News Corp bets on iPad for future of news

By Jennifer Saba and Yinka Adegoke

NEW YORK (Reuters) - Rupert Murdoch, among the most ardent defenders of the traditional press, has staked his reputation on a risky bet that for just 14 cents a day he can save the news business with tablet devices like Apple's iPad.

Unlike the News Corp chairman's other newspapers such as the Wall Street Journal or the Times of London, it was not immediately clear who the Daily, News Corp's digital newspaper for the iPad unveiled Wednesday, is intended to reach.

But that has not stopped the 79-year-old media mogul from investing $30 million to start to find an answer.

The Daily, a general news product available to iPad users in the United States, will cover everything from national politics to sports to gossip. It will cost 99 cents a week or $39.99 a year. Apple is expected to take a 30 percent cut in the first year.

The Daily will also be the first subscription product available through Apple's iTunes store. The first two weeks will be free courtesy of Verizon Communications.

News Corp will later roll out the Daily on other tablets.

"We can and must make the business of news gathering and editing viable again," Murdoch said in New York. "We're entering a remarkable age of innovation and digital renaissance."

Murdoch's lofty remarks recalled his speech almost six years ago when the media mogul urged newspaper editors, or "digital immigrants," to save the news business by applying a "digital mindset."

Shortly thereafter, News Corp was hailed as a digital leader among traditional media companies after its purchase of the once-hot MySpace social network. MySpace was overtaken by Facebook and now faces either closure or sale.

The Daily represents a big gamble that starting a digital organization from scratch employing traditional journalists will revive the news business beset by declining readership and advertising revenue.

But will anyone pay for news that is not specialized, analysts asked.

"It helps us answer the big question of 2011," said Ken Doctor, an analyst with Outsell Research. "Can you charge for (online) general news?"

The Daily represents News Corp's newest attempt to get consumers to pay for online news and support investment in journalism.

In another example, News Corp put all the news from the Times of London website behind a pay wall, charging 1 pound for a day or 2 pounds for a week's access. Its online readership dropped by almost 90 percent.

Murdoch said the Daily would cost an additional $500,000 or less a week to run before revenue from advertisers and subscriptions. He added that he would measure his success by "selling millions" of subscriptions.

News Corp executives were much more evasive about whom they expect to read the digital newspaper. The Daily's editor-in-chief, Jesse Angelo, relayed a story about Murdoch's response to a question about the Daily's target audience: Everyone.

ANGRY BIRDS COMPETITOR

Angelo said the Daily, which appeared to take design cues from Newsweek and New York magazine, will be published every morning and updated throughout the day with text, photos and HD video.

"The big trick here is that it is so magazine-like," said Outsell Research analyst Doctor. "If it can maintain a daily quality of interactive multimedia, it indeed has a good chance at being the USA Today of 2011, the inventor of a new category."

News Corp's chief digital officer, Jon Miller, said the Daily will be competing for attention with a range of news, games and other media services.

"You're competing with Angry Birds on some level," Miller said, referring to the wildly successful iPhone-based video game.

The staff plans to deliver about 100 pages of the Daily depending on the news cycle. Stories can also be shared for free on Facebook, Twitter and other social networking websites. Additionally, the Daily brings in Twitter feeds and links out to the Web.

ANGRY PUBLISHERS

The Daily marks Apple's first attempt at subscription sales through the iTunes store after having spent a year in talks with publishers with little progress.

Apple's Eddy Cue, vice president of Internet services, said his company will soon make an announcement on subscription services for other publishers.

The main sticking point is Apple's control of subscriber data, said sources who did not want to be identified because they are still in negotiations.

Publishers are particularly protective of subscriber data such as names, addresses and credit cards, which helps them court advertisers and market new products to existing readers.

"The subscription stuff is the real story, and Apple really did not give us any new information on what the subscription is going to look like," said Gartner analyst Allen Weiner.

He added: "This doesn't just impact the Daily, it impacts the entire news business." (Reporting by Jennifer Saba and Yinka Adegoke in New York and Gabriel Madway in San Francisco; Editing by Steve Orlofsky, Kenneth Li, Matthew Lewis and Phil Berlowitz))