Media FAIL… The Daily Beast Going Bust?

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Looks like the Harmon family is divesting interest in NewsWeeks Daily Beast online blog.

Barry Diller launched The Daily Beast under the auspices of former New Yorker and Vanity Fair editor Tina Brown in October 2008. The presence of Brown, coupled with an emphasis on political coverage that dovetailed with the election of U.S. President Barack Obama one month later, allowed The Daily Beast to immediately establish a brand and build an audience.

But advertising sales never caught up with the buzz, and media reports have estimated losses at The Daily Beast at around $10 million annually.

Diller and Harman decided to merge their titles in November 2010 — the rationale was to leverage the combined audiences to cross-sell advertising at both publications and subscriptions for Newsweek. The Daily Beast is a free, ad-supported site.

So far, however, the combined venture is still losing money, according to Diller, though he has said this year’s loss will be substantially less than last year’s. He did not give a figure and Brown has called reports of $30 million in losses last year “excessive.”

Here is the deal. The Daily Beast is predominately liberal. It was created with the expectations that the Obama friendly slant would guarantee a growth audience for years to come. It did have a great launch -“Sorry, Dad, I’m voting for Obama.” – And they lured into the fold the one blogger who has perhaps the biggest man-crush on Obama that could ever exist… Meep. Meep…. and more Meeps.

Ah… The folly of expectations! Just like The Nobel Peace Prize committee awarding President Obama that most honored prize even though he had only been in office for not even six months, because the President was surely going to do something to encourage World Peace and was certainly going to craft policy to make his “vision of and work for a world without nuclear weapons“, a reality that has yet in any way to materialize (Bush’s fault I’m sure). And no, assassinating US citizens and killing people with drones and giving the OK to fly spy drones over your own citizens does not help the cause for peace….

Oops. I side-barred.

Anyway, the media strategy at the Daily Beast was destined to fail because left a huge chunk of the reading audience alienated from the get-go… Yes, that would be Conservatives. Don’t get me wrong, I’m not advocating for the placement of far right commentators by any means, but you don’t want to cater to the far left either. I mean, it’s not like Air America was also a success, and they were only a little more to the left than The Daily Beast has consistently been. You figure that lesson would have been learned.

I can hear someone saying now… “Well, what about FOX News or National Review Online? They cater to one side of the political fence and have been very successful!”.

Two points here. The Daily Beast seems to have been built on the assumption that Obama would be a hugely successful President. At this point, that certainly looks like a silly assumption. Live by the Obama sword, die by the Obama sword (sorry again Nobel Committee, probably a bad idiom to use for this President). More important in this case IS the examination of FOX News and National Review Online. Why FOX has worked so well, that many liberal detractors seem to ignore, is that before FOX, there was almost nothing out there in the cable news industry that catered to the right wing audience. Murdoch and friends had a completely untapped audience waiting for someone to come along and snatch up that demographic segment.

National Review Online?

They had a very successful branding, and they started small. This is often the most important aspect of starting a business that both Air America and apparently The Daily Beast completely ignored. They both started big, huge in AA’s case, which didn’t leave them any room for segment growth. Both FOX and NRO were able to grow to fit their audience, not the other way around. I also suspect that a great many in the business / advertising world have over-estimated the effectiveness of online advertising (yes facebook, I’m looking your way) and have set themselves up for a rude awakening when that bubble bursts. But them, I’ve always thought the price for advertising was always overvalued in many aspects of media, so this may be a bias on my part clouding my judgement.

Is this a sign that daily Beast is going under? I can’t say. There is still time to save the product. But they have to get much smarter and much more accommodating to other political point of views if they are going to survive. Oh, and get rid of Tina Brown. She doesn’t exactly have a great track record for the last several years.

PS. To Yahoo writer Peter Lauria – Thank you and Yahoo for including the fact that you used to work for the Daily Beast so that we can know there might be some bias in this report (why did you leave I wonder). But… BUT… Andrew Sullivan did not exactly scoop the story about Anderson Cooper being gay. You can’t scoop something when the whole world pretty much knows it anyway.

Wow! I’m being awfully snarky tonight.