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WSJ.com to Become Free

The Associate Press reported last night that once the Dow Jones deal closes at year's end, Murdoch plans on giving away access to WSJ.com -- for free.

"Rupert Murdoch, the chairman of the News Corporation, said today that he intended to make access to The Wall Street Journal’s Web site free, trading subscription fees for anticipated ad revenue.

“We are studying it and we expect to make that free, and instead of having one million, having at least 10 million-15 million in every corner of the earth,” Mr. Murdoch said, referring to The Journal’s online readership.

I am going to take a contrary position on this: I believe this is -- in part -- a mistake.

Thumb through either the print or online Journal, and you will see many high end luxe advertisers. They are not attracted by the sheer volume of readers, but rather, by the very appealing reader demographics: They pay a huge premium in ad rates to reach the highly educated, high income, tech savvy, free spending readers of the WSJ. (The demographics of a Journal reader are nearly as attractive as are those of The Big Picture's).

Ironically, this raises an issue we have seen with another Murdoch property: Fox News. I have been told by several people in the advertising biz that despite Fox News utterly kicking CNN's ass in the ratings, CNN charges much higher ad rates. Their ad sales, despite having lower total number of viewers, is more lucrative.

Why?

The simple answer is demographics. I have not personally seen the data, but according to these "Ad men," the CNN viewer has much better education and income numbers amongst; Fox news badly trails CNN in this department. The issue of disposable incomes of viewers surely concersn advertisers. One said to me "We can sell basic necessities on Fox and cheap trinkets; We can sell more upscale brands on CNN, and we can sell a lot more upscale goods on CNBC."

Hence, the business idea behind Fox Business channel: Aim for Fox News viewer numbers, with demographics between CNN and CNBC. If it works -- tho far from a sure thing -- it will be a huge money maker.

Murdoch apparently wants to apply the same idea to WSJ.com: Get USA Today numbers but charge WSJ ad rates.

I am not so sure this will work: The Journal can and does charge a premium for their ads because of who is presently willing to pay for the service -- both in print, and online: Those consumers advertisers find extremely attractive.

I remain am unconvinced that saying to advertisers "Come see all of our readers who can't or won't pay $79 per year for the WSJ.com" is a strategy for selling more high end luxe brands.

A hybrid system makes the most sense to us. As we previously suggested in WSJ: Free or Paid? (Yes) charging those willing to pay for the most recent WSJ.com (i.e., the most recent 2 weeks or so) will capture the highest end readers for those high paying advertisers who want to reach them. Pulling the rest of the paper out from behind the firewall for the broader advertisers has been my advice to the WSJ.com for several years now.

Hey, that's just my opinion; Mr. Murdoch has shown over the years that he is a crafty businessman with a good feel for what the reading/viewing public wants. 

We'll find out soon enough what the fate of the firewalled WSJ.com will be . . .

>

Source:
Murdoch Intends to Drop WSJ.com Fee
By THE ASSOCIATED PRESS
NYT, November 13, 2007
http://www.nytimes.com/aponline/business/apee-journal.html

Murdoch Sees End to Journal Web Fees
LYNDAL MCFARLAND and SARAH ELLISON
WSJ, November 13, 2007 8:28 p.m.; Page B4
http://online.wsj.com/article/SB119496001563491328.html

Wednesday, November 14, 2007 | 06:57 AM | Permalink | Comments (40) | TrackBack (2)
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Comments

So much for the rich being Republicans and the poor being Democratics - I always new that, that was a big crock of crap. Murdocks idea seems very lucrative, in the long run: establish "price wars" with your competitors, thereby eliminating them, while encompensing the the earth with your product. Think of all the up-start Chinese and Indian, etc., viewers that are becoming middle-class.

Posted by: justin | Nov 14, 2007 7:36:09 AM

As someone whom tries not to read the advertisings but the newspaper content

Good idea to have a free access to WS through the web, it may require the WS to have a lesser Panglossian and eccentric view of its domicile.
Murdock may not lead this change.

Posted by: Philippe | Nov 14, 2007 7:42:46 AM

I've seen the cable news numbers, and differences in demo characteristics are certainly there. Foxnews is essentially the nursing home channel.

From a profitability standpoint, they are still a winner, because their costs are lower - they don't have to maintain news bureaus around the world, because they don't operate under the pretense that they are an actual, credible news organization.

The only rationale I can see for Murdoch to open up WSJ.com is to use it as a loss leader and credibility-builder for his fledging business news network. Given the credibility of his other networks, or lack thereof, and the more arbitrary, non-political nature of business news, he needs to borrow from and build on the WSJ's reputation.

