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.

New York Times should make its Times Reader free as well

The New York Times will stop charging from September 19 for online content covered under its TimesSelect program. Until this move TimesSelect content on the newspaper’s online site, including some opinion columns, was charged for separately.

The move by The New York Times reflects how newspapers are trying to come to terms with the online world, and the implicit demand from users that information should be free.

There are reports that The Wall Street Journal, a subscription-only financial news site may slowly move to offering more if not all content free, after it is acquired by Rupert Murdoch’s News Corp.

In the circumstances, newspapers will have to rely more on online advertising for online revenues, while charging only for the print editions. As more readers move online, the revenue mix is getting skewed in the direction of advertising revenue, and away from subscriptions.

The TimesSelect was introduced two years ago by the newspaper in a bid to make some money from readers on select content. But this hybrid model, which combined subscription revenue with advertising revenue online, did not really pay off.

The newspaper made about US$10 million in revenue annually from TimesSelect, but it lost out on a number of readers, including those coming through search engines, who were not willing to pay for the content, but would have been an attractive target for advertisers.

The New York Times also introduced almost a year ago the Times Reader, an offline reader for the online newspaper. Readers can download content into the reader, and then read it offline in an easily navigated and flexible format. The New York Times was offering TimesSelect free with the Times Reader.

With TimesSelect now free, subscribers of the reader may not renew their monthly subscription of $14.95. The Times Reader proposition was not very compelling when the New York Times started charging for it, and is now less so. The Times Reader provides an interesting reading experience, but to many it hardly justifies paying $14.95 per month for it.

The newspaper is better off making the Times Reader also free, making up for lost subscriptions with advertising. The Times Reader would then be a strategic tool in the New York Times’ contest for eyeballs and advertising revenue.

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