Despite the longstanding arguments for the benefits of paywall removal, Joseph Weisenthal of Paid Content today points to a Bear Stearns analysis today that it would be nigh-impossible for the WSJ to recoup their losses by dropping the paywall with advertising revenues. Spencer Wang, author of the Bear Stearns report, puts the annual revenue from the WSJ paywall at around $78 Million.
Assuming, as Wang does, that the WSJ could only manage a CPM of $6 and using the company claims of 122.4 million monthly page views, there is about a $71 million deficit. That is fairly significant, and at the face of it fairly insurmountable.
When I asked for what an acceptable range of ad revenue on a CPM basis across all the ads that displayed on a given news site's page, the answers ranged from $8 to $16 CPM.
Going back to Weisenthal's analysis for a minute, he points out that "if WSJ.com grew to the average of its peers (nytimes.com, CNN Money, usatoday.com, MarketWatch and Yahoo Finance), the site would be only halfway to [$78 million annually]."
Pete pointed out to me, though, that the estimates in the report don't account for the monumental increase on organic traffic that would occur as the Wall Street Journal opens itself up to traffic from aggregators, memetrackers, blogger references and search results.
Given the fact that Wang vastly underestimated the CPM rates that an established news source like the Wall Street Journal could fetch (an organization with a highly engaged and influential audience), as well as the viral effects of content on the internet, it is obvious to see why the Bear Stearns report differs so widely from the August report from the Lehman analyst who said it would only take "a 2x-3x rise in traffic to offset the revenue loss."
Before I began my investigation, I was a bit on the fence on the benefits of dropping the paywall. Don't get me wrong, I'm all about freely available information paid for by advertising, but that was before I had exactly how much money the WSJ was bringing in through its paywall. But even through just a cursory amount of research, the benefits of dropping that wall become plain to see.