Wednesday, November 14, 2007

Information on WSJ shall be free, says Rupert Murdoch

News Corp. chairman Rupert Murdoch said yesterday that he intends to make access to The Wall Street Journal's website free, dropping subscription fees in exchange for anticipated ad revenue, according to this report from the Associated Press.

The proposal by the Wall Street Journal follows similar moves by other top newspapers including The New York Times which made its paid content called Times Select free to all online readers.

All these publications seem to have got the message that as readers move online, they are going to be less willing to pay money for reading news, if only because the news choices are so many on the Web. The option for these newspapers is to add more readers by offering content free, and look to advertising to make up for subscription income.

But newspapers like WSJ will have to strike a balance between appealing to a broad audience while retaining their current focused readers. Too much advertising on a site can also put off readers.

Online advertising will also have to progressively replace revenue from print editions, as it is expected that more readers will move online. That and growing competition from non-traditional online media are big challenges for the newspaper industry.

Data available from the Newspaper Association of America (NAA) in Arlington, Virginia suggests that advertising in print is on the decline. Spending for print ads in newspapers in the second quarter of this year totaled US$10.5 billion, down 10.2 percent from the same period a year earlier, according to a NAA release in August.

However whatever advertising is moving away from print editions of newspapers is not necessarily going to their online sites.

Advertising expenditures for newspaper Web sites increased by 19.3 percent to US$796 million in the second quarter versus the same period a year ago, according to preliminary estimates from the NAA.

This sounds great in isolation. But the newspapers that saw a decline of about US$1 billion in advertising in the second quarter, witnessed an increase of less than $200 million in advertising from its online properties.

As a result, total advertising expenditures at newspaper companies were $11.3 billion for the second quarter of 2007, an 8.6 percent decrease from the same period a year earlier, according to NAA.

The NAA puts down the reduced advertising revenue for newspapers to cyclical swings in the U.S. economy, as well as structural changes in the businesses of major advertisers, which continue to affect print advertising revenue.

In the long-term, online sites like YouTube, and news and opinion sites, set up by former journalists and also by experts on specific topics, could compete for eyeballs and advertising revenue with traditional newspaper web sites. Some of the new media sites have built strong online reputations and brands that down the line could be as strong as that of online editions of mainline newspapers.

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