The Wall Street Journal, HBO and Faulty Extrapolation

I’ve been wanting to write for a while now about the infuriating continued tendency for media pundits to cite the WSJ.com’s paywall as a successful example of a business model for online journalism. I have yet to read or hear anyone point out the obvious difference between the Wall St. Journal and most other publications.  This key difference is that I am reasonably sure that a significant percentage of subscribers to the Wall St. Journal (in all formats, online included) are reimbursed by their employers  for their subscriptions and/or are simply given a free subscription in their names.  In general, it seems that businesses and the business media have trouble understanding this key aspect of consumer behavior.  If one’s employer pays for something, one considers it free – e.g. Blackberry data plans, Airport/Hotel WiFi, etc.  Trying to extrapolate this behavior into broader consumer adoption is plain silly.

Additionally, in general, it seems unwise to me to use a singular example (otherwise known as an exception) to try prove a rule.  Even if there was no special case for the WSJ as postulated above, all that this proves to me is that for most publications, consumers are unwilling to pay for a subscription.  Others, including the NY Times have tried and failed to charge for their content online. HBO is another case as one of the only television content providers able to extract a significant monthly subscription fee from a substantial population. Again, the exception should not be used as an example to follow. I would guess that CBS would not be able to charge $20/month for their programming, for example.

In general, I believe that consumers expect most digital goods to be free, particularly text/news. It’s just too easy to copy/paste/share to intuitively seem like it should cost money.  I do think that there is value in packaging/curating content online and that there will be some ability to charge for some content/aggregation, but I don’t think it will ever compare to the advertising model of traditional journalism.  Even subscription revenue for the WSJ.com is not nearly enough to cover lost ad revenues.  I think that display advertising has largely been a missed opportunity, and if done right should be able to garner as much/more revenue as offline ads were getting in Newspapers and Magazines before the past few years.  Instead of worshiping the false idols of WSJ.com and HBO, media companies need to get to work building compelling online experiences and new ad units and selling them to consumers and advertisers.

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3 responses to “The Wall Street Journal, HBO and Faulty Extrapolation

  1. Patrice Diaz-Migoyo

    Well written, Ron, but I disagree on some key points. Your WSJ example is, I believe, accurate, but anecdotal. Is it true that most people have these subscriptions paid for by institutions? I pay for mine, although I have been subsidized in the past.

    But HBO, now there is an example that, while currently an exception, most definitely can become the rule. HBO is successful partly because they are skilled at a unique mix of content that is well balanced in terms of production/delivery margins and demo draw. Combine this clever mix with savvy content identification (and specialization/segmentation) and add in the iTunes model of micropayments for molecular content delivery and it opens a playing field for several big media companies to succeed. An alternative, because the outlined strategy is only for a privileged few large competitors capable of broad reach and development, is to specialize and appeal based on niche draws. This approach will likely add to the cult of personality in which we find ourselves, but it will provide a robust structure for the packaging and sale of content directly to consumers.
    My thoughts…

  2. @Patrice Thanks for the insightful comment.

    Regarding the WSJ – I don’t know for sure, but based on many people that I know, I would guess that it’s a decent percentage of their subs. Just Wall St. institutions alone have hundreds of copies of the WSJ delivered to their offices every day, and I’m pretty certain most of those employees aren’t paying.

    Regarding HBO – I agree they produce great content, however it’s at great expense and consumers simply will only pay $20/month to a limited few. Will there be a few examples like this? Probably, but if anything I think the HBO’s of the world are also threatened by new media and by loss of dominance by cable companies as people cut the cord and use Internet only for their content. I do think that people would prefer to pay a la carte for channels on cable vs. all or nothing, but I just think that in general most content producers are better off pursuing ad-monetized models vs. relying on being the exceptions.

  3. Interesting – 3 years later, still as valid of a discussion as it was then.

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