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WSJ's Online Subscriptions Outperform Print

Posted by ryuzaki0 on from the numbers-add-up dept.

ScentCone writes "The New York Post is reporting that the Wall Street Journal's parent company, Dow Jones, is doing much better with its online publication than with print. Online subscribers pay $84/year, whereas print subscribers are still paying $356... and the profit on the online business is 20 times that of the paper flavor." From the article: "'They're simply losing market share to other media. Print publishing is not a profitable business for Dow Jones anymore,' said Feinseth. Kann is hoping that the company's long-range growth also comes in online publishing, which has profit margins at least 20-fold higher than print. The Wall Street Journal Online is signing up thousands of new subscribers, up 5.2 percent for the quarter, to a total of 731,000."

13 of 223 comments (clear)

  1. The real news by stecoop · · Score: 5, Insightful

    The real information gathered from the story is that consumers buying Wall Street Journal online are paying 20 times too much. They should be paying $4.20 a year.

    At least competition will help as if there is so much money in something then everyone will be doing it.

    1. Re:The real news by ScentCone · · Score: 4, Insightful

      The real information gathered from the story is that consumers buying Wall Street Journal online are paying 20 times too much.

      Never mind that the paper version is losing them money, so making more profit than the losing part of the operation isn't, by itself, necessarily all that fabuluous.

      But the real news in your comment is that you don't think someone should make any more profit than you think they should. What is the correct profit margin for each type of business, taking into account seasonal variability, changing competition, evolving technology, company reputation, and all of the other variables that impact each business model? Do you have a table, or set of guidelines? How often do you update it, and based on what criteria?

      I have an idea. How about: the WSJ has competition, and if any of it is as good or better, and charges less, then people will spend their money there, instead. Or, regardless of what the WSJ costs, if people don't think it's worth it, they can just stop subscribing. It's almost like the market adjusts the price! *sigh*

      --
      Don't disappoint your bird dog. Go to the range.
    2. Re:The real news by Ingolfke · · Score: 4, Insightful

      the profit on the online business is 20 times that of the paper flavor

      You should try reading the WSJ sometime you might learn something about business fundamentals and economics. The PROFIT is NOT equal to the cost to the subscriber. All that is being said is that the online version makes 20x more profit than the paper version. So if the paper version makes $.10 per year of profit per customer, the online version is making $2.00 of profit per customer.

    3. Re:The real news by Ingolfke · · Score: 5, Informative

      For all of those of you out there who missed the satire here (oh gosh I hope it's satire) please read.

      They are in the same business yet the online is making 20 times the profit of print. Take the online subscription fee of $84 per year / 20 times the profit = $4.20 per year is the expected price for subscriptions.

      Notice that what is being done is that the total revenue per subscriber is being divided by the profit ratio. This makes no sense. That $84 per customer per year is used to pay for the infrastructure, staff, etc. to provide the service. Let's say that $80 per customer per subscriber. That leaves $4 in profit. Which would mean that the paper version makes $.20 per subscriber per year. My point is not the exact numbers, but that the basic mathematics used is WRONG! You cannot divide revenue by a profit comparison ratio and come up with a meaningful subscriber cost.

    4. Re:The real news by wfberg · · Score: 4, Insightful

      Come-on now I don't have an MBA it is simple math though....

      Apparently there still is a need for business school..

      Just because the profit is 20x the profit of the offline version, that doesn't mean their costs are 1/20th. Assuming the profit on the offline version is 4%, the profit on the online version would be 80%, so the cost would be $16.80 -- a lot more than $4.20!

      Of course, this doesn't necessarily reflect the true cost of the online version too well - I doubt that they're expensing the costs of articles that are written for the paper version and republished online at reasonable prices; i.e. if the paper WSJ wouldn't exist, the online version couldn't copy their articles.

      So, yes, it would appear that the online version is doing well, though you'd have to look into what they're paying for their shared content to know just exactly how well.

      But if they were selling the same amount of subscriptions at $4.20 a year they'd be making huge losses.

      Of course at $4.20 a year they'd sell more subscriptions, but whether that would still make a profit remains to be seen.

      So I'm afraid your simple math didn't quite cut it..

