Dow Jones: Headlines and Bottom Lines
When it comes to electronic publishing, Dow Jones & Co. does what nearly all its competitors cant charge for content and make money. Thats because the company has been in the profit-from-content business for 119 years. Its flagship, The Wall Street Journal, and the Dow Jones Newswires are so integrated into the fabric of American business and finance that there was never really any question of adopting a free model when the Web arrived, says Gordon Crovitz, senior vice president of Dow Jones Electronic Publishing.
"We managed the Internet business the same way we manage our other electronic businesses they should make money," Crovitz says. "And we knew people would pay for electronic functionality." The way the company ensures its success both online and off is by adding value and servicing the customers.
Dow Jones posted online-derived revenue of $450 million for the 12-month period ended June 30. The Electronic Publishing division, which includes WSJ.com, the Dow Jones Newswires and Factiva, are on track to generate $500 million this year, according to Crovitz. In Dow Jones third-quarter financial statement, electronic publishing accounted for nearly half of the companys profits.
The Newswires, started in 1897, are the largest and most profitable of the companys electronic ventures. They generated $275 million in revenue, and currently have 330,000 professional customers and 5 million online brokerage users. The wires offer a panoply of products, from market indexes to industry-specific business news and analysis, delivered, in part, over the Internet.
WSJ.com, launched in 1996, is the largest fee-based subscription commercial site on the Internet, with paid circulation of 609,000 as of September. It brought in $50 million in revenue for the Interactive 500 reporting period.
In 1999, Dow Jones, in partnership with Reuters Group, launched Factiva, an online service that customizes proprietary and third-party business information for corporate users. The 2-year-old venture brought in $125 million in online revenue.
Together, the services create a formidable online trio that no other publishing company has been able to match.
"[Dow Jones] is totally unique," says Steve Vonder Haar, a new media analyst with The Yankee Group. "They have content that can have a direct impact on peoples pocketbooks."
Still, WSJ.com took some heavy brickbats from critics when it launched with a subscription model while competitors chased eyeballs with free content. "We were accused of just not getting it," Crovitz says. "At a time like this, we are ratified."
A few others, including the Financial Times and The Economist, tried the pay-to-play online approach, but ultimately gave up for open-content portals because of low uptake.
A subscription to WSJ.com currently costs $59 annually, and there is some discussion in the company about raising the price.
The subscription model has led to a much smaller reader base. According to Jupiter Media Metrix figures for September, CNN led the pack with 24.8 million unique online visitors, followed by MSNBC with 22.2 million and the New York Times online with 9 million. WSJ.com had only 1.7 million.
But that doesnt bother Crovitz. "Not only does WSJ.com have subscription revenues to add to the advertising revenues, but the fact that we have subscribers means we are able to deliver significantly more value to our advertisers than can free sites," he says.
Interestingly, only 200,000 of WSJ.com subscribers also read the print edition, which tells Crovitz there are still more paying readers to be found.
Independent analyst Peter Krasilovsky says the company "has done very well getting non[print] subscribers" while continuing to add value to the print edition with online hooks.
WSJ.com has been profitable in the past, but now is in the red due to an investment in a $25 million redesign that will be launched early next year, Crovitz says. Its working closely with IBM to create an advanced publishing platform that makes finding information easier in the 1 million pages Dow Jones generates each day across its services.
Dow Jones isnt charging for everything. The company operates a fleet of free Web sites aimed at vertical niches. They include CollegeJournal.com, OpinionJournal.com, RealestateJournal.com and StartupJournal.com.
As soon as the economic climate improves, Crovitz would like to launch more sites, like one fashioned from the Weekend section of the print edition.
Crovitz is likely to find an open competitive landscape as many pure-play Internet news sites go under and the big brands survive, Vonder Haar says.
"Theres no room nor incentive [right now] for small publishers to make a big splash on the Web," Vonder Haar says.