The Wall Street Journal Schools Us on Web Subscriptions

A while back, Levitt wondered why the Wall Street Journal charges for its online version while other papers generally offer their content ice for free. Sure enough, we have an answer. Walter E. Hussman Jr., publisher of the Arkansas Democrat-Gazette, has an editorial in today’s Journal (available for free!) titled “How to Sink a Newspaper.” It offers a detailed explanation of the print/online dynamic and makes a strong case for subscription-only sites.

Most striking is Hussman’s statement that, while newspapers generate between $500 and $900 in annual revenue per print subscriber, an average news site generates just $5 to $10 annually per unique visitor — though, of course, there’s the fact that putting your content online can heavily increase your overall readership. Meanwhile, his correlation between offering free-access web sites and falling print subscription rates seems to skirt the other possible causes of circulation decline (such as the argument that print itself is in trouble). Still, Hussman makes a good point: especially when advertising dollars are concerned, Web sites and newspapers are very different animals.

(Hat tip: David Ozburn)


vestigial_cerebrum

Yoshimi, even if each unique visitor were to average 1000 pageviews per day, $5 to $10 would be high. And 1000 pageviews a day per unique is a preposterous number.

virals

Hey,

I jus finished reading freakonomics a day back...ohhh n i loved the book

Ive always wondered if Steven levitt could sort of get some freakonomics underlying rationale done for salaries of top Wall street banks headhonchos as compared to sportsstars and celebrities...jus find the topic very interesting

It may not be the right post 2 put my comment...but its a post on WSJ and i thought i might as well put it in here

yoshimi

this math seems very off to me. i would expect a news site to generate at least $5 to $10 per day. (i work in online advertising.)

yoshimi

per unique visitor, that is.

chimp

yoshimi, where is this $5-10 coming from if I don't spend that much across all news sites I visit? I don't think I am that unrepresentative.

Regardless, the logic of the article is pretty lame. No matter how little revenue online advertising generates, it is hard to believe it can't make up the difference of a few percentage points between the Little Rock paper and the Columbus paper.

jonathank

Assuming all the numbers are correct, then maybe this makes a case for localized subscriptions. I read the Detroit papers because I grew up there. I would never subscribe to them, either in print or online because I live many hundreds of miles away. If I lived in the Detroit area, I might stop subscribing if the paper were free online or if it were so much less costly that the benefits of the print edition - which include the full number of local store ads - don't outweigh the cost differential for me.

If the Columbus paper were able to charge people in its print market a fee, but not people outside its print market, then it might reap the benefits of ad revenues generated by the web edition without taking a hit on print subscriptions lost.

This is doable, but the usual subscription info now is wholly voluntary stuff you can lie about - your zip code is the typical identifier.

I would argue the local subscription model does what the web is meant to do: it encourages readership from outside your local area and encourages the paper to entice local readers to subscribe to the online edition by providing more local coverage on the web than it can put in print. The Detroit News, for example, is running a multimedia series on the history of the main street, Woodward Avenue. More of that kind of content would be encouraged by a local subscription model - and maybe that content could in part be provided by local partners.

Read more...

chesapean

Most striking to me is Hussman's statement that print readers seem to WANT the advertising in the content they purchase, whereas online readers seem to be averse to pop-ups and banner ads.

This tells me that print buyers regard advertising as "news," whereas online "news buyers" regard advertising as noise.

Perhaps both audiences are looking, in their own way, for the same thing: Useful data?

Bet there's a couple of successful business models somewhere in this: An advertiser-supported local web site that tells where ALL the weekend sales are; a pay-for-purchase newsprint daily that rational, curious people could believe in.

For my part, I buy a local paper every day ONLY for the editorials and the puzzles. As I grow older, I find the editorials becoming increasingly misinformed and smarmy. With the puzzles, at least, some days are better than others!

JanneM

The basic problem is that just about all news is fungible today. Any event over and above a cat stuck in a tree is sure to be reported by multiple sources; if it is significant you can count on hundreds or more. Also, news is its own advertisement, making things worse.

This means that for any news I want to know about I can find it online without cost. I don't need to pay for it. Second (and that's what my last point was about above) news that is unique to one source is something I will only become aware about if I have access to the source. If not, I don't know that I'm missing it and so don't know to ask for it. But a newspaper can't advertise to me about the missing news; if they show examples of current exclusive news I, well, get to know about it. And showing old exclusives is probably tremendously offputting.

But again, exclusives are either exclusives for only a brief period, or they were not interesting enough to be worth covering in the first place. Selling news by subscription is probably a losing proposition. Selling columnists, leader page access, lifestyle sections - the purview of magazines rather than newspapers - is probably easier (wonder how NY Times is doing?).

