Next: the iPad newspaper

People who own an iPad will tell you it makes everything look sexier. Maybe even a newspaper.

Rupert Murdoch, an old-timey newspaper romantic, has nonetheless deputized himself as the digital saviour of paid content. Murdoch is leading the charge to build The Daily, an iPad-centered newspaper under construction in News Corp.’s Manhattan offices that is scheduled to appear at the beginning of next year.

With an investment of $30 million and a staff of around 100, The Daily will be the first of a kind – a “newspaper” with rich media and photography built especially for the iPad.

The enterprise has made some surprising hires from the ranks of the mainstream – Sasha Frere-Jones, the music critic of The New Yorker; Steve Alperin, a high-profile television producer; and Richard Johnson, the former king of Page Six. The Daily will incorporate some material from the rest of News Corp. – Fox Sports will provide some video, according to people putting together the prototype – but the plan is that a vast majority of the content will be original.

Murdoch told Fox Business recently that The Daily was his “Number 1 most exciting project,” a sentiment that was echoed an ocean away by his son James, who called tablet newspapers “our flagship project.”

Leaving aside some elephant-size editorial questions – how do you put out an original national newspaper every day with a staff of only 100? – there’s an argument to be made for News Corp.’s app-centric approach. Newspapers have been so busy trying to come to grips with the Web, but there may be a better opportunity on tablets and other mobile devices on which consumers are used to paying for at least some content.

News Corp. clearly sees the iPad as a way to bring consumer revenue back to the publication of news, in part because the company has had some success in building a relationship with Apple. Consumers who download The Wall Street Journal’s iPad application buy their subscription from Dow Jones. (The Economist recently announced a similar arrangement because, like The Journal, it was already charging for content online.) Other publishers have complained that they have been locked out of selling such “in-app subscriptions” and left to sell single issues.

If you want a good look at the past and future of News Corp., compare the website of The New York Post – surely one of the ugliest, least functional in the business – with its snappy new iPad app. It’s a charming product, one that well reflects and amplifies the spice and excesses of the mother brand.

The night-and-day bifurcation is understandable given that Murdoch has never entirely trusted the Web, with its terrible advertising economics and brutal fight for revenue from consumers.

In July, The Times of London and The Sunday Times – both owned by News Corp. – went behind a pay wall, and the company recently reported about 100,000 payments in the first four months of the effort, only half of which were for more than one-off purchases of a story.

Subtract out subscribers to the print product, as well as Kindle and iPad users – as the digital thinker and writer Clay Shirky recently did – and the number of actual opt-in customers could be in the low tens of thousands. That compares with a pre-pay wall audience of 6 million unique visitors, according to estimates from the research firm comScore.

With The Daily, News Corp. can enter the digital newsstand business in earnest with a new product that was never free on the Web and in a format for which payments are easily made. When I am on a Web browser and I bump into a pay wall, I reflexively pull back unless it is in front of something I really must have. But when I’m in the App Store on an iPad, I’m already in a commercial environment: pushing the button to spend small money on something I’d like to see or play with doesn’t seem like such a sucker’s bet.

But Murdoch’s view that Steve Jobs’ device is some kind of magical kingdom for news is up against some hard realities. As innovative as it seems, The Daily will be a newspaper, an ancient motif on a modern device. It will be produced into the evening, and then a button will be pushed and it will be “printed” for the next morning. There will be updates – the number of which is still under discussion – but not at the velocity or with the urgency of a news website.

And at a time when the ecosystem of news is driven by links, The Daily will have no inbound links from other sites, and nothing outbound either. (Initially, there will be a mirror site on the Web to market some of its wares outside the high-walled kingdom of apps.)

It seems sensible to wonder: Who is going to bring old habits to a new environment? The people who own or will buy an iPad have become used to a Web browser as their prism on the news, not a newspaper and its editors. The Daily will have a separate opinion section, which will seem wildly anachronistic to readers who have grown up reading news and point-of-view analysis in the same piece of digital journalism.

Beyond editorial challenges, the path to a real business with real profits seems a lot less clear than the display on an iPad. If, as Murdoch is said to hope, half a million people eventually subscribe over the first five years, that would be almost 5 percent of all current tablet users, which seems wildly optimistic. (Then again, by some estimates, the number of tablet users will grow to more than 100 million in the same period.)

In the meantime, reaching about 100,000 people seems far more likely, which would yield less than $20 million annually, even before Apple gets a cut. And the discrete market for advertising within applications seems promising, but it is largely untested.

In the short run at least, The Daily will be like a number of Murdoch’s other newspapers in this respect: It will be depending on money earned by other parts of News Corp.

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