WSJ.com Subscription Issue Leaves Murdoch Half-Pregnant

It's almost unfathomable to imagine Rupert Murdoch as half-pregnant (please...nooooooo), but that's the picture that seems to be emerging, at least as far as the WSJ.com (DJ) subscription issue is concerned. Yes, as a former colleague of mine liked to rant: Proof of Failure. Times Select made sense - on a white board - and it did pull in $10M, but it was fatally flawed.

That flaw looks to be the same that Rupert's Wall Street Journal is embracing.

Those of us in publishing talked endlessly about the Times Select "business model." Did it make sense to wall off columnists? Were they walling off too much or too little content? Was the price point right?

The flaw turned out to be simpler. Most of us, trained by a habit of over a decade of now, expect our news on the web to be free. When we run into a paywall or even a new registration barrier ("hey, what your sign;" "are you cat person or dog person"), we generally bounce off of it, choosing to follow a freer path of less resistance.

That - plus good SEO - is the simple reason that NYTimes.com (NYT) traffic is up 30%+. It's not that so much more content became available, but the Times ended confusion. It made it simple. Come in, sit down and read, they told everyone.

And that seemed to be Rupert's simple idea. Why settle for a million customers, when you could get 10 to 15 million, he told us. But now, he's taking the Times Select route. If you're a WSJ.com subscriber, you get most of the archives for free. A non-subscriber can come to the site, and quickly hit a wall. Come in from Google (GOOG) or Google News Archive, and you'll get a page or even several free. Oh, you want to hear the last roar of the neocons - try Opinion Journal, which is generally free. It's all fairly confusing, no matter how much good SEO, SEM and tracking Dow Jones is up to. It has a chilling affect on potential readers.

My suspicion has long been that Murdoch's hemming and hawing on this subject has as much to do with the threat to print subscription revenues - the Journal gets an above-average percentage (more than 30%, compared to an average of 20-25%) of its revenue from circulation. So it's not just the $70M online sub revenues at stake, but the more than $300 million in print circulation (that also includes Barron's), as well. Once you make WSJ.com free, you remove a reason to continue subscribing to print - that's partly rational, partly irrational - but I think is plainly true. While Rupert's ready to invest in feeding the golden goose he bought, he's concerned that it will succumb to a rapid revenue malaise if he acts precipitously.

In some ways, it's not surprising. Rupert likes the spotlight and the media tracking his every word. As with most politicians, you can find words on many sides of the same subject. Remember this one, widely quoted after he first bid for Dow Jones. Asked why he liked business content, he simply said: "You can charge for it."

So instead of going free, Rupert's going product-to-product, and more head-to-head with his arch-nemesis, the New York Times. He's talking about a sports WSJ play, but more importantly his lifestyle initiatives directly apply to the same group of luxury advertisers that Times CEO Janet Robinson has recently targeted in earnings calls.

On the surface, the WSJ's decision to stay half-pregnant might create a business news opportunity for the Times. But the Times, while offering good business coverage for a general interest newspaper, just doesn't offer its readers the same depth, breadth or knowledge. That's as much a matter of mindset as of resources. The Financial Times is another half-pregnant business news player (offering 30 page views free a month), which doesn't appear as much of a threat to the WSJ. So who benefits from Murdoch's decision? Well, for now, it gives the Times a little breathing room, and puts some more air in the business news space, in general.

Who might be able to fill this void? We don't see any big new players at this point, but we can see the wires - Reuters/Thomson (RTRSY), Associated Press and an ascendant Bloomberg - mastering the art of free ad-monetized distribution.