Free WSJ.com: In Part, A Mistake

The Associate Press reported Tuesday 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. 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 -- though 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 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.htm