• by Mark Walsh  @markfwal, August 31, 2007

Now that Rupert Murdoch has bagged The Wall Street Journal, speculation is rife that the paper's Web site will switch to a free, ad-supported model.

With nearly 1 million subscribers to date, WSJ.com has been one of the few newspaper sites to make money by selling paid subscriptions. But separate analyses done recently by Lehman Brothers and the media consulting firm Borrell Associates suggest that News Corp. could ultimately reap more benefit through either a free or a mixed free/paid model for WSJ.com.

By going free, the site would have to make up for an estimated $65 million in lost subscription fees, or about 50 percent of its overall revenue, according to Douglas Anmuth, North America Internet and media analyst at Lehman Brothers. To recoup that amount as a free site, WSJ.com would have to increase page views by two to three times. While that's unlikely to happen overnight, Lehman maintains that a free, fully-supported ad model will ultimately prove more sustainable.

The Lehman report argues that a free WSJ.com could also more aggressively siphon ad dollars from the top finance portals such as Yahoo Finance, AOL Finance and MSN Money. With much greater distribution through News Corp. properties, including broadcasting, cable, satellite and, yes, even MySpace, Lehman sees considerable potential for increasing the site's reach and popularity — especially as MySpace users switch from following indie rock bands to exchange-traded funds.

Larry Shaw, director of research at Borrell Associates, recommends a more conservative approach for WSJ.com. He envisions a hybrid model in which News Corp. makes much of the site available for free, but retains a paid wall around leading columnists and other select content. Under this plan, he predicts only a 10 percent to 20 percent initial loss in subscriptions. Besides generating subscription revenue, the paid portion would enable WSJ.com to hold onto the affluent subscriber audience that commands higher CPMs from advertisers.

He fears that by inviting in the masses, News Corp. will dilute the brand equity The Wall Street Journal has spent so many years building up. If a typical WSJ.com page now includes two large display units on either side and a Web tools sponsorship at the bottom, a free page might run four to five ads at lower CPMs. In that scenario, WSJ.com would come to more closely resemble the financial portals loaded with banner ads. "There's a danger of degrading your brand a little bit," says Shaw.

Whatever direction WSJ.com takes, the speculation over it's going free may already be having an impact. The New York Times reportedly is mulling ending its paid content offering by killing TimesSelect, the subscription-only section featuring Op-Ed and other columnists. Lehman estimates NYTimes.com will total $175 million in ad revenue, while generating eight to 10 times the average monthly page views of WSJ.com.

Perhaps The Times worries that if the most successful paid newspaper site ever is about to go free, paid walls online no longer make much sense.