If there’s one written-in-stone consensus among the digerati–SAI’s included–it’s that the Wall Street Journal Online will soon be free. But guess what? It might not be.
True, Mr. Murdoch’s original instinct was to nuke the pay-wall, and there’s a lot to be said for that. (We’ve said it, many times). But there’s also a lot to be said for continuing to make the Journal’s die-hard readers pony up. And the first indication that you WSJ holdouts may not suddenly get your free lunch is this: Murdoch’s owned the thing for several weeks now and it hasn’t yet gone free.
Then there are the numerous compelling arguments for keeping the pay-wall up. Such as:
- Not giving away a growing revenue stream of $75 million + in free money.
- Preserving the brand’s exclusivity.
- Continuing to charge premium CPM rates for a known audience.
- Preserving the value of the print paper for a long as possible (subscribers will be less inclined to drop their subscriptions if they have to pay for the content anyway).
- Keeping your options open (once you go free, you’re never going back).
The consensus that the Journal should and will go free, meanwhile, hinges on one primary argument, which is suspect:
The 10X+ increase in traffic will immediately offset the lost revenue. This argument hinges on two assumptions: First, that WSJ traffic will jump 10X+ (far from a given). Second, that the company will be able to maintain strong advertising pricing despite a 10X increase in inventory.
On the first point, it’s easy to forget that–for those who take business/Wall Street seriously–the Journal is a must-read. You want to know what you’re talking about? Then you have to read the Journal. If you’re tired of fishing the paper out of trash bins or waiting for blogs to summarize it, you’ll pony up for a subscription.
Will the Journal’s audience increase if the pay wall drops? Of course. Vastly. But the new readers will be 1) less intense business-readers (or they’d already have been reading it) and 2) a less-valuable demographic (the most intense business readers tend to be the richer ones).
On the second point, the expansion to a less-serious-about-business audience would likely translate into less pure ad demographic and a drop in advertising CPMs. The Journal’s pageviews would become the same as many other business sites’ pageviews: lots of hard-core business types but also a lot of drive-by lookee loos, with no way for the advertiser to tell the difference.
Then there’s the 10X increase in inventory. Do you think the WSJ Online sells out its inventory now? Our guess is it doesn’t. So what do you think will happen when that inventory gets multiplied by 10X? Revenue goes up 10X? No. Revenue per page goes DOWN 10X…and then the company prays that its salesforce can start to steal market share from other players.
(Don’t forget that the financial and business ad market is not going expand just because the Journal goes free. Fidelity’s not going to suddenly decide to spend 2X as much because financial ad pageviews have doubled. Fidelity is going to spread out its ad dollars over the greater pages–by paying less per page–and it’s still going to use a lot of media companies besides the Journal).
Are there good reasons to take the Journal free? Yes. If Murdoch wants to make a long-term bet that a free Journal will be able to expand into general news, take on the New York Times, and gradually recoup the money and exclusivity it gives away by going free, then fine–he’ll take it free.
But, in the meantime, having looked in more detail at the pros and cons, he might decide to wait and see. Or pursue a hybrid option, of which there are many. In any case, with every passing day, it becomes less and less likely that the WSJ will just up and go free.
Business Insider Emails & Alerts
Site highlights each day to your inbox.