WSJ Insists on Micro-Payments Model

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» 10 May 2009

WSJ Insists on Micro-Payments Model

As the newspaper industry experiences a growing reduction in sales and profits, word of the micro-payment model emerges. Because more and more readers have opted to go online for all the latest news, newspapers have undergone a sharp decline in subscriber numbers and advertising revenue.

Robert Thomson, the managing editor of the Wall Street Journal and the editor-in-chief of Dow Jones, informed the Financial Times that the Journal will launch "a sophisticated micro-payments service" this autumn. As its name suggests, the scheme will charge miniscule amounts to occasional users who aren't willing to pay more than $100 a year for a subscription to WSJ.com and who only want to access single articles at a time, Thomson elaborated.

The Wall Street Journal is one of the few widespread daily newspapers that still manage to charge for web content. In contrast, even the well-respected New York Times discarded its two-year experiment with the online subscription scheme way back in 2007, which suggests that the company's subscriber-based sales is far too small compared to its advertising profits.

These days, many publishers are scrambling to see what business model they can use to survive today's economy, especially now that advertisers are pulling back from using newspaper-based advertising. To cope with this current trend, several news companies have downsized their workforce just to stay afloat. Then there are those who are currently facing eventual closure because they weren't able to adapt to the situation.

In any event, micro-payments will no doubt partly relieve the decreasing number of newspaper subscribers. However, charging with the wrong price will also risk a publisher's advertising sales. Careful consideration of the price is crucial in making the micro-payments model work.

It works this way: charging too much will not attract any new subscribers because news is easily accessible and free elsewhere, while charging too little will make those already subscribed to the yearly fee switch to the much cheaper alternative, which will cause the publication to produce even less revenue.

On the bright side, the fact that the Journal continues to use its yearly subscription model is evidence enough that it's working. Hopefully, adding a micro-payments model to its revenue scheme will help it cope and adapt with this era of free access to information.