Regarding A Free Wall Street Journal Online

Posted by: Jon Fine on January 3, 2008

Paid Content’s Joseph Weisenthal beats me (by a lot) to blogging thoughtfully about Bear Stearns analyst Spencer Wang’s number-crunching regarding what might happen should News Corp. ditch WSJ.com’s subscription model and make the site free.

Wang came down very hard against the idea that a free wsj.com may result in a big financial upside for News Corp—quite the opposite, in fact:

Turning WSJ.com into a free site would require a 12x increase in traffic growth to offset the lost revenue, according to a new report from Bear Stearns analyst Spencer Wang. WSJ.com revenue is currently pegged at $78 million annually, based on an estimated 989,000 subscribers paying $79/year. Including non-subscriber traffic, the company claims 122.4 million monthly page views. Based on an estimated CPM of $6 and a few other assumptions about sell-through rate and ad impressions per page, Wang arrives at the 12x conclusion.

To put this in a proper perspective, per Weisenthal:

If WSJ.com only grew to the average of its peers (nytimes.com, CNN Money, usatoday.com MarketWatch and Yahoo (NSDQ: YHOO) Finance), the site would only be about halfway to the 12x goal.

To really see direct revenue growth from going free, it would require the site grow as big as Yahoo Finance itself. (Emphasis added.)

This, of course, assumes that Wang’s CPM estimate is right. (Commenters on Weisenthal’s post dispute this—are they correct? Please post a comment below if you’ve any notion on this point.) And, as Weisenthal points out, it also assumes that News Corp. has a purely financial reason for doing what they do.

News Corp. likely doesn't. If Murdoch loves his newspapers for their influence, you get a much bigger bang on that front by tearing down the tollgates.

More importantly . . .how do I put this? Let me start by contradicting something I just wrote about: I have an upcoming column in which I touch on how Web traffic, at least in the US, is no longer an infinitely expanding universe. If this is the case, the reverberations from this new-ish reality will have many interesting effects on the online media landscape.

That said, I think something like WSJ.com has a lot of untapped growth potential, for both traffic and especially video, and will for a long time. (The international implications of being the financial news source of record makes that potential greater still.) And that even a WSJ.com that no longer shows massive traffic spikes, but rather lots of dependable and high-quality traffic, will loom large as an especially prized advertising outlet—maybe even larger, owing to who reads it and the loyalty its online site should generate.

But perhaps I’m all wet. Your thoughts?

Reader Comments

Suvikas

January 4, 2008 3:31 AM

What is missed out is the fact that 'large' high-quality impressions are increasingly difficult to come by. Advertisers would go for those, thereby increasing eCPMs.

And why is everyone forgetting a free WSJ being accessed ALL OVER THE WORLD, and not just US? I am in India without access to the print, and balk at the cost of online. WSJ is essentially opening impressions from where it has neither print nor ad revenue now. This is not cannibalization of traffic.

Peter He

January 4, 2008 9:29 AM

the key here is that information is no longer one-way street. news corp sees this is happening. in the short-term, rid of the subscription wall may cause some financial constrain, but in the long run, wsj will be irrelevant if it does not adopt consumer behavior and aim for a greater universe.

A. Lipton

January 4, 2008 2:20 PM

Any mass marketing strategy needs to attract a very large audience. One reason for this strategy might be to sell other products beside the WSJ to readers. If they keep the subscription business, this property will never grow into a mass audience vehicle. The profitability of subsidiary revenues must be added to this decision.

Anon

January 7, 2008 11:54 AM

$79 rate assumes all subscribers are online only. What % are print as well, which brings the rate way, way down...

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