      --
      SCO employee? Check out the bounty
  2. White and (depends on screen) and read all over? by Leontes · · Score: 5, Informative

    This makes sense to me, especially when you are dealing with the chaotic and capricious world of finance. It's nice to have a paper with you, sure, but with the ever changing world of business, you need to have now headlines now, and yesterday's news may be obsolete by the time it gets to your door.

  3. End of Paper Publications? by Flywheels+of+Fire · · Score: 4, Insightful
    Long ago, when computers were as big as houses, and magazines were, well, 11x8, people still read magazines on paper.

    But now that your average PDA is small than the magazine, and you can get the latest news online, not to save the number of trees you save, there's not really a justification for having paper publication of periodicals.

    But I still prefer reading my books on paper. And most people I know feel the same.

    --
    Iran captures three CIA agents
  4. I wonder. . . . by jluebke · · Score: 5, Interesting

    How many people (like me) do both. Existing print subscribers can add the online service for $39 per year. I prefer to do most of my reading from the print version, but the interactivity of the online is also frequently useful....

  5. Good for them, good for us by Rosco+P.+Coltrane · · Score: 4, Interesting

    The more publications go online successfully, the more demand there will be for ebooks and other portable reading devices, the quicker we'll finally get usable cheap ebooks.

    --
    "A door is what a dog is perpetually on the wrong side of" - Ogden Nash
  6. Re:Paper is archaic... by Guardian+Hacker · · Score: 4, Insightful

    Paper may be archaic, but I already spend enough of my day in front of a computer. I personally like to be able to read the hard copy.

    Beyond less strain on the ol' peepers, it's nice to be able to get away from the computer. With the online version, it might not be DRMed, but I certainly can't easily take it with me wherever I go (sure, I can print things out, but that format is still less than ideal for me).

    I agree that the online version might be great for some, but I'm not one of those people. And I've tried NewsStand and Zinio as well as the online versions of many papers.

    Beyond what I've mentioned already... For my taste, the screen is too small a device for the display of articles. With a paper, I might have to turn a page once or twice.... with NewsStand and Zinio I found myself doing a constant 'pan and scan'. Online articles required too much scrolling and clicking of 'next'.

    I'll stick with the dead tree format (I recycle, mind you), but agree that a paper specifically formatted for display on-screen might be a good thing.

  7. Re:Fudgy numbers by syphax · · Score: 4, Insightful

    It always interests me when folks generalize their personal experiences and observations into "almost everyone/hardly anyone...".

    My experience in suburbia is that plenty of people still get print newspapers delivered. But when I lived in a city, not so much. I'm guessing the parent lives in an urban area...

    --
    Simple Unexpected Concrete Credible Emotional Stories
  8. Re:sounds like a deal, right? by Anonymous Coward · · Score: 4, Insightful

    Here's the problem with the argument that "50% off the cover price!" subscriptions means the cover price is a ripoff.

    Printing is expensive. And there's zero resale market--unlike an unsold copy of a book (which you can potentially sell later), magazines and newspapers have a clear expiration date--when the next one comes out. Which means printing exactly the right amount of things is tricky--print too many, and you waste money. Print too few, and you lose sales.

    If I'm running Sports Illustrated, and I am printing a copy for a known and paid subscriber, that very low risk--I know this copy will be sold, I know I can distribute it by mailing it direct from my printing facility (no need to ship it somewhere else first), I know I will be paid, and I know that there's no middle man taking a cut (the price I sell for is the price you pay).

    If I'm printing for retail distribution, things are different. I need to ship the magazines to resellers. I have to sell to those resellers at less than the final "cover" price--otherwise the reseller doesn't make any money (so I make LESS than you pay for the magazine). I also have to price in the risk of the magainzes not selling--I will probably print more than I think "average" sales will be so I'm covered if there's unuaully high demand for this issue, so I'm expecting to take some level of losses for unsold inventory.

    By cutting out the middle man, cutting the distribution costs, and by removing the risk/waste factor from pricing, I don't think it's unreasonable to think that subscription prices reasonably should be fairly substantially below the cover prices.

  9. Re:First of Many... by jbolden · · Score: 4, Insightful

    Almost all the "first-tier" papers tried charging for content. The WSJ was the only one that was succesful. The reason is that WSJ has original content that no one else has while the other papers are all getting their news from wire services and government briefings so they all had the same stuff. The NYTimes of the 1950s which has a large international staff (and thus plenty of original international content) probably could have had a pay website. The NYTimes today doesn't have anything all that important to say.