Dow Jones Pours Cold Water On Murdoch's Free Journal Plans

from the he-said,-he-said dept

For months, we've been reporting on rumors that Rupert Murdoch is thinking about dropping the Wall Street Journal's paywall in the hopes of dramatically expanding the paper's readership. This week we've had the first direct confirmation of Murdoch's plans when he predicted at a shareholder meeting that dropping the Journal's paywall would expand the paper's online readership from a million readers to 10 or 15 million. But Dow Jones executive Michael Rooney rushed to pour cold water on Murdoch's comments, insisting that they would need to wait until after the sale closed before any decisions were made. He said he wanted to figure out how much revenue Dow Jones would lose before deciding whether to drop the paywall. Frankly, I think it's a good thing Murdoch will soon be in charge of the paper. Short-term revenues are far less important than the paper's long-term influence and visibility. Murdoch understands that continuing the paywall would virtually guarantee continued readership stagnation by keeping the Journal out of the online conversation. That would leave a huge opening for one of the Journal's competitors to establish itself as the leading online business news outlet. That's a far bigger threat to the paper's financial health than a short-term loss of subscription revenue. Murdoch has a long history of being willing to take temporary financial hits to build up successful and ultimately profitable media properties, and that shrewd business sense looks set to continue with his acquisition of Dow Jones.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Anon, Nov 14th, 2007 @ 4:26am

    I'm shocked

    Basically, I'm shocked.

    I never - ever - thought I would hear or read anyone say "Frankly, I think it's a good thing Murdoch will soon be in charge of the paper."

    I have worked promoting The Times, and have heard the opinion of many people on the subject of Murdoch...it has never been positive.

    Some people even seemed very angry and passionate about their dislike for this man.

     

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  2.  

    Think he sees the light

    I don't know much about him except what I read in the news about him but think he is on the right track. I mean who needs to pay anymore to get top news online? The ad revenue seems like it would skyrocket compared to lost subscription revenue but this is from a consumer point of view.

     

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  3.  
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    Joel Coehoorn, Nov 14th, 2007 @ 6:15am

    Same pie, more slices

    I don't think any online ad revenue for the Journal will ever match what they currently take (or used to take) in subscription revenue, if you also include those who get the physical paper. But I do think that subscription revenue is dwindling, and if they don't open up their online service they will eventually evaporate into irrelevance. Basically, they are doomed to make less money, and the choice is either give up a little more now so they can remain a player for the long term or hold on to their old model and eventually vanish.

    Their problem is that there are many more players in the national news business. Many small outlets that before couldn't reach beyond a single city can now easily gain national or even global exposure. Since they can do this for very low marginal cost it makes sense for them to give their product away. If they didn't give it away the global exposure wouldn't matter because no one would read it. So again, the choice is between revenue from an ad supported model or no revenue at all. Thus the old subscriptions fees are no longer part of the equation.

    With all these new players easily available online, it makes less and less sense for people to continue to get a physical paper. Instead you can use the internet to get the most relevant information from a dozen for free, including the physical paper you used to read.

    At the same time, the total amount of dollars spent by advertisers has not increased. Firms see no reason to be spending more on advertising with a particular outlet than they were before- there's no new benefit to them. In fact, the benefit is significantly reduced because the same readers are now distributing their time across more outlets.

    The only bright side to all this is that the internet also makes it possible to greatly improve the percent of each dollar of revenue that remains as profit. As their business model shifts more towards online distribution they can spend less and less on printing dead trees.

     

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  4.  
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    Yockey, Nov 14th, 2007 @ 6:16am

    Personally, I do not read he Wall Street Journal on a regular basis. However, you could bet that if it became a free online source, I'd be there day one. And I would expect to be lots of ads to pay for it, but I've gotten good at ignoring those.

