Alan Murray, who edits the Wall Street Journal online, offers some thoughtful ideas about when it makes sense to charge for content:
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.)
Probably the way to look at it is this. In a competitive marketplace, the price of a good should converge toward its marginal cost. In a digital world, the marginal cost of distributing a given piece of information to a new person is about zero. Consequently, competitive pressure should drive the price down to free. The solution, if you want to charge people for something, is to find an area in which there’s no competition. And that means, slightly paradoxically, information that nobody cares about.
If you’ve got a big blockbuster about Jane Harman, AIPAC, Alberto Gonzales, and surveillance then tons of people are going to be interested and everyone’s going to want to spread your info around. If you make the article free, then everyone will read your article and at a minimum you’ll get a ton of hits. If you charge for it, the traffic will just gravitate toward people who are summarizing your report. But if you have a subject niche that only 10,000 people care about then you could image a situation in which in 5,000 of those people are willing to pay $1 a month to subscribe. That’s $60,000 in revenue, so as long as it doesn’t take many staff-hours to cover this subject it can make economic sense. But it wouldn’t necessarily make economic sense for anyone to bother competing with you in that niche. There just aren’t enough people who care.