily article, but it's cumbersome and renders somewhat awkwardly and isn't ideal for frictionless sharing (i.e.: on most sites, you press a Facebook button and your work is done). News Corp built a populist newspaper away from where the people are. They're on the Web.

Many critiques of The Daily today are saying it failed to carve out a niche and locate an audience. Perhaps. When I subscribed, I found it a good newspaper, with great editors and journalists, that broke interesting stories, and built cool infographics. The trouble is, I didn't want to read it, not because of what it was, but because of where it was: Trapped inside an iPad. Building a $30 million newspaper without significant subsidies is hard to do, no matter where you put it. But it's certainly impossible when you lock it in the app world when traffic on the Internet is all about sharing.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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