Delivering in increments: learning from Murdoch’s expensive failure

cue_murdoch_the_daily

Rupert Murdoch’s bold experiment“The Daily”, is dead. The online subscription publication will close its doors on December 15th, after operating for only 21 months.

The Daily’s demise provides a great lesson about what can happen when you try to do too much. It’s not that The Daily didn’t have customers or revenue, in fact it’s probably one of the more successful attempts to get people to pay for online content, with an estimated 100,000 users paying at least $40 per annum. Add in at least $1m worth of advertising revenue and you have a $5 million a year income stream. Sounds pretty good, right? Sure, until you discover that the operation was costing $25 million a year to run. So what was wrong?  To put it really simply, they tried to be everything to everyone. Their increment was too big. As John Gruber puts it:

They set up an operation with $25 million a year in expenses. But there’s no reason why a daily iPad newspaper needs that sort of budget. A daily iPad newspaper of the scope of The Daily might (but I doubt it), but that simply means the scope of The Daily was ill-conceived. News Corporation went no further than taking the newspaper as we know it — the newspaper as defined by the pre-Internet 20th century — and cramming it into an iPad wrapper. You can’t tell me a good daily iPad newspaper couldn’t be run profitably for $5 million a year.

Maybe “newspaper” is the wrong term, because it carries so much historical baggage. Just think: daily news app. You don’t necessarily need the scope of a traditional newspaper, with entire sections dedicated to business, entertainment, and sports. (Sports is particularly problematic for a national publication.) Those sections only made sense in the pre-Web world where most people had no other source of daily news than their local newspaper. My advice to a would-be daily news app today would be to simply do the A section: the front page, breaking news, major national and world news, and opinion. There’s no way you need $25 million per year to do that.

The timing is fortuitous since we were considering potential case studies for the Value, Flow, Quality session Delivering Early and Often. It’s actually quite hard to find good case studies. The ideal case study is one that succinctly demonstrates some of the concepts we are trying to teach people, using a real-world example in an organisation that they know well (like, say, News Corp). Typically this means that the organisation tries something and fails, with one of the key reasons being not understanding the concept we are discussing. Even better is when they then try again, but take a different approach that takes the key concept into account, and this time succeed.

Whilst there is a lot more going on (not least of which is the history) these stories are mostly an “appeal to authority”. Showing that someone else has done this or that and got a result provides a level of credibility to what we are saying. Of course, not every organisation is the same, and I would always recommend running small, safe-to-fail experiments to see what the impact is in your context. The role of leadership is then to amplify if the results are positive or dampen if not. The point of the case study is to encourage people to try a different approach. In this way, case studies are a catalyst for initiating change.

Let’s see whether Murdoch and News Corp. makes another attempt with a similar idea but executed differently. Maybe they’ll go for a smaller audience or segment and do it from a lower cost-base. Whatever the approach, it’s going to have to be delivered in smaller increments rather than big-bang, I’ve got to have it all, everything at once approach that so often leads to failure.

Leave a Reply

Your email address will not be published. Required fields are marked *