The WSJ’s Subscription Model

I’m at the Future of Business Media conference, where the wifi is painfully slow and where Robert Thomson, the editor of the WSJ, spoke this morning. He spent some time addressing the subject of whether should be free, and started off by saying that people like me who think it should be are fuddy-duddies from the dot-com era, who haven’t kept up with how things have changed. He also said that although the debate about going free did happen, "we never seriously considered not charging for specialized content".

But a lot of what Thomson said didn’t quite add up, and I still reckon that is going to go free eventually — although not nearly as quickly as I anticipated when Murdoch first bought it.

For instance: Thomson tried to paint a picture of non-subscribing visitors to the WSJ’s website being so attracted by the headlines on premium stories that they end up subscribing. He said that the website is up to 30 million uniques — "a doubling of the audience from last year, and a great free funnel of the readers to premium content". (If you think that number is high, so do I, and so does Thomson: he admitted that web metrics are "problematic".)

Thomson admitted that the website’s ad revenue is growing much more slowly than its visitor count, and he didn’t even mention what the growth rates are in paid subscriptions on the website.

And later on, Thomson talked about "how promiscuous web readers are" — implicitly admitting that just because someone is reading a free story about the yen, to use his example, they’re not going to jump through all the hoops needed to pay money to read a premium story on the recapitalization of Japanese banks.

Thomson also talked about how his decision to allow Dow Jones’s newswire content to appear for free on his Chinese-language website has sparked 400% growth rates there.

Thomson’s most interesting datapoint, for me, was when he was asked about the impact of consolidation in the financial-services industry on subcription revenues. He replied that there’s no doubt that if you’re a Dow Jones sales person phoning up banks and trying to get them to subscribe to products, you’re not in a great place right now. At the same time, he said, people who got fired from a place like Dow Jones haven’t disappeared, and are likely to strike out on their own in one form or another. They won’t necessarily be reached by a human salesperson, but if and when they find their own way to Dow Jones, they will still subscribe to content.

But aren’t individual subscription rates much lower than corporate rates? No, said Thomson, not on a per-person basis. If you can get a company’s worth of people to subscribe at individual rates, you’ll make more money than if you just sell a single corporate subscription. The question, of course, is how many individuals, after being fired from a big bank, will still do that.

My feeling is that Thomson was entirely right when he said that commentary had become commoditized, and that therefore you couldn’t charge for it; he also said the same thing about most news. But what he calls "specialized content" is to a large degree just taking commoditized news, and adding the kind of value that comes from informed commentators. Yes, there are things which Dow Jones the WSJ can do and no one else can do in quite the same way — Thomson was interesting when he started talking about selling content on the subject of India to Japan, for instance. And in a world where Dow Jones is looking to individual subscriptions to make up the losses from corporate subscriptions, it’s going to be very difficult for them to start slashing those individual subscription rates to zero.

But I suspect that eventually the WSJ will do the math and work out that the best way to monetize and grow its large number of unique visitors is to maximize the time they spend on the site. And the best way to do that is to go free.

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