Murdoch launches next step in crusade

By Stephen Foley

NEW YORK - A museum might not be the most obvious place to launch a cutting-edge technology project but, then again, Frank Lloyd Wright's Guggenheim Museum in Manhattan is more famous for its sleek design than it is for any of the things available inside - and that is something you might say about Apple's iPad, too.

The media mogul Rupert Murdoch will take to the stage at the Guggenheim tomorrow to launch the first iPad-only newspaper. If he hadn't taken indefinite medical leave, Apple boss Steve Jobs would be there, too.

The launch of Murdoch's new title, The Daily, is hotly anticipated in the publishing industry as the latest move in his crusade to persuade people to pay for news over the internet.

Jobs' keenness to appear alongside him should be a clue about the importance of the launch for Apple, too.

Sales of the company's revolutionary tablet computer have soared past even the wildest forecasts, but it has not yet brought about the publishing revolution predicted for it when it went on sale last April.

Then, it was hailed as the saviour of magazines and newspapers, after years of giving away their content for free on websites, with only meagre online advertising revenues.

After almost a year, though, the story of newspaper and magazine publishing for the iPad is one of disappointing sales and frustrating dealings with Apple.

The launch of The Daily offers the possibility of a reset and, if it doesn't, then the launch of other tablet computer devices from rival manufacturers will allow publishers to put pressure on Apple from another direction.

When Apple reported its latest quarterly results last week, it said it shipped 7.3 million iPads in the final three months of 2010.

Father Christmas was loaded down with iPads during his December delivery rounds, and over 15 million devices have been sold, more than twice as many as the most bullish Wall St forecasters had dared predict.

PC manufacturers have started warning that tablet sales are eating into sales of traditional computers, and the consulting firm Deloitte predicts 50 million tablet sales this year, the majority of which will be Apple iPads.

The launch of the iPad helped push the number of downloads from Apple's App Store - which includes games and other applications, as well as content from publishers for iPods, iPhones and iPads - past 10 billion.

Little wonder that publishers such as Murdoch want in on the action, and many rushed to make available iPad versions of their publications in time for the launch last spring.

Magazine publishers loved the iPad: They could recreate their publications in a format that looked like the physical format, sell the kinds of glossy, full-page ads that appear in the printed copy, and charge users as much as they would for a news-stand copy. At least, that was the theory. In fact, the early buzz has faded fast.

Advertisers signed up to exclusive deals worth anything between US$75,000 ($97,000) and US$300,000 ($388,000) to be associated with the first iPad editions of popular magazines, but those early deals have not been replicated.

There has been frustration that, unlike with website ads, which use cookies to track viewers, there is little data available about who is seeing an iPad ad. Apple has resisted handing over app-user data.

And the readers have not materialised, either, amid complaints that publishers are not being innovative enough and are charging too much. Wired magazine, a favourite of those tech-savvy "early adopters" who were in the first wave of iPad owners, sold more than 100,000 downloads of its first edition in June, but is down to little more than 20,000.

"How much is the layout of Wired worth to you?" asks Dan Cryan, senior analyst at the technology consultancy Screen Digest.

"The articles themselves can be got more quickly and for free on the website. The iPad app only offers a little more interaction, a few bells and whistles, and bigger adverts."

Murdoch will be joined at the Guggenheim by Apple's Eddie Cue, vice-president of internet services. Details of what The Daily looks like remain scarce, though News Corporation has hired well-established journalists to produce content that it says will cover general news, entertainment and culture, in written and video format.

Apple has given privileged access to Murdoch's News Corp from the very beginning of its development of the iPad, enabling the Wall Street Journal to offer an iPad app from day one last year, for example.

Now, it has been jointly developing a payments system that will include a subscription to The Daily of perhaps as little as US$1 a week, taken directly from users' App Store accounts.

Up to now, the absence of an easy subscription option has been a major gripe of publishers, who often have to rely on iPad owners coming to the App Store regularly to download each edition of a magazine separately.

If Apple insists on taking its usual 30 per cent fee from subscription sales, this could still be a major sticking point for publishers, and a roadblock to bringing down the cost of downloads. Google, whose Android operating system is the basis for many of the new tablet computers being launched this year, has been wooing publishers with promises of a much cheaper subscription system.

As for the readers, will they come? Cryan of Screen Digest sounds a sceptical note.

"This is still the internet, and internet rules will apply," he said.

"The Daily's success is predicated on whether it is producing content that is not replicated elsewhere. If it is, then consumers have proven time and again that they will go and find that content elsewhere for free - which is everybody's favourite price point."

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