Jeff Jarvis started, on his blog, a conversation about whether or not The Daily can make some money. A few months ago, Frédéric Fillioux (Monday Note) crunched some numbers.
Here are three hypotheses. Don't hesitate to comment and make your own.
HYPOTHESIS #1: 1% penetration of the iPad market
- USA Today paid circulation (1.82M) is less than 1% of the adult American population (around 220 M of people 17+)
- Let's say that The Daily will get 1% of the 15M iPads. It is 150,000 subs x $40 = $6M/year.
- Let's say that they have a CPM like the USA Today app at $50 and that they have 10 ads a day for 365 days. So ad revenue will be = ~$27.34M/year. (150,000/1000= 150. Then 150 x50 x 10 x 265)
- Total revenue = ~$33.4M/year
HYPOTHESIS #2: 0.56% penetration of the iPad market
- How do we come up with 0.56%? I'm using Le Monde (the French daily) numbers. They have 7 million monthly UV. 39,000 of them pay to access the paid part of lemonde.fr. (39,000 = 0.56% of 7 million).
- In this case, sub revenue is = 3.36M/year (84,000 x 40). 84,000 is 0.56% of 15M iPad users.
- Ad revenue (if we keep the same $50 CPM and the same 10 ads/day) = $15.33M/year.
- Total revenue: 18.69M/year.
HYPOTHESIS #3: 0.33% penetration of the iPad market
- How do we come up with 0.33%? Le Monde sales ~300,000 print copies. 100,000 customers access to the paid part of lemonde.fr (39,000 pay only for the web + 61,000 print subscribers who requested access to it). So 100,000 is 0.33% of the 300,000 people paying for print.
- In this case, sub revenue is = $1.98M/year. (49,500 x 40). 49,500 is 0.33% of 15M iPad users.
- Ad revenue (if we keep the same $50 CPM and the same 10 ads/day) = $9M/year.
- Total revenue: $10.98M/year.
Of course the more iPad users, the more potential. On top of that, The Daily is probably going to have an Android and a windows version.
Operations are $25M / year, so it does not look impossible to make money (even if initial investment is $30M). But do you get any advertiser with 150,000 subscribers? The Daily team has put numbers together before launching the project for sure. I'll be curious to see their business cases. As a reader, I'm not the audience. I hope there is one for this hybrid. We'll see.