1. The best model is a mix of paid and free content. "It's not pay wall/no pay wall," Murray told me. The Journal allows free access to all of its political, arts, and opinion coverage, in addition to certain breaking news stories and all of its blogs. But the rest of the site requires a subscription.
2. You can't charge for exclusives that will just be repeated elsewhere. This was my favorite lesson from Murray, who explained, "If it's a big news story, if we report a takeover and -- we could hold that behind the pay wall, but if we do, BusinessWeek or someone else will simply write a story saying 'The Wall Street Journal is reporting x,' and they'll get all the traffic. Why would we do that?" So they drop the pay wall, "and take the traffic ourselves, thank you very much," Murray said.
3. Don't charge for the most popular content on your site. "That's the been the mistake that some people have made in the past," Murray said. Items with broad appeal are better used to build traffic that can be turned into advertising revenue.
4. Content behind a pay wall should appeal to niches. It may be easier to identify those opportunities with financial news, but Murray suggested, for instance, that a local newspaper could consider charging for coverage of high school sports. "To the people who want to read it," he said, "they really want to read it because maybe their kids are involved. Maybe they're willing to pay for that or maybe there's a photography service that's connected to that where you can download pictures of your kids or of the game. But only if you're a subscriber."
5. The narrower the niche, perhaps the better. This was the bit of news in our interview: The Journal is planning what Murray called a "premium initiative" to sell "narrower information services" at a higher subscription rate to subsets of its readership. He was coy about what services will be offered but mentioned, as examples, energy coverage and some sort of news service for chief financial officers. (According to someone else I know at the Journal, those are, in fact, likely to be among the first offerings of this tiered-premium service.)
I think a lot of this makes sense. WSJ.com does an excellent job of leading with stories that attract the most attention and then bumping readers up against a pay wall for more specific content. They also understand the premium quality of forward-looking information -- eg. "Pressure Grows on BofA's Lewis" and "Kohn Sees Recovery in '09" require premium log-ins this morning -- much the same way ESPN.com requires users to register for an Insider account to get the most stastistically dense predictions and fantasy projections.
Now about the last idea that "the narrower the niche, perhaps the better." I agree with that, up to a point. If a group belongs to a narrow audience niche, users will pay for content they can't access at any old site and advertisers might pay a similar premium because they know exactly what kind of readers they're targeting. For example, if the Atlantic were to build a paid channel dedicated to the most detailed analysis and news about the wind energy industry, we could try to attract a higher CPM from energy advertisers looking to connect with the die-hards of the wind energy world. You take the verticals, er channels, and you make them micro, for a premium audience with premium advertisers.
That's what Yglesias means, I think, when he says you can only charge for information "information that nobody cares about." But sites have also charged for information that everybody cares about -- and it didn't totally flop. That's what the New York Times did with -- I know, we all kind of hated it -- TimesSelect, which evidently brought in $10 million a year in revenue. The Times explained its 2007 decision to cut the program, saying:
The Times said the project had met expectations, drawing 227,000 paying subscribers -- out of 787,000 over all -- and generating about $10 million a year in revenue.
"But our projections for growth on that paid subscriber base were low, compared to the growth of online advertising," said Vivian L. Schiller, senior vice president and general manager of the site, NYTimes.com.
Now, we're a long way from 2007 already -- as the NYT earnings show, we're sadly a long way from 2008. But the fact that 30% of the Times' readers were willing to pay for its most popular content -- features stories and opinion writers -- suggests that newspapers don't have to lean exclusively on a microvertical strategy and that there are plenty of readers who might be willing to pay for the content that is specific to a website, and not just esoteric.
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