     

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  5.  
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    JS Beckerist (profile), Nov 14th, 2007 @ 6:29am

    Re: I'm shocked

    A personal opinion is quite often the antithesis of a business opinion. No one is saying he's a nice guy, just that he knows how to run a company. There's no denying that!

     

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  6.  
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    Chuck Norris' Enemy (deceased), Nov 14th, 2007 @ 6:33am

    Re: I'm shocked

    That is because everyone at The Times is still in the dinosaur age mindset. At least Murdoch is changing to continue or raise profits. Here is some news...the Ice Age is coming (not warming)! Those who adapt will survive (like crocodiles) those who don't will die(like the T-Rex)!
    Note: That was a metaphor...a stupid one. But you get the point.

     

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  7.  
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    Barry, Nov 14th, 2007 @ 6:54am

    I've worked at both Dow Jones & Newscorp (a peon, but I was there). I came away with a great deal more respect for Murdock as a business man that the petty characters that run DJ. It's terrible to see Murdock take over the WJS because we need as many independent voices as possible. But from a pure business perspective it's the best thing could have happened to DJ.

     

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  8.  
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    Anonymous Coward, Nov 14th, 2007 @ 7:08am

    Re: I'm shocked

    There is no denying he's a brilliant businessman...however, he has been the head of the Media/Brainwashing Dept. for the Republican Party since the Reagan Era. His manipulation and censorship has caused some to equate Fox News with tabloid television. A prime example of how privatisation removes accountability.

     

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  9.  
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    Anonymous Coward, Nov 14th, 2007 @ 7:59am

    Re: Re: I'm shocked

    There is no denying he's a brilliant businessman...however, he has been the head of the Media/Brainwashing Dept. for the Democratic Party since the Carter Era. His manipulation and censorship has caused some to equate CNN with tabloid television. A prime example of how privatisation removes accountability.


    How dare you talk about Ted Turner like that!

     

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  10.  
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    Bryan Price, Nov 14th, 2007 @ 8:13am

    The wall's already cracking.

    With Digg buttons getting placed on all articles, and by bypassing the paywall as long as it's available on Digg. And it's not exclusive, so you could see it via Reddit or del.icio.us or somesuch.

     

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  11.  
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    Joseph Beck, Nov 14th, 2007 @ 10:42am

    Beat It!

    The WSJ has their own original content not available anywhere else. They don't regurgitate the AP feed available everywhere else. I pay for a subscription and enjoy reading a printed newspaper. All of you freeloaders should get lost and go read USA Today online.

     

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  12.  
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    Anonymous Coward, Nov 14th, 2007 @ 11:31am

    Re: Re: I'm shocked

    No argument here, but I don't think there's any risk of the Journal's editorial page getting more conservative.

     

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  13.  
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    Joel Coehoorn, Nov 14th, 2007 @ 12:29pm

    Re: Beat It!

    That's exactly the point, Joseph: so many of us have done just that. And the number of people like you willing to keep paying for a physical newspaper is dwindling rapidly. If they don't open up to online access they'll eventually lose so much readership they can't keep their doors open.

    The WSJ does have good content. Unfortunately for them, this has nothing to do with the quality of the WSJ vs USAToday or any other single outlet. USAToday isn't WSJ's main competition anymore. Instead, it's the WSJ vs the rest of the world. When my news source includes not only USAToday, WSJ, or the Times but also 1/2 the local papers in the country, then somewhere out there each day are going to be a number of articles that are much better than I'd get from one of the major publications. Search engines are getting to the point that I don't have to manually hunt around and read a bunch of junk to find them.

    If the WSJ consistently produces good content, then they'll come up in people's news feeds on a regular basis and continue to draw in readers, and thus ad revenue. But if you have to pay for a subscription, then there's enough other equally good content out there that there's no real reason to bother.

    Of course, this is about perception. You believe that the WSJ's content is much better. Often that may be the case. But if you believe that WSJ's content is always better than everything else published in the nation, simply because it's the WSJ, then there's some swamp land in Florida I'd like to sell you.

