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After a Year, Tablet Daily Is a Struggle

One year ago Rupert Murdoch took the stage at the Guggenheim Museum and with much fanfare introduced a News Corporation publication that, in the words of the Apple executive Eddy Cue, would “redefine the news.”

News Corporation
Bebeto Matthews
News Corporation

A year later, it has not quite done that.

It is not that The Daily, a $30 million tablet-only news publication, developed under a shroud of secrecy by Mr. Murdoch and Steven P. Jobs, has not kept its promise of delivering a daily dose of sleek news told through interactive articles, images, and videos that float across the screen unlike any website. It has.

And with 100,000 subscribers paying 99 cents a week or $39.99 a year, and 250,000 unique readers each month, The Daily is on target to break even in five years, just short of the time it typically takes a new print magazine to see a profit, said its publisher, Greg Clayman.

But The Daily, begun with sky-high expectations when Apple’s iPad was being promoted as the savior of the publishing industry, has struggled to break into the national conversation or to drive news and build on its brand the way traditional outlets do.

In part, The Daily has been limited by the structure of the app itself, which renders beautiful pages of text, photos, and graphics, but lacks the fluidity of the networked web or the immediacy of blogs and Twitter. Editors might update the app once or twice a day, depending on news events. Critics immediately grumbled that The Daily seemed oddly static.

“The feedback we get from users is that this is sit-down, appointment viewing. No one has ever said ‘This isn’t up to date enough,’ ” said Jesse Angelo, editor in chief of The Daily. He added that users spend 30 minutes a day browsing the app, according to internal research.

The app format also puts The Daily outside the walled garden, allowing users to easily share articles and spread scoops far beyond one publication.

Mr. Angelo said that has prevented some of The Daily’s bigger scoops — the National Football League’s potentially issuing players concussion lawsuit waivers and the chef Paula Deen’s diabetes — from generating discussion. And The Daily, with its relatively small staff of 150, has had to fight for reader attention as a start-up, albeit a well-financed start-up from a huge media conglomerate and well-entrenched competition.

The Daily owes its origins to the particular culture of News Corporation. The idea came to Mr. Murdoch in a dream — literally — in 2010, company executives have said. He woke up and called his top lieutenants to explain that the company needed to build the first tablet-only publication.

A longtime believer in print journalism, Mr. Murdoch said at The Daily’s introduction that the iPad could make “the business of news gathering and editing viable again.” He said The Daily would be “the model for how stories are told and consumed.”

To lead the effort, Mr. Murdoch chose Mr. Angelo, a childhood friend of Mr. Murdoch’s son James Murdoch, who previously worked at News Corporation newspapers in Australia and England before he became executive editor of The New York Post, a title he still holds.

A staff was quickly hired with the goal to develop and start the project within six months. The aim was the middle market, a pithier digital version of USA Today. Mr. Angelo recalled an early discussion with Mr. Murdoch when a top Daily executive asked what the target audience would be. “Rupert looked at him like it was the stupidest question he’d ever heard and said a single world: ‘Everybody.’ ”

The Daily now consists of around 120 pages of original articles, splashy photos from across the globe (called “The Daily’s Planet”) and videos like one with Michelle Obama, the First Lady, talking about healthful eating with Jay Leno. It also has lowbrow favorites, like a mutated kitten born with two faces and video of objects exploding in microwave ovens.

A significant number of subscribers live in Florida, Texas, Michigan, Nashville, and Denver. Mr. Angelo said The Daily has always aimed at these readers, rather than catering to the chattering classes in New York and Los Angeles.

“I don’t care about what people in a 20-block radius of our office say about this product,” Mr. Angelo said. The Daily’s offices are on the ninth floor of the News Corporation building in Midtown Manhattan.

A few months after The Daily began publishing, many of its early supporters wondered if it had started too soon. The articles seemed derivative and lacked depth, media commentators said. Some journalists who came to The Daily in the hope of writing substantial articles grew frustrated with its tabloid format, according to several former employees who would not discuss The Daily on the record.

Technical problems made The Daily slow to upload, and it crashed frequently. Users commenting on technology message boards said they had lost patience, and a handful of employees left the publication.

Mr. Angelo pushed his staff hard. Shortly after The Daily started, he sent a memorandum encouraging staff members to generate more scoops. “Folks, Egypt is over,” he wrote after the Tahrir Square uprisings.

“Find me a story of corruption and malfeasance in a state capitol that no one has found,” he wrote. “Find me the oldest dog in America or the richest man in South Dakota.”

Inevitably, the technical kinks were worked out, Mr. Clayman, the publisher said. In six months The Daily went from Mr. Murdoch’s vision to a real publication with its own publishing system built from scratch, he said. As for the blurblike articles, he and Mr. Angelo said research showed readers preferred brevity.

“We were in building mode for six months,” Mr. Clayman said. “It’s a big shift to go from speculation to seeing how people actually use it.”

In 2011, The Daily, which evenly splits its revenues between subscriptions and advertisements, was the third-highest-grossing app behind Angry Birds and Smurfs’ Village, according to Apple. But it still struggles for attention in a vast media universe.

“It hasn’t really hit its stride or realized its potential,” said Paul Verna, senior analyst at eMarketer. He compared The Daily to the early days of The Drudge Report, which became a major player only after it broke the Monica Lewinsky scandal.

“It needs to catapult itself into the mainstream by breaking a big news story or carving out a niche within the media ecosystem,” Mr. Verna said.

But analysts have praised News Corporation for embracing the medium early. “This is a company that thinks long term, and they’re willing to try new things,” said Benjamin Swinburne, a media analyst for Morgan Stanley. “That’s how you get successes like Fox News, but you also get misses like MySpace.”

Certainly, the audience on tablets is growing. Last year, an estimated 28 million Americans used iPads, up 144 percent from 2010, according to eMarketer. By 2014, an estimated 60.8 million people in the U.S. will use iPads, eMarketer said.

At the Consumer Electronics Show in Las Vegas last month, News Corporation announced a deal with Verizon Wireless, a unit of Verizon Communications, to make The Daily available on select Samsung Galaxy tablets. The Verizon devices will come preloaded with The Daily. In the next few months, The Daily will become available on mobile phones, Mr. Clayman said.

One of things News Corporation has learned is that iPad owners are not necessarily young, urban, and coastal. A majority of The Daily’s subscribers are aged 35 to 50. Forty-five percent of them have children, and 89 percent own their homes and have a median household income of $118,000.

Jon Miller, News Corporation’s chief digital officer, said The Daily has been an invaluable experiment, as the company expands the digital footprint of its established brands like The Wall Street Journal and The New York Post.

Still, The Daily can’t thrive as a laboratory alone and it increasingly faces competition from apps tied to traditional newspapers and magazines and free alternatives like Flipboard.

“Now the question is one of scale: How big can this be and can it be profitable?” Mr. Miller said. “Everyone is working on that one.”

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