Everyone in the news industry seems to be talking about charging for news content – again. It seems so 2001 (remember when economy last tanked and the online ad market swooned).
Of course, whenever such discussion starts, people inevitably start to assess the experience of The Wall Street Journal’s subscription model, regardless of their level of knowledge or depth of understanding. Quite a few of my former Journal colleagues have weighed in on the subject, but I think even they’re still missing some key elements.
Perhaps the best information came from Alan Murray, the current executive editor, whose interview by Zachary M. Seward of the Nieman Journalism Lab yielded five solid pieces of advice, including: “Content behind a pay wall should appeal to niches.”
Far less specific were comments from Gordon Crovitz, for a time my boss, who wrote “Information Wants to Be Expensive” in The Wall Street Journal itself and opined: “People are happy to pay for news and information however it’s delivered, but only if it has real, differentiated value.”
Or Dick Tofel who offered similar logic in The Daily Beast site under the headline “Would You Pay to Read This Story?” (one didn’t have to; it was free): “The basis of the Journal’s ability to charge a million subscribers for content is the distinctive value of that content.”
Interestingly, Tofel was a close adviser to CEO Peter Kann, who is quoted in another blog post by Bill Grueskin as admitting: ““I didn’t know any better. I just thought people should pay for content.” In his post on Alan Mutter’s Reflections of a Newsosaur blog, Grueskin tried to explode some “myths” about the Journal, but did little to support the title: “The case for charging to read WSJ.com.”
To understand the success of the WSJ subscription model and contemplate what other information-based products might merit a fee, I think you first have to explode another “myth” about WSJ.com. I think it’s commonly assumed that we conceptualized, designed and built The Wall Street Journal Interactive Edition (as we called it during development in 1994-95 and at its launch in 1996) and then decided to charge for it. Quite the opposite was true. We began with the premise that we wanted to build a “product” that would have sufficient value that people would pay for it.
All of our work went into creating such a valuable subscription package. We knew, for instance, that we’d need to incorporate more than just the news from the print Wall Street Journal. Yes, as Crovitz and Tofel suggested, that content alone has value and is differentiated. But we knew that it alone would not make a compelling enough product online. We fought hard within Dow Jones to include a substantial portion of the real-time Dow Jones News Service, for which stock brokers pay $500/year per terminal. We lobbied to include reasonable archival content, for which another Dow Jones business unit might have charged another several hundred dollars a year. We maintained a sizable 24×7 newsroom to keep the site updated around the clock and to provide extensive editorially curated links from stories to related content. We also licensed and integrated into the product databases of corporate information, advanced stock charting capabilities and other useful and valuable features that added to the convenience of online access. We allowed users to customize their pages to show the news they want to follow.
When we launched the product, we charged only $49/year for all of this value and worked like mad to convince people it was worth even that modest subscription price. We also were in an endless “arms race” to keep adding functionality and improving the product to make it more useful and valuable to subscribers and worth more than free offerings. Even today, they charge only $100/year for all of the features and functionality and a bundle of information worth close to $1,000/year in other formats.
For other publishers thinking about charging “for their content” the lesson should be to start from scratch and design and build a product that will warrant a subscription fee rather than try to take what you’ve already built and slap on a charge. Understand your potential users and their needs and what they will pay to use. Know what alternatives they have and their switching costs. Differentiate and build in far more value than the price you charge, especially at first.
Listen when Google CEO Eric Schmidt tells you that “newspapers need to create a ‘new format’ for online journalism, including new delivery models that give consumers personalized content they want to read,” as the Journal reported.
Examining the paid content issue in The New York Times, Richard Perez-Pena and Tim Arango came up with examples such as bottled water, TiVo and airlines charging for luggage and meals.
Let’s hope that news organizations don’t take the “customers-be-damned” approach of airlines or think they can put commodity news in a bottle and sell it to the public (though putting it in containers that are easy to carry around would be useful).
Better that they look at TiVo and see that convenience, control and functionality can make “content” feel personal and therefore valuable. That is the kind of product news organizations need to offer.