Business Blog: Hoover’s Business Insight Zone

Jack Welch once said that the grand challenge of management — the very thing that makes it hard — is playing long-term and short-term considerations off of one another. That’s what we’ve seen in many markets as old-line companies try to figure out how to make the most money from the Internet.

For the longest time, newspaper companies, and especially the biggest ones, have tried to make money by walling off their content and charging subscription fees to see it. They’ve never made much money doing it, but the thought behind the subscription model has been that it would pay off in the long run. You give up short-term gain — in this case, from ad sales — in favor of the long-term gain of adding online subscribers.

If you