Sarah Ellison of the WSJ has more
detail today on whether or not WSJ.com is likely to go free. Although Murdoch
himself seems to see what a good idea it is, he is apparently getting pushback
from Dow Jones CEO Richard Zannino:
Mr. Zannino and other Dow Jones executives, however, have made the case that
there is value in keeping the Journal’s Web site — with its 983,000 subscribers
— at least partially a paid site…
Mr. Zannino and other executives have said that given the nature of the Journal’s
content, opening up the Web site to nonsubscribers might not attract enough
new readers to make up for lost subscription revenue. Furthermore, according
to an internal Dow Jones review of WSJ.com, nonsubscribers only stay on the
site for an article or two, unlike subscribers, who stay on the site much
The lofty ad rates the Journal can charge online would be eroded by a less
loyal, nonsubcriber base. Lehman Brothers estimates that the average page
view on WSJ.com commands four times the ad revenue of a page view the New
York Times site.
Thankfully, all of this is offset by the much more bullish and sensible ideas
of Rupert Murdoch, who realises how silly it sounds.
For one thing, the only value in keeping WSJ.com a paid site is the
immediate subscription revenue that it generates. If you’re owned by a Bancroft
family which wants to maximize its dividends, then I can see why you might want
to do that. But if you’re a tiny part of the giant News Corp, your online subscription
revenue is barely a rounding error when it comes to overall profits. Rupert
doesn’t want WSJ.com to contribute to News Corp’s profits, he wants it to contribute
to News Corp’s share price. And the way to do that is to make it as
popular and successful an internet property as he possibly can.
Besides, I reckon that ad revenues can make up for lost subcription
revenues. According to Dow Jones, WSJ.com gets 8.3 million unique visitors a
month, and would need to raise that number to something over 20 million uniques
in order to keep total revenues constant. Never mind the accuracy of the numbers,
the key thing here is the percentage increase: readership would have to go up
by about 140%. Slate’s readership went up by many multiples of that after it
went free, and I reckon the WSJ’s would as well. People looking for financial
news right now don’t visit WSJ.com because they know it’s a pay site. If they
know it’s free, it could easily become the first best source for all financial
news and analysis online.
As for the idea that subscribers are more valuable than nonsubscribers because
they spend more time on the site – well, duh. Of course
nonsubscribers don’t spend much time on the site: they’re barred from reading
most of it! Let’s see what happens when WSJ.com goes free: my guess is that
it will find itself with an extremely loyal nonsubscriber base indeed –
a nonsubscriber base, what’s more, which will continue to be very attractive
to advertisers. After all, financial professionals are very busy, and very hard
to reach; I have a hunch that they spend much more time online than they do
reading newspapers or watching TV. If advertisers want to reach these professionals,
WSJ.com will be a must-buy platform.
And all of these considerations don’t even take into account the value of the
WSJ in emerging markets such as Brazil, India and China. The emerging business
elite in those countries will probably never be particularly inclined to shell
out for a WSJ.com subscription, but if they grow up reading WSJ.com regularly,
that relationship could be worth a fortune to advertisers in the future. As
Jeff Jarvis says,
"it’s the relationship that is valuable. It’s the relationship
that is profitable, not the control of the content or the distribution."
Murdoch gets this; Zannino, it seems, doesn’t. Which doesn’t bode well for Zannino’s
tenure as CEO.