Monday, March 23, 2009

Can WSJ pay model work at other sites?

Second of two parts. The first part is here.

Proponents and opponents of paid content often invoke the subscription model at the Wall Street Journal Online as the reason for why their point of view is right.

In the following guest commentary, Bill Grueskin, former managing editor of WSJ.Com, sorts through what he calls “a few common myths” to provide insights into why and how the Journal came to be the most prominent pay site on the web. He left the Journal last summer to become the dean of academic affairs at Columbia University’s Graduate School of Journalism.

By Bill Grueskin

Dow Jones has been strikingly consistent (some would say maddeningly stubborn) about its paid strategy.

While I was at WSJ.Com, we had many spirited discussions/arguments how much to raise the price, how many articles to make free, how to generate more outside traffic. But no one ever seriously considered making the site free.

Rupert Murdoch mused openly about lifting the subscription wall during his negotiations over Dow Jones, but changed his mind once he took over and realized how valuable the strategy was – and how irrevocable a change in that strategy would be.

And so, how replicable is the Journal’s model?

It’s hard to say, given how rarely others have tried to charge for content, and how half-hearted those efforts have been.

The Los Angeles Times, for example, tried charging for its Calendar section and listings a few years ago. It survived about as long as the New York Times TimesSelect experiment, which involved charging for opinion columns and several other online features.

One lesson from those efforts: It is a mistake to ask people to pay for chunks of content that previously were free, especially when the content – particularly something like opinion or entertainment content – is replicable elsewhere.

Which gets to the larger point, and to the Journal’s unbending decision to charge – and keep raising the price – for WSJ.Com. It is very hard to ask people to pay for something you’ve trained them to get for free.

This gets back to Alan Mutter’s concept of “Original Sin.” In that scenario, what argument would you make to your readers? Do you tell them that your current business model is failing so they need to support this other version of the same product? At that point, media companies become charities, not businesses. And charity isn’t going to support journalism.

The arguments also ignore the fact that most media companies have thrived on advertising, not circulation revenue. Even in flusher times, what readers paid for the newspaper generally covered the newsprint, ink and delivery. It was all those ads that kept the enterprise going. And, of course, that’s even more true in broadcast television news, where the subscription cost is zero.

One of the lesser-known benefits of WSJ’s subscription model was that it enabled the site to charge considerably higher rates for ads than free sites did. Advertisers were paying for the Journal’s audience, which, beyond being affluent, was in a position to buy Cisco servers and JP Morgan financial products. Ubiquity is great, but it doesn’t pay the bills by itself.

And this is where I think the paid vs. free argument gets lost.

Free-content advocate Jeff Jarvis, Alan and I would all likely agree that slapping a subscription fee on an existing free news site is going nowhere. Attaching micropayments, iTunes-style, is even more hopeless. Such tactics may temporarily reduce cannibalization of the print edition, but that erosion is well under way.

What’s missing is the more important quality: engagement. Readers’ time can be as valuable as their money – more so online, where options to flee to another news source involve clicking a mouse, not heading to the newsstand to buy a different newspaper.

You see this error in the way online publishers gauge their traffic. They usually cite monthly unique users, but, in fact, I’ve always thought total time spent per user, or page views per visitor, were more meaningful metrics.

If a news site gets 250,000 new unique users thanks to a link on Drudge, and that generates exactly 250,000 page views, the value of that traffic is minimal. All it shows is that those readers are engaged with Drudge, not the news site.

Engagement is important journalistically, too. Ask many reporters why they got into the business, and they say they wanted to have impact – on people’s lives, on government conduct, on foreign policy. You get impact by engaging readers, and, in a happy coincidence, you also get a better economic model.

What are the kinds of things readers that readers of a local news site would pay for?

How about a daily email that told them what traffic spots to avoid, or an authoritative reader-generated guide to the best and worst public schoolteachers? Or a regularly updated site that told readers how much and why local real estate listings had dropped or risen in the last few weeks, along with examples of how certain homeowners got appraisals lowered? Or innovative coverage of local government, providing sample bills every time property taxes go up and video clips of commission meetings intertwined with analysis and context? In other words, content that is truly of online, not just posted there. (Alan made much the same point, with his own examples, in his recent post here.)

Charging readers for content might work, but it needs to be a consistent approach, with targeted content that enriches the lives of readers. More fundamentally, online editors and publishers need to value their readers’ time, and make editorial and business decisions that fit that goal.

The Journal’s route may be unique, but the key to expecting readers to pay you – with their money or their time – is not.


Anonymous Anonymous said...

Ah, this is really a response to your bio and your "twin passions of journalism and technology".

It is absolute hell being a journalist now. (Part of the time you were in Chicago I was a correspondent for the Chicago Tribune from Paris).

All my friends are telling me terrible stories. And to think, most of us were/are enthralled with our profession. How many people can say that?

The reason I'm writing a blog is because my agent told me it was the only way to get a book published. ( Perhaps it's true. Who knows?

At any rate, I'm signing up for your blog and bravo even though it's all so sad.

Best regards,

9:07 AM  
Blogger Bill Burger said...

