WSJ.com’s barbell strategy

By Felix Salmon
April 9, 2009

Zachary Seward has an interesting interview with wsj.com’s Allan Murray, who is sounding reasonably similar to the FT’s Rob Grimshaw, although even Murray says that he finds FT.com’s bizarre business model “very confusing”.

The WSJ seems to be moving towards something of a barbell strategy here. On the one hand there’s a lot of free content: Murray lists not only “all our political coverage, all our opinion coverage, all our arts and leisure coverage”, but also any “big news story” as the kind of stuff which anybody should be able to read for free. Plus, of course, there’s any story which you get to via Google News.

At the other end, there’s very expensive niche content:

I think what you have to think about is sort of narrower groups of interest where the interest might be deeper and more intense and therefore might make people willing to pay for it…

We’re working on a premium initiative to launch a series of, as you say, niche or narrower information services that we can sell at a premium to smaller groups of subscribers on subjects that they care most about.

The FT has already started going down this road, with the launch of its China Confidential product. There have been three biweekly issues so far, and a subscription will set you back somewhere in the £2,000 or $3,000 range.

How many subscribers does China Confidential have? One, I think, although the number might have risen all the way to three or even four. There will probably be more, but I’m not at all convinced that this kind of business is a smart one for the FT and WSJ to be in.

I’ve spent a fair amount of time among both FT and WSJ reporters, on the one hand, and financial trade-magazine and newsletter journalists, on the other. Essentially, the FT and the WSJ are trying to move in to the newsletter space — but are trying to do so with their present cadre of reporters. And newspaper reporters don’t tend to be nerdy enough to get excited by the finer details of the platinum-molybdenum relative-value play: they’re always more interested in the big stories.

What’s more, FT and WSJ reporters have a habit of believing that they’re extremely good, just because they get big stories. But of course it’s always much easier to get a big story if you can say you’re calling from the FT or the WSJ than it is if you say you’re calling from some publication which will only be read by a handful of super-premium subscribers.

Indeed, there might well be an element of bait-and-switch going on here: WSJ reporters will get stories wearing their WSJ hats, only to publish them behind ultra-high subscription firewalls which are impenetrable to the overwhelming majority of WSJ subscribers. This is unlikely to impress anybody — not the sources, not the subscribers, and not even the suits, who will eventually realise that their franchises are built on having reach. The FT’s Lex column, for instance, is influential precisely because it’s read by hundreds of thousands of commuters on their way in to work in the morning. The more expensive you make it, the less that it’s read, and the less that it’s read, the less influential it is.

My feeling is that Murray’s latest bright idea is doomed. He’s giving away most of the stuff that people want to read, and he’s trying to make money from selling stuff people need to read. The problem is that for all the WSJ’s astonishing levels of self-regard, there’s precious little of that material out there. Open the paper and ask yourself how much of it really isn’t replicated, for free, anywhere online. The answer is that there’s very little — certainly not enough to persuade hundreds of thousands of people to pay good money for an online subscription.

When people subscribe to wsj.com, they do it because out of a desire for convenience: the knowledge that they can get whatever they want in one place. They’re not, in general, paying this money out of a feeling that they simply can’t live their lives without this particular source of information. And when the WSJ starts trying to charge thousands of dollars for premium content — when it walls off stories even from its own subscribers — a lot of the convenience that people are paying for, the knowledge that all the WSJ’s content is available to them, evaporates. Subscribers hate running into super-premium firewalls: it makes them feel second-class. And it’s the broad mass of subscribers which the WSJ will get the overwhelming majority of its revenue from. It’s a good idea not to annoy them — or they’re prone to start finding their news elsewhere.

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