Of course, it is just as likely that the WSJ's authority is debased by the Murdoch plan. The only question then is whether this occurs before or after his biznews net has built up a viewership base.

Posted by: Rusty | Nov 14, 2007 7:58:38 AM

When people complained that Murdoch taking over the WSJ would kill the paper's streak of independent journalism (uhhhh.... independent being a loaded word), this is part of it: if it becomes more heavily ad based, then it'll have no choice but to become like the US Today or NY Post - get more eyes on the paper!

Imagine a NY Post version of the WSJ.

Posted by: erpij | Nov 14, 2007 8:02:37 AM

I spent many years "temping" in different institutions that received the WSJ including major banks, stockbroker firms, insurance agencies, architectural firms, magazine publishing etc.. Typically all the salesmen and writers received a daily copy. I was the only one who read it though. It would sit in the reception area or on their desks untouched until they chucked it at days end.

Also I worked for many ad salesmen. These guys hustle and they get ads by any means necessary. They usually know nothing about the industry, but they know how to SELL. I've worked with the ad buyers who are pretty clueless also. I think people lie alot about their demographics-I know I do. I'm on every major survey panel there is and while I accurately review the product-no one needs to know how much my house cost or how much money I make or how much I have saved.

I think it will be great for people like me who depend on giveaway promotions to read the WSJ and who actually LOVE reading it. They can just follow the TMZ model and force me to watch that same Pantene commercial over and over.

I currently work in TV and I haven't seen a TV commercial in probably 10 years. I TIVo or FLIP the channel immediately. I have zero tolerance. I never read magazine ads or listen to radio ads. When I want to buy something i.e. digital camera-I go to the blogs and pubs like Consumer Reports etc...

Oh and of course Barry Ritholz has great reviews also!

Posted by: babygal | Nov 14, 2007 8:14:42 AM

Your assumption is that the WSJ would keep the same focus. Perhaps not; perhaps it will become 'popular' to cash in on the name, moving premium content elsewhere, still for a fee.

Posted by: wally | Nov 14, 2007 8:26:27 AM

Free or paid, who cares? Its almost completely worthless. A prime example was this weeks WSJ "news" (rumor to most of the rest of us) about Buffett buying the monolines.

I find it amazing that none of these newspapers (except, arguably, the FT) has recognized that many demographically attractive, well educated subscribers are quite willing to pay real money for objective, non cheerleading (special shout out to Greg Ip on this one) reporting.

Posted by: Mark | Nov 14, 2007 8:57:17 AM

MARK

I fully concur FT has a better impartial view where WS want to be international the US way.

Posted by: Philippe | Nov 14, 2007 9:14:58 AM

Unless making the WSJ causes it to become a less "exclusive" commodity - causing high-end users to believe it devalued and leave - I don't see why this will affect ad rates at all. You'll still have the same wealthy readers as before. They're not going anywhere- why would this affect the ads targeted to them?

Posted by: mph | Nov 14, 2007 9:15:12 AM

I rarely read it since foxnews bought it. It's about as balanced as Kudlow.

Posted by: Bob A | Nov 14, 2007 9:25:58 AM

I actually like IBD better (and if this makes them keep the cost down, great!). As for selling junk, just take a look at any of the home shopping channels. I am not even the slightest bit tempted to pause while flipping by them, but obviously MILLIONS of people stop, watch and get out the credit card for the Guitar or necklace or whatever.

Posted by: Mike G. | Nov 14, 2007 9:26:51 AM

Do all of you think you're experts on EVERYTHING?
Such arrogance.
The Internet has given just about everyone on the planet the ability to opine on nearly every subject. However, that doesn't mean they SHOULD, nor does it mean their opinions have any value.

It's truly laughable.

Posted by: slick | Nov 14, 2007 9:46:38 AM

look in the mirror slick

Posted by: Bob A | Nov 14, 2007 9:52:41 AM

The minutia they can collect on such a scale. This doorway is not darkglass. Story interest or better story disinterest, cookies, hang time, link thru.

BR - did your site take notice that I steped away for Bernancke at Cato questions? Maybe it thought I was having breakfest or a #2.

I'm worried of megastructures and the power of the Richistanians.

Posted by: Greg0658 | Nov 14, 2007 10:08:17 AM

Barry,

I have to disagree. Shifting advert focus is the best thing Rube can do given that he has to deal with several realities.

While Rube may have a lot of credit, he has no credibility. At least not with those truly toward the top of the education ladder.

