Murdoch needs 12-fold traffic increase to offset making WSJ.com free

Posted by Leah McBride Mensching on January 3, 2008 at 11:38 PM

Rupert Murdoch has said he is looking to turn WSJ.com into a free site, but such a move would require a 12-fold increase in traffic growth to offset lost subscription revenues, according to a new report from Bear Stearns analyst Spencer Wang.

WSJ.com brings in $78 million annually, from 989,000 subscribers who each pay $79 a year. Including traffic from non-subscribers, the company counts 122.4 page views per month.

Wang came to the 12-fold conclusion based on an estimated $6 CPM and other assumptions about ad impressions per page and sell-through rate, according to paidContent. MediaGuardian, however, reported that some observers are questioning whether Wang's use of a $6 CPM is a bit unfairly on the low side.

“A $6 CPM? Why in the world does Wang think a free WSJ.com would command only a $6 CPM?” wrote Mick Weinstein, financial journalist and online content specialist, on Seeking Alpha.

Weinstein stated that in a recent conference call with Eric Ashman, CFO of TheStreet.com, “which publishes ad-heavy, less valuable content to a considerably less valuable readership than the WSJ's,” Ashman shared his site's ad numbers, which included a $14 RPM and 78 percent sell-through in a bad quarter, and a $19 RPM in a good one.

Based on these figures, Weinstein stated that WSJ.com should “command northward of a $20 RPM – and probably much more.”

Whether WSJ.com could even grow 12 times its current size is also a problem. If the site grew to the average size of its peers' sites (nytimes.com, usatoday.com, Yahoo Finance, CNN Money), it would only be halfway to the 12-fold growth Wang said is necessary, according to paidContent.

“To really see direct revenue growth from going free, it would require the site grow as big as Yahoo Finance itself,” paidContent stated. And while 989,000 subscribers bringing in $78 million a year aren't jaw-dropping numbers for a brand as valuable as the Wall Street Journal or for Murdoch's empire, having the site grow as large as Yahoo Finance “would obviously be a huge challenge, since Yahoo Finance is a portal aggregating content from multiple third party sources.”

Wang also noted that WSJ.com's $78 million revenue only accounts for four percent of revenue for Dow Jones. This means if Murdoch does make the site free, it will probably be due to more than just wanting more advertising revenue in the short term, according to paidContent.

For a previous article on this topic, visit our partner site, Editorsweblog.org.