March 25, 2010 Last Updated 1:43 pm

WSJ to provide test case for paywall advocates; iPad version to cost $18 per month; more than print version

Well, this is what I was waiting for: an honest to goodness test case — and Rupert Murdoch and the WSJ appears ready to give it to us.

For months, advocates for paywalls have been wasting pixels claiming that free must go away if journalism is to survive. Those holding the opposite position have wasted an equal amount of pixels claiming those that advocate for paywalls are, well, nuts.

So, if this Wall Street Journal story is to be believed, the financial news titan plans to charge $17.99 per month to iPad users for the privilege of reading their journal.

Good.

There is nothing like an extreme case to prove a theory, one way or another. If the WSJ had chosen to charge $2.99 a month both sides of the paywall argument could feel vindicated. $2.99, after all, is like giving it away. The iPad version would become the preferred format for those that like the device and want to save money.

But at $17.99 a month you really better want the iPad version of the WSJ because you can find a better price right on the WSJ web site. For $140 a year, the WSJ will sell you both the print and online versions of the paper.


I suppose an argument could be made that Murdoch is not providing paywall advocates a good test case because $17.99 is outrageous. And the more I think about, the more that might be true. (rats)



The most important variable will be who actually buys the iPad. Is this, like the iPhone, a crossover product, one purchased by young people who see it as a great gaming device, as well as one that also allows you to read, compute and communicate (though less well than a smart phone)? Or will others buy it for its ease of e-reading, browsing and applications and such?
“Successful newspapers of the future will charge for their content and aggregators will largely be excluded.”
— Rupert Murdoch

For the WSJ’s test price this is an important question. If the device is mostly bought by those who have grown up in the computer age, then this is experiment will work about as well as Newsday’s paywall efforts.

I suppose it is also possible that the reporters for the WSJ don’t know what they are talking about. Back when I was reading the WSJ on a regular basis that thought would never have entered my mind. But this truly is Murdoch’s WSJ now. The wall between the editorial and news pages has been torn down and the idea that a trial balloon could be ordered from corporate no longer seems a long shot.

If $17.99 is a trial balloon (remember the stories that appeared guessing that the iPad would be priced around $1000?) then it should have been floated through another channel — not the news pages.

Lately I’ve noticed that the pages of the WSJ have been used to attack both Google and Apple, often with claims that they engaging in anti-competitive behavior. This morning the WSJ published a piece critical of the make-up of Apple’s board. (A Google search using the terms “WSJ”, “Google” (or Apple) and “Competition” pulls up pages of stories.)



Murdoch has come down solidly in the paywall camp — he wants to get paid, period.

“Good journalism too comes at a price,” Murdoch told shareholders last fall. “Successful newspapers of the future will charge for their content and aggregators will largely be excluded.”

These comments, and other delivered at industry meetings got the conversation going.

Even before the shareholder talk, when Murdoch was just beginning to the leading voice for paywalls, the naysayers were already to pouncing. Shane Richmond of the Telegraph wondered if “perhaps Murdoch is simply quitting a game that he’s losing.”

The most famous reply to Murdoch came from the Guardian’s editor Alan Rusbridger. In January he addressed the issue and fell firmly in the free access camp. “My commercial colleagues at the Guardian – the ones who do think about business models – are very focused on that (the paywall issue), want to grow a large audience for our content and for advertisers, and can’t presently see the benefits of choking off growth in return for the relatively modest sums we think we would get from universal charging for digital content,” Rusbridger said.

This past Sunday, the Guardian’s Peter Preston wrote about the subject quoting Rebekah Brooks, chief executive of Murdoch’s News International, as arguing against the traffic model.

“Of course we expect to see the numbers of unique users of our websites come down dramatically,” said Rebekah Brooks. “The industry is making the mistake of chasing millions of users by giving the audience more and more content for free – an obsession with traffic that just doesn’t pay.”


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The most famous quote concerning this issue is by Stewart Brand, the editor of the Whole Earth Catalog. In 1985, at the first Hacker’s Conference, he summed up the problem:

“Information wants to be free. Information also wants to be expensive. Information wants to be free because it has become so cheap to distribute, copy, and recombine – too cheap to meter. It wants to be expensive because it can be immeasurably valuable to the recipient. That tension will not go away. It leads to endless wrenching debate about price, copyright, ‘intellectual property’, the moral rightness of casual distribution, because each round of new devices makes the tension worse, not better.”

My position in the paywall wars has always been one of a neutral. My natural instincts tell me that everyone will be able to claim they were right.

The real issue, one that is just starting to come to the surface, is the value of traffic. For the last couple years marketers have been beginning to come to grips with the fact that valuing traffic over context and quality of the audience (quality being measured by target audience of the marketer) is a mistake. This is in direct response to the growth of sites whose only purpose is to aggregate traffic for the purpose of gaming the system.

But if there is a move towards recognizing that quality content and context still matters I would think that this could be rewarded through higher CPMs, offsetting the need to monetize traffic through a paywall.

But the argument that advertisers should believe that paid readership is better than free readership is an old one that has a long history of being tested. The whole controlled circulation movement in B2B was based on the idea that a targeted audience is better than a paid one. Give the advertiser 50,000 readers who are known to be in the industry and qualified buyers and that will be preferable to the same number of paid readers who just happen to open their checkbooks. In this scenario the battle is over the value of the readers, not whether they are willing to pay.

But, of course, every controlled circulation publisher will tell you that it would be nice to have some subscription revenue coming in, too — so long as it didn’t lower the total reach. I’ve worked at daily newspapers and monthly B2B magazines, so I can usually argue either side of the paid versus free argument. At McGraw-Hill, I was publisher of a daily newspaper that had an annual subscription price of $1811 (because of the value of the construction bid news inside). But my next position was publisher of a controlled circulation monthly magazine that just happened to compete with McGraw-Hill’s paid weekly Engineering News-Record — we never saw their paid-is-better-than-free argument as a barrier to landing their advertisers.

That may be why this paywall versus free battle will continue: both sides will find evidence they are right. And while charging $17.99 for an iPad subscription may end up being a failure, another price level could prove a winner. Ultimately I think we will continue to see both free and paid publications, and both will succeed and fail based on many factors — cover price just being one of them.

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