The ad-space in the print WSJ is an up-sell. The target market is the aspiring rich, not the truly rich. The _truly rich_ read WSJ? Oh Please, the only thing they read is the writing on the outside of their compound's wall. That, and maybe they sniff at it to determine if the paint is fresh.

Not to be confused with the filthy rich, who don't bother with walls, because you'd need to cross several acres of electronic surveillance, armed para-militaries, and guard dogs. See also: Booming land sales and construction in Costa Rica.

There is a larger comment made by Rube shifting the advert target: The aspiring rich will soon no longer have the means with which to aspire.

Then there's the Barnum Element: Readership going up because Proles are looking for an 'authoritative' channel in making decisions with their forced-to-have-a-401K/403B-instead retirement fund.

Sorry to be lead man in the bummer tent. Just my -.02 worth.

Mike

Posted by: Mike Nomad | Nov 14, 2007 10:11:50 AM

I have not seen, or care to search for the demographic statistics on this, but my anecdotal observation is that most "old media" consumers are not waiting for online access to their favorite newspaper and they are not likely to change their consumption habits...

The vast majority of my clients are age 50 to 65 and NONE of them seek out financial information on the internet. They'll keep looking at the newspaper until their eyes are too tired to read the print...

I will second BR's final comment that Murdoch seems to have a pretty good handle on media concerns.

No one knows if free WSJ.online is a "wise" move. If you do "know," then you will certainly profit by "betting" against Mr. Murdoch... We'll find out soon enough...

In the mean time, we many continue to be distracted by... uh, I mean consume... our preferred sources of media...

Posted by: The Financial Philosopher | Nov 14, 2007 10:23:43 AM

ps - I missed presenting that the WSJ credentials get them many places, I'm sure. The info aquired can be disseminated or not, set in place by corporate objectives.

Freedom of the Press is important - and not 2nd place, Freedom is dependant on a press pining to the Middlestanians too.

Posted by: Greg0658 | Nov 14, 2007 10:30:14 AM

Running the WSJ without all the cumbersome reporters and news sounds like a wonderful business idea. I think Ailes is 100% right that there is a market for business news that does not use scary words like "basis point" (he actually said this). I think I am just not a part of that market, because I actually use news to make money, and sometimes business news reporters need to use business words.

As the inevitable USA Todayzation of the WSJ begins, let us all remember that journalists need to be paid, and therefore they will migrate somewhere else. Then, let us cheerfully pay to read their work in the new venue. (Portfolio anyone? FT?)

Posted by: RG | Nov 14, 2007 10:46:39 AM

He also mentioned about making many changes to "make the paper readable". Also bringing in the foreigners from UK and Australia. Good thing it will be free becuase I won't pay for it anymore.

Posted by: me | Nov 14, 2007 10:53:16 AM

little late in the game to say the least, I'm up 40+% for the year thanks to:

Barry (inflation hawk)
Russ Winter (great Yen call)
Mish (goldbug)
Calculated Risk (aaahhh SKF)
Brad Setser (bearish dollar)
John Hussman (TWM)

next thing you know the MSM WILL PAY YOU TO ACCESS THEM :)

Posted by: Rick45 | Nov 14, 2007 10:58:29 AM

p.s. i enjoy kudlow for ALL THE WRONG REASONS!

Posted by: Rick45 | Nov 14, 2007 10:59:57 AM

Japan is on the moon with HDtv. 1st Google hits to FoxNews at the moment. JAXA (Japans Nasa) has a double line link. What is a double line link?

JAXA what a missed opportunity. Should have landed next to Apollo site. I wanted to see that, then pan over to Earth. I think China is heading up there too, maybe they will get the money shot.

Posted by: Greg0658 | Nov 14, 2007 11:11:13 AM

makes sense that Fox's audience consists of mouth breathers.

Posted by: rob | Nov 14, 2007 11:12:38 AM

Who stands to gain the most from the WSJ losing its walls?

The market for an business oriented newspaper with a subscription fee isn't going away just b/c the WSJ changes its policies, so which newspaper/magazine will fill its shoes?

Posted by: Joe | Nov 14, 2007 11:25:26 AM

He bought a brand and will use it to sell an image rather than substance. It happened to the entertainment industry. That has been bled dry. Now news is entertainment. One of the reasons the internet must be kept neutral.

http://en.wikipedia.org/wiki/Net_neutrality

We get music from bands who play because they enjoy it, videos from independents who have something to say and (news) blogs from people who aren't afraid of people knowing their agenda. The WSJ is finished.

Posted by: mysterious eggs | Nov 14, 2007 12:51:34 PM

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