Free the Wall Street Journal? Running the Numbers


Dorian Benkoil crunches some numbers on a free-vs-paid Wall Street Journal Online.  His key conclusions:

  • WSJ Online currently generates about $137mm in annual revenue from subscriptions ($79mm) and ads ($58mm).
  • Assuming Murdoch is right that making the WSJ free would increase traffic 10x, Benkoil concludes that the new ad-only property would generate about half the current revenue, or $68 million (his assumptions include: a lower sell-out percentage because of the increase in inventory; lower prices, because of a less demonstrably attractive user base, and reduced pageviews per unique, because of all the quick link hits).

You can tweak the assumptions and come up with significantly different numbers, but Benkoil’s logic is clear.  Although this analysis makes the decision to “go free” look moronic, we would add two additional pro-free considerations:

First, the WSJ is probably closing in on “peak subscribers.”  There are only so many people willing to pay $79 a year for a newspaper, even the Journal, especially with an ever-increasing proliferation of free content around.  With a paid service, the number of subscribers limits the amount of advertising that can be sold, so the subscriber growth will restrain future growth in both lines.  In a free service, meanwhile, traffic can continue to increase indefinitely, especially if competitors like the FT remain behind a wall.

Second, the WSJ would gain a lot more global mindshare and influence than it currently has if its stories were available for free.  Over time, this would enhance the value of the brand and lead to revenue opportunities separate from subscriptions and ads (such as conferences, premium data subscriptions, research etc.)

Going free, in other words, would likely involve a near-term hit to revenue and profit.  Over the long haul, however, it would also likely enhance both the brand and bottom line.

Related: One Vote Against a Free Journal, Another Vote For

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