News International, it seems, has been working up some sort of idea for a printed title; a new newspaper in short. A project team – believed to be headed by former Sun deputy editor Fergus Shanahan – has been busy over at the Murdoch company's Wapping skyscraper. And enough about their work has leaked out on to Fleet Street for rivals to believe that News Int is working on some sort of competitor to Alexander Lebedev's more successful than expected i.
The story that emerged was that Wapping would produce a 10p title, called, according to some from outside the company, the Daily. However, the line from various Wapping sources is firstly that News wouldn't presume to use the Daily name and that while some dummies have been worked up it is understood no launch is imminent. But if an i spoiler is not on the immediate horizon, it would be a mistake to assume News is completely uninterested in the category.
Wapping's view is that the i is in fact a mid-market title – and anybody who can remember Today will know that Murdoch has some form in the bit of the market place between the Sun and the Times. Although at first the i looked like something of a dog, with sales at below 60,000 in January, the Jemima Goldsmith advertising campaign changed all that overnight. Now sales are at 175,000 and the i has proven it has an audience.
The interesting part is that the i has not grown at the expense of upmarket rivals. Some say the Times has lost 5,000 to the i (although Wapping wouldn't agree); the Guardian perhaps a few less and the smaller Indy fewer still. Over at Lebedev's Kensington HQ the notion is that this curiosity can be explained because there are some lapsed broadsheet readers who want something cheap and quick rather than a vast £1 product.
At Wapping the thinking is that the i is a competitor of sorts to the Metro. Advertisers too seem to be in agreement with that – or rather, it has proven difficult (so far) to persuade many to pay for display ads in the i at Indy rates. But that doesn't mean there isn't something in the economics – well there is if you can get your editorial from another newspaper (in this case the Indy) for free.
Start with the i's 20p cover price. Knock off the 5p that is thought to go to the retailer and 2p for the distributor, and that leaves 13p coming into the coffers of Lebedev towers. That makes for a modest £6m in annual revenue at 175,000, before newsprint costs, the cost of the subs who work on the product. There'll be some advertising revenue that will be won – rivals reckon £3m-£4m a year is realistic – and that figure could rise over time.
A £10m a year newspaper may not sound much by Fleet Street standards, but the word is that i is doing enough to ensure "run rate" break even. That may not pay for the launch costs, which included an initial ill-judged £2m poster campaign before the successful £1.8m TV effort. It may not also be enough to pay for future promotion, but you can argue that "the promotion is in the price" which is the sort of thing they say over at Kensington.
Ten million may not be enough to interest Wapping either, but go back to that Metro point again. The point about the 20p price is that it is so cheap that you might wonder whether it is worth charging at all. After all, the free Metro has a circulation of 1.4m, a turnover of about £110m and a 20% profit margin. Which is a decent business. But after all the Murdoch empire has said about the virtues of paywalls would News really want to launch a freesheet?
