wsj.com v The Wall Street Journal

Here's a fascinating piece of news, and a scary one for media execs everywhere.

For some time now the wsj.com has been considered a prime example of a successful online business model. Their financial journalism via The Wall Street Journal is a specialist product for which they have been able to charge for access.

But it seems they might have become a victim of their own success. Dow Jones earnings have dropped 54% this financial year and - get this - for the first time wsj.com has earned more than its mother ship The Wall Street Journal.

That's a very significant milestone. But I wonder exactly what it does reveal.

The New York Post article only refers to the drop in advertising revenue at the Journal and its effect on the print side of the business. With first quarter profits down to US$8.2 million from US$17.8 million a year earlier, the company has a big problem. Their print profit margin is quite small - averaging 4.2% - but online's is up to 20 times higher. Online is gaining subscribers at a rapid rate. They currently have 731,000 online subscribers.

There's a fair degree of anecdotal evidence that says print subscribers are dropping the more expensive subscription for a cheaper online-only sub. No doubt that is having an effect on the print business, but I suspect it is probably over-emphasised in the rush to find an answer to the problem.

An important issue that has been lost to date is: how much is wsj.com paying for the Wall Street Journal copy it publishes? If wsj.com is picking up the copy for nothing because it can then its published results are misleading because they don't include the real cost of doing business.

Dave Taylor argues that the article should be about the success of the online site rather than the failure of the print side. If wsj.com is paying a syndication fee, or some other fee to use Wall Street Journal copy then they can rightfully claim to be in the ascendancy. If not, they are simply standing on the shoulders of the print business and there's not really anything to get worked up about.

But it would help if the New York Post had got all the details.

Further to this whole issue, Jay Rosen has a Q & A with Bill Grueskin the Managing Editor of wsj.com. Grueskin says in part:

I'm writing this response at 2 pm on a Friday, April 8th. The best-read story on WSJ.com at the moment is an exclusive Page One Journal piece about how Warren Buffett provided a key tip in the AIG investigation. Down the list a bit is the Online Journal's latest survey of nearly 60 economists; it includes an interactive graphic and tons of downloadable data. Next is a richly reported story from the paper about a Wal-Mart executive fired for allgedly defrauding his firm. Then comes an online-only column by Carl Bialik, WSJ.com's "Numbers Guy" who looks at how US News' new law-school rankings could affect minority admissions.

That, to me, is a perfect most-popular list. Our readers are clicking back and forth between print stories that showcase the best of the Journal and online columns and graphics that make the most of the medium.

In other words there's a clear distinction between wsj.com generated content and stories that have come originally from the paper.

To give an idea of the scale of the issue the Dow Jones corporate web site says that wsj.com is "published by a dedicated news staff of more than 60 editors and reporters who draw on the Dow Jones network of nearly 1,700 business and financial news staff world-wide — the largest network of business and financial journalists in the world." Sounds impressive, but what's not explained is how much the 1,700 news staff world wide cost wsj.com.