Web Sites Tear Down That Wall

Rupert Murdoch said the shift toward free, ad-supported sites should prove lucrative.
Rupert Murdoch said the shift toward free, ad-supported sites should prove lucrative. (By Richard Drew -- Associated Press)
By Frank Ahrens
Washington Post Staff Writer
Friday, November 16, 2007

Rupert Murdoch's announcement this week that he expects to stop charging for access to the Wall Street Journal's Web site is the latest example of a publisher giving up on the subscription-based business model -- a significant shift in the evolution of online content.

In recent months, the Economist, the New York Times and the Financial Times have all moved content out from "behind the wall," an industry metaphor for the location of paid online content.

Other publications, including the Los Angeles Times' entertainment listings, Salon and Slate (owned by The Washington Post Co.), have tried the subscription model but switched to free access. Others have settled on a hybrid plan -- for example, most of the stories in the print version of ESPN's monthly magazine can be read free on ESPN.com, but the site charges for chats with sportswriters and other Web-only content.

The lesson seems to be that online consumers will pay only for niche content of intense interest to them -- such as specialized industry news from trade publications, inside sports news, gambling tips, pornography and so on. As Slate editor Jacob Weisberg put it: It's all "pornography of one kind or another."

But most consumers expect free mainstream content, including news and mass-audience entertainment, whether they find it on YouTube or washingtonpost.com.

"Subscriptions thrive in an area where there's scarcity -- content that people can't get anywhere else," said Rafat Ali, publisher of PaidContent.org. "Other than that, you need an advertising-based model."

The shift toward free, ad-supported sites should prove to be more lucrative, said Murdoch, who plans to conclude his purchase of the Wall Street Journal before the end of the year. The Journal, with about 1 million subscribers, is one of a few publications that have made a business of selling content online. But the number of users could increase to 10 million to 15 million if the site were free, Murdoch told shareholders in a speech in Australia. That would mean the site could charge more to advertisers who want to reach that broader audience or any part of it.

The Economist, the British newsweekly, decided in June to stop charging for online content that was less than a year old. For Economist.com publisher Ben Edwards, there are benefits other than more eyeballs.

"Part of my job as publisher is to create the very best possible experience for people so they can advance into a deeper relationship with us," Edwards said. "Eventually, they can transfer over to be a print subscriber."

Although a stream of subscription revenue is a sound basis for a business, it can be limiting, Edwards said. Online is the fastest-growing advertising sector, increasing at an annual rate of 20 to 30 percent. By comparison, subscription-based businesses typically see single-digit yearly growth.

"I think the problem with putting a subscription around content is you don't get the growth," Edwards said. "You can't get scale. You can't get flexibility to match advertisers with your audience in an ever-more segmented way."

Britain's Pearson, publisher of the Financial Times, is changing its online business model not only to reflect the industry trend toward free content but also to acknowledge how people get content -- increasingly, through search engines such as Google, not by going directly to a publication's site.

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