If WSJ.com Was Set Free: The Numbers At Stake
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Everyone and their mother in law has numbers proving one side or the other: whether making WSJ.com fully open, ad-supported instead of subscription makes sense or not. WSJ publisher Gordon Crovitz told us earlier this week: “So far, our analysis says the way to maximize revenues and earnings is to have a mixed model.”
Now Lehman Brothers analyst Doug Anmuth does a detailed number-crunching and analysis of the scenarios if WSJ.com became open, something Murdoch has indicated in the past he would like to see: “We believe almost 50% of the site’s revenue is derived from subscriptions, [but] we believe the incremental advertising revenue derived from a larger user base could ultimately make up for lost subscription revenue over time. The shift, however, could potentially have a more meaningful impact on current financial news incumbents, including Yahoo! Finance, MSN Money, AOL Money & Finance, and CNNMoney…more after the jump…
Some estimates from the report:
—The total online division of DJ, which includes MarketWatch and several other properties, will generate an estimated $115 million in advertising revenue in 2007.
—Of the ad revs, about $75 million (+13% Y/Y) is generated by WSJ.com. In addition, WSJ.com will generate roughly $65 million (+11%) in subscription revenue in 2007, putting advertising/subscription revenues at a 54% / 46% split, or $140 million in total.
—MarketWatch will generate roughly $40 million in advertising revenue in 2007
—An average page view on WSJ.com currently commands almost 4x the ad revenue of a page view on NYTimes.com.
Then the likely impact of making WSJ.com free:
—WSJ.com would have to increase page views by 2x – 3x, which is unlikely in the near-term, even as a free site, but longger term it should be viewed in context of News Corp’s big online reach.
—A potentially free WSJ.com poses the greatest immediate threat to Yahoo! Finance, AOL Finance, and MSN Money.
—If News Corp moves more aggressively toward building out WSJ.com’s national and political news coverage (which has been suggested), we believe the competitive threat would extend further to the general news sections of the portals, including MSNBC and CNN.
—“Based on our estimate that 10%-15% of the display advertising at the major portals is driven by the finance verticals, we estimate that at Yahoo!, Yahoo! Finance will drive $160 million - $250 million in 2007, or applying a 45% EBITDA margin, roughly $75 million - $115 million in annual EBITDA. Using similar assumptions, AOL Money & Finance will drive $98 million - $150 million in revenue and MSN Money will drive roughly $50 million - $70 million in revenue. Therefore, in aggregate we estimate the 3 major portals could drive roughly $350 - $450 million in 2007 advertising revenue – representing a key opportunity which a recharged WSJ.com could pursue.”
You can download the full PDF here
Update: Besides the voices I linked to above, couple of more have been added to the mix since Friday:
—Jeff Jarvis: Free the Journal
—Rex Hammock: News Corp should open up WSJ.com’s golden door to the huddled masses yearning to surf free
Posted In: Companies, News Corp., Dow Jones, Wall Street Journal
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