Bill: Thanks for a very intelligent analysis in this two-part series. You've acknowledged some difficult truths about the business and the fantasy that just charging for content will somehow solve the problems the industry faces. Ultimately, as you point out, the answer lies in providing content--yes, journalism, but even more--that people and communities value and connect with.

10:40 AM  
Anonymous Anonymous said...

I think the model cannot easily be exported because of's unique characteristics:
(1) first mover advantage
(2) good synergy between print and online; easier to forward articles via e-mail than cut-n-clip
(3) can more readily be justified as a business expense (little non-business content)
(4) content produces a more tangible advantage (than simply being more informed of world/local events)

Also, has been steadily dropping its "real" online charges (I know, since I'm one of them), so the overall economic benefits are far from clear. Moreover, as others have noted, the nature of's content has been changing over time; it's far from clear that even could succeed if they started afresh now.'s strategy involves a single payment allowing "all-you-can-eat" consumption. It seems entirely possible that there exists a potentially large, unserved market that would be interested in some of the content, if it were available for a lesser price. So, I would caution the author not to dismiss incremental pricing out of hand.

I very much agree with the importance of what the author calls "engagement." Many others, when applying this to an online site. refer to "stickiness." It's the capability of the site to draw in visitors who are initially focused on a particular article so they read other articles as well. As the author observes, when you get 250K page views from 250K unique visitors, the value is minimal because there's no evident stickiness involved.

Stickiness usually involves context. Visitors have some reason to be interested in the initial article. The "trick" is to figure out the nature of that interest and show them some other articles that are likely to appeal to that same interest.

11:35 AM  
Anonymous Anonymous said...

People will be willing to pay for content. Newspapers need to start remembering what made them important in the first place -- the content they provided. When left with nothing but the content, I found myself perfectly satisfied ( I didn't need all the fancy interactive ads and features that newspapers seem to think benefit their Web sites.

11:36 AM  
Anonymous Anonymous said...

My wife was laid off from a financial services company in 2003. If she chooses, she still can access her "paid" subscription six years later, and I guarantee no one is paying for it.

Therefore I must presume that the Journal presents its advertisers with inflated paid web circulation figures, and derives value from charging advertisers a premium to reach subscribers who in fact view site content for free.

6:22 PM  
Blogger Racoon said...

I guess I must remind everyone again that people *do* pay for the online content produced by newspapers. But they're paying their *ISPs*, not the reporters, editors, photogs and graphic artists.

If newspapers believe in the value of their reporting, then extract that value from the ISPs. If that content were not available on-line, don't you think ISPs would be under pressure from their customers to either 1) split their monthly fees with the content producers or 2) lower their monthly fees? Of course they would.

For newspapers to "leave that money on the table" is just plain stupid. Wise up, guys. You have only your chains to lose.

6:44 PM  
Anonymous Anonymous said...

Congratulations to the journal for keeping paying subscribers online. I wonder how many of them transferred their print subscription and how many new subscribers they continue to get. No local paper could get away with it, though, and probably not many metros either. If a newspaper doesn't give the reader traffic information, information about housing prices, crime statistics and the like, someone else surely will. is an early example. Unlike with newspapers, the barriers for entry online are quite low, and a clever programmer or two using free tools can run rings around most newspaper sites.
The real advantage publishers have and don't use is data. Recently Guardian UK announced a data store, where people could make use of some Guardian data free. Want to get really progressive, WSJ? How about creating a data store that people could find useful. Here’s the link

7:06 PM  
Blogger Matthew Terenzio said...

I wouldn't pay for any of those things and I don't know anybody under 45 that would either.

8:34 AM  
Blogger The Hypervigilant Observer said...

The OP posits that "page views per visitor" should be the true standard to value web traffic.

Is that why Reuters, ABC and the Washington Post "cheat" their page totals by breaking stories into extremely short takes?

That practice really pisses me off.

It SLOWS down my web visits especially if the connection is slow or faulty.

So much so that I no rarely visit the Washington Post and ABC.

At least Reuters offers a single page option view. The WP and ABC do not.

IMO, the gold standard here is the New York Times.

It doesn't play around with a bunch of short takes...and punch up its totals.

As an advertiser/agency looking at page per view totals, I would heavily discount the WP and ABC.

9:27 AM  
Anonymous Anonymous said...

The change in advertising rates is a very interesting point. I think that the paid model could also have a dramatic impact on content and design decisions. When you go from 'how can I attract as many as possible' to 'how can I keep those willing to pay on board' you begin having to think harder about what is the actual value your are delivering.

8:15 PM  
Anonymous Larry Higgs said...

Remember that once upon a time banks let you use ATM's for free. Once customers got in the habit of using them, fees followed and have been ramping up ever since.
While as ATM users we don't like fees, the bottom line is we realize the bank is a business, not a charity or non-profit institution.
At this stage of the game, what the hell does the industry have to lose? Give the people who subscribe to the print edition a username and password so they don't pay twice. (Just like some banks do for using other banks ATM's) But the industry better bloody well do something before the next flush of the toilet sounds for us!

1:16 PM  

Post a Comment

<< Home