Read more...

smili

I'm honestly more interested in discussions of profit per viewer or reader than revenue per viewer or reader. Similarly, the capital required to service that particular viewer/reader is probably different. (printing presses and delivery seems far more expensive than computer servers/websites). Underneath it all is return on investment. Do I have to spend $300 a year to make $30 in profits from a print customer, but only spend $30 a year to make $3 in profits from an online customer?

Also, I wonder if papers try to make money on the pricing of an actual printed paper or simply attempt to offset high production costs? At that point maximizing advertising revenue is the real jewel and I'm not sure why an online advertisement should necessarily be worth less than a hard copy advertisement.

frankenduf

I always thought that WSJ charged because it is indispensible- the wealthy class needs to actually know what's going on in the world, so they can easily pay for the business news, which is the least biased, and the least "fungible", as JanneM put it

vtgrad03

I agree that people may buy print copies for the ads and some visit local papers' sites for their hometown news, but we're talking about national papers (WSJ, USA Today, Financial Times, etc) so that is irrelevant. I think subscription of national papers is going to drop sharply as more technology for accessing internet on the go (i.e. blackberries, wifi) become more affordable. I know if I had the technology I'd cancel my USA Today subscription.

One thing i don't understand is why subscribers to paper copies of a newspaper aren't granted access to "member-only" web content as well. That is the primary reason I will not subscribe to the WSJ or Financial Times.

fozzie7

I think WSJ's decision to be subscription-based is paying off nicely. Rupert Murdoch cited them and the FT as the two newspapers who have most successfully transitioned to the internet-era, because they charge for content.
Given that he said this was one reason for offering $5 billion for Dow Jones (in an interview with NPR yesterday), I'd say that the WSJ decision has been validated.

kj

The question is if the paid subscription route is really working or not.

Dow Jones is now heavily discounting online subscriptions. In fact, you can now get the wsj.com online subscription entirely free if you just buy the print version. Total price is $125 for 1 year + 2 months subscription to BOTH print delivery as well as the wsj.com online site.

Yes, the offer is only given through certain marketing channels like at http://www.getwallstreetjournal.com, but it seems that they wouldn't be testing these discounts, if there wasn't a need, right?

vestigial_cerebrum

Yoshimi, even if each unique visitor were to average 1000 pageviews per day, $5 to $10 would be high. And 1000 pageviews a day per unique is a preposterous number.

virals

Hey,

I jus finished reading freakonomics a day back...ohhh n i loved the book

Ive always wondered if Steven levitt could sort of get some freakonomics underlying rationale done for salaries of top Wall street banks headhonchos as compared to sportsstars and celebrities...jus find the topic very interesting

It may not be the right post 2 put my comment...but its a post on WSJ and i thought i might as well put it in here

yoshimi

this math seems very off to me. i would expect a news site to generate at least $5 to $10 per day. (i work in online advertising.)

yoshimi

per unique visitor, that is.

chimp

yoshimi, where is this $5-10 coming from if I don't spend that much across all news sites I visit? I don't think I am that unrepresentative.

Regardless, the logic of the article is pretty lame. No matter how little revenue online advertising generates, it is hard to believe it can't make up the difference of a few percentage points between the Little Rock paper and the Columbus paper.

jonathank

Assuming all the numbers are correct, then maybe this makes a case for localized subscriptions. I read the Detroit papers because I grew up there. I would never subscribe to them, either in print or online because I live many hundreds of miles away. If I lived in the Detroit area, I might stop subscribing if the paper were free online or if it were so much less costly that the benefits of the print edition - which include the full number of local store ads - don't outweigh the cost differential for me.

If the Columbus paper were able to charge people in its print market a fee, but not people outside its print market, then it might reap the benefits of ad revenues generated by the web edition without taking a hit on print subscriptions lost.

This is doable, but the usual subscription info now is wholly voluntary stuff you can lie about - your zip code is the typical identifier.

I would argue the local subscription model does what the web is meant to do: it encourages readership from outside your local area and encourages the paper to entice local readers to subscribe to the online edition by providing more local coverage on the web than it can put in print. The Detroit News, for example, is running a multimedia series on the history of the main street, Woodward Avenue. More of that kind of content would be encouraged by a local subscription model - and maybe that content could in part be provided by local partners.

Read more...

chesapean

Most striking to me is Hussman's statement that print readers seem to WANT the advertising in the content they purchase, whereas online readers seem to be averse to pop-ups and banner ads.

This tells me that print buyers regard advertising as "news," whereas online "news buyers" regard advertising as noise.

Perhaps both audiences are looking, in their own way, for the same thing: Useful data?

Bet there's a couple of successful business models somewhere in this: An advertiser-supported local web site that tells where ALL the weekend sales are; a pay-for-purchase newsprint daily that rational, curious people could believe in.

For my part, I buy a local paper every day ONLY for the editorials and the puzzles. As I grow older, I find the editorials becoming increasingly misinformed and smarmy. With the puzzles, at least, some days are better than others!