When the icon of high-priced business information tells its readers to line up for their "free lunch," you know that the game of digital content economics has changed. "We’re delighted to offer our worldwide readers access to our message of free people and free markets—for free," WSJ.com told visitors in January.
Shortly after the merger between parent company Dow Jones and Rupert Murdoch’s News Corp., WSJ.com brought all of its daily op-ed editorial out from behind the $79-a-year subscription wall and into its free OpinionJournal area. Throughout the 1990s and early 2000s, WSJ.com embodied the struggle to maintain a subscription model for high value professional content in a digital world, and with more than 800,000 paid members remained an emblem of the model’s viability. Today, however, WSJ.com followed a trend that had seen NYTimes.com end its fee model for TimesSelect editorial and CNN’s video Pipeline service go fully ad-supported.
Controlled circulation trade pubs are now putting more of their print content online and uncontrolled for all to see, and even the highest-end medical journal articles no longer cost thousands of dollars, because they are open access at MedScape.com and OncologySTAT.com. So even the icon of modern capitalism, WSJ.com, had to admit, "It’s as close as we’ll get to conceding there is such a thing as a free lunch." Yes, clearly the game has changed.
Yet despite all the good press for "free" of late, the pay model is alive, even if it is struggling to find its proper place in an increasingly ad-driven digital media market. According to content consultancy Outsell’s most recent full-year figures, 30% of the information industry’s revenues in 2006 came from subscriptions and 28.5% from transactions (one-off sales, and so on), while 41.5% represented ad revenues. Across different segments, the breakdown varies widely. In general B2B publishing, for instance, 36% of income is ad-related, and in science and technical only 6% comes from advertisers.
Models are not only in flux, but they are shifting at an uneven pace in various professional segments. The reality is clear, however, that every publisher in every content segment now has to contend with multiple business models. In one way or another everyone is experimenting with some mixture of free and fee, even if no one is claiming to have found the perfect blend at this early stage of the changed game. But this new experimentation has even deeper implications for the content industry. It goes to the heart of where they locate their value to readers, how they prioritize resources internally, and how technology and service are becoming as important to publishers as the quality of content itself.
There is no one "perfect blend" in the current environment of shifting consumer and content models—but there is a lot of taste testing. At Nature magazine’s NatureJobs.com, the company moved from fee-based online job posting to a free system that up-sells postings in print. Video-editing software publisher Pinnacle released a fully free version of its high-end editing engine where users pay to upgrade into specific higher-end features. Increasingly, companies like Hoover’s are using sales of one-off company reports, rather than full subscriptions, as an introductory transaction that gives the publisher some information about a client that it can use to up-sell another product. The search for a perfect blend is critical and highly experimental now because "The funding sources for content are fundamentally limited, and people forget that," says Anthea Stratigos, co-founder and CEO of Outsell. Both ad spending and professional subscriptions are enterprise line items driven by budgets that are growing at "single digits," she says. Most professional content can no longer rely on a single-fee or free model to survive the digital environment.