    It's not that I'm anti-newspaper. In college I roomed for three years with a guy who's now night-editor at a medium-sized paper in Ohio. It's just that things are changing. The internet is the great equalizer; it puts my room-mate's paper on equal footing with the WSJ or USAToday.

    Local papers do also need a new revenue model that takes the internet into account, and it hasn't been worked out very well yet. But they provide a service in the form of targeted local coverage that the national outlets and larger internet have more trouble competing with. There's definitely more there than just AP content. The value they provide is real and people will find a way to pay for it. The WSJ's new competition isn't going anywhere.

     

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  14.  
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    Joel Coehoorn, Nov 14th, 2007 @ 12:58pm

    Accreditation?

    In the old days, there were only one or two papers available in your area. You paid your reasonable monthly rate for access to that news source. Papers could charge it because any competition had the same printing and distribution costs.

    Today, newspapers all of a sudden have to compete with every other newspaper out there. There is so much competition that some papers are having to give away access under a model that, as physical subscribers evaporate, will eventually bring in less money than it costs to create the content in the first place, just to make sure anybody will read it.

    Paywalls don't work, because individuals obviously can't afford to subscribe to more than two or three at most. Any smaller paper that wants exposure to the larger audience will have to drop the paywall to be included, and there are enough of those to make the larger papers superfluous.

    Now what we had companies that 'accredit' newspapers as following a certain journalistic standard? The companies manage to encompass a large number of newspapers each- perhaps a few hundred smaller papers anchored by a national player or a pair of larger local papers like the Chicago Tribune or LA Times. This spreads to the point that the vast majority of newspapers in the country are members with one company or another.

    Now add to this the idea that part of the membership process is that member newspapers put their content behind the the company's paywall, similar to a syndication deal. Revenue from the paywall is shared out with member papers based on the article views for each paper. This is made to work almost seamlessly with current newsreaders.

    Forget for a moment that you already have access to all these papers for free. As more papers joined the syndication companies that ability would go away. What we've created here is a situation where it might make sense to subscribe to a paywall. For what you'd pay right now for having one newspaper delivered to your door you can instead get access to a cartel of 100s of papers.

    Newspapers could still sell their own ads alongside their articles. And this wouldn't be a complete loss for individual consumers, either. Consumers gain from the continued existence of many papers that might otherwise fail. Additionally, different syndication companies can build brands around themselves, probably aligned with politics as we see now with Fox News vs CNN. For their money, consumers will be able to pick the brand with which they identify.

     

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  15.  
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    Joel Coehoorn, Nov 14th, 2007 @ 1:03pm

    Re: Accreditation?

    I forgot to mention that consumers would also benefit in being able to hold newspapers to a whole new level of accountability through the accrediting body.

     

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  16.  
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    Greg Andrew, Nov 14th, 2007 @ 1:10pm

    The problem I have with Murdoch's plans for the Journal is that he thinks he's going to use it to take on the Times. But the greatness of the Wall Street Journal is that it's not the Times; it's a business newspaper. If Murdoch expands the Journal to cover more political, international, and non-business oriented national stories, the Journal will lose what makes it distinctive. I like *both* the Times and the Journal (and I'm talking about the news pages; I'm not particularly interested in reading the editorial pages of either paper), but I like them because they have different focuses; I don't want to see them become direct competitors covering the same ground.

     

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  17.  
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    Jake, Nov 15th, 2007 @ 7:34am

    Econ 101

    Interesting how old, basic Economics concepts keep propping up as crucial tenets in navigating the Digital Media shift. Basically, Murdoch (and TechDirt) argue that distribution (volume) increases exponentially as the price is dropped (especially to zero). It looks like Murdoch has the balls to wade confidently into the new waters as old MSM is too afraid to make the jump. Which is somewhat understandable because if revenues do crater, the editor and a lot of other people could lose their job.

     

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