WSJ INTERACTIVE TURNS FIRST MONTHLY PROFIT

By: Joe Nicholson Subscription-based Site Launches Massive Marketing

The Wall Street Journal Interactive Edition, the nation's only subscription-based Web site for a large newspaper, has turned a monthly profit for the first time, Editor & Publisher has learned.

The Web's online newspaper pace car roared out of the red and into the black in September after fueling up with a boost in marketing efforts, sending out hundreds of thousands of direct-mail and e-mail subscription solicitations.

Tom Baker, vice president and general manager of the Interactive Journal, said it decided not to report on its own first profitable month because 'we didn't want everybody to assume we were into the black permanently.'

Still, Baker called the milestone 'exciting.' While the operation 'probably' will take dips back into the red 'in the next year or two,' he said the online service's long-
range future was 'absolutely' going to be profitable. Baker declined to provide figures on the Web site's revenues or profits.

The first moneymaking month was achieved even though short-
term profit was 'not our primary goal,' said Baker, who added that advertising revenue contributed 'a little bit more' than subscription revenue.

Massive marketing push

The massive direct-mail and e-mail effort boosted the pace of new subscriptions, which had been coming in at a rate of 400 to 500 a day, to more than 1,000 a day on many of the weekdays since Labor Day, including 11 1,000-plus days between Nov. 2 and Nov. 21.

'With our second-half marketing push, we've doubled the number of new daily orders,' said Baker, who declined to disclose the campaign cost.

'Most of the [subscription-marketing] programs we're running are traditional direct response,' said Baker, who has been using 'a variety of lists, including a lot of print business publication [lists].'

The regular price for an annual online subscription is $59, with two free weeks added. The direct-mail and e-mail offers are both for various reduced introductory prices - $39 in the case of an offer mailed to E&P. The solicitations all offered two weeks free.

The campaign has involved 'very little being spent on general awareness advertising where it is very hard to trace the productivity of your spending,' said Baker, who added that the strongest response 'probably has been [from] the old-fashioned direct mail. ... I continue to be amazed that the old rules of direct marketing still apply in the Internet world in deciding how much it's worth to get and keep a customer.'

Executives at the Web operation, which was launched April 26, 1996, said they now have 330,000 subscribers; about a third of them are subscribers to a print edition of The Wall Street Journal, which costs $175 a year, or to Barron's, also published by Dow Jones & Co. Inc., and get the online edition at a reduced annual rate of $29.

The executives plan on passing 400,000 subscriptions next year and expect to reach 500,000 within a couple of years. Without giving a time frame, they eventually expect to match the print edition's 1.8 million subscribers.

Peter M. Zollman, founding principal of the Orlando, Fla.-
based Advanced Interactive Media Group, said, 'It's heartening to see somebody as large and prestigious as The Wall Street Journal [online service] start operating in the black.'

Referring to free newspaper online services, Zollman said many of them have become profitable, adding, 'USAToday .com has been operating in the black for a while. The New York Times On The Web has operated in the black off and on.'

Local newspapers can set up profitable subscription-based online services if they 'figure out what unique content they can offer that they can charge for,' Zollman said. For example, he said, local newspapers might be able to charge $12 to $15 a year for a daily e-mailed newsletter of obituaries. He noted that people who are interested [in obits] are very interested' and that such a service has 'great potential for advertiser support as well.'

Many are losing big bucks

The Interactive Journal's recent moneymaking not withstanding, there are also lots of newspaper and non-
newspaper interactive services losing big bucks. Online buzz king TheStreet.com lost $16 million last year and has conceded that any profits are still years away.

In the latest effort to further rev up subscription momentum, the Interactive Journal announced Nov. 30 that subscriptions to its service are being sold in 800 Staples stores nationwide. Earlier, on Nov. 18, the service announced an agreement with Amazon.com to sell gift subscriptions through Dec. 25. Both Staples and Amazon.com are selling annual subscriptions for $49 and include an added free month.

The Staples and Amazon.com deals were described as so recent that they have yet to have any major impact on subscription increases. Both companies will receive compensation, but no details about the size of their cuts were made public.

While Baker conceded the online service has a powerful brand and prospective customers who 'are used to paying for valuable information,' he said other newspaper Web operations may find ways that will enable them to charge for access.

'I've learned ... don't decide too quickly that people won't pay for things,' he said. 'There is still a great opportunity on the Internet to invent services.'

The trick is value-added qualities, he said. The Interactive Journal, for example, offers continuously updated news as well as features that go beyond the daily print newspaper, such as access to 22,000 in-depth background reports on companies.

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Joe Nicholson (joen@mediainfo.com) is associate editor for Editor & Publisher magazine.



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