Murdoch’s remodeling plan for WSJ.com: First, we knock out this wall …
As the Web developed, it became apparent pretty quickly that, for the most part, you weren’t going to be able to charge for news. Unless you had exclusive, high-interest content aimed at a well-heeled audience, there were just too many free alternatives, and over time, most of the publications that tried online subscriptions gave up and pinned their hopes on advertising. The Wall Street Journal’s site has long been the exception, generating about $50 million in revenue from about 1 million users. Now it looks like the subscription model is on the way out there, too, not because it failed, but because the new owner has a lot of faith in the growth of online advertising.
News Corp. Chairman Rupert Murdoch said today that after his purchase of Dow Jones closes later this year, he plans to liberate the Journal’s creative output. “We expect to make that free, and instead of having one million (subscribers), having at least 10 million-15 million in every corner of the earth,” Murdoch told shareholders in Australia. Erick Schonfeld at TechCrunch runs some theoretical numbers: “For instance, the WSJ.com could probably get a $25 CPM (cost per thousand) for its ads, maybe higher. Assuming it could show a conservative 20 ads a month to 10 million Website readers at a $25 CPM, that right there is $60 million in annual revenues.”
Murdoch’s thinking is no doubt influenced by stats like those that came out of the Interactive Advertising Bureau yesterday. The IAB reported that online ad revenue surpassed $5.2 billion in Q3, a 3 percent gain over Q2, and an increase of 25.3 percent over the same quarter last year. Citing the growth in broadband video, rich Internet applications, mobile ads and social media, the IAB said online ad revenue was on track to top $20 billion by the end of the year. Before anyone gets too excited, though, Marshall Kirkpatrick reminds us that a large part of that growth is tied to one company: Google.
The WSJ has one other advantage that must be considered. The people who read it are very well heeled indeed. The people reading the journal are not geeks and nerds sitting in front of video games, these people have real cash IN hand, not just ON hand. My guess is that with targeted advertising them might get more for their ads.
No, Red. I get the tree version & have zippo interest in “getting” it on a monitor connected to a machine I don’t particularly like.
People analyzing the business sense of making newspaper content freely available online must consider the online and “paper” newspaper business as a whole.
In short, WSJ must consider the extent to which making its content freely available online will cannibalize its paper-newspaper revenue.
In contrast to Stuart — Personally, I would never pay for a paper newspaper that I was able to access online for free.
Murdoch’s math is off:
$25 CPM
10 million subs
20 ads per month
10,000,000 / 1,000 = 10,000
10,000 x 20 = 200,000
200,000 x 25 = $5 million
So, $5million in ad revenue vs. $50 million in subs revenue today.
What am I missing?
That’s $5 million a month. Multiply by 12 for the $60 million, which isn’t Murdoch’s, but Erick Schonfeld’s quick guesstimate.
John
got it…just saw the post on TechCrunch and came back to correct myself…you beat me to it…
I’ve worked within the Murdoch Empire and what often enough passes for innovation is more of a case of flinging it all against the wall and let’s see what sticks. Bring on the Page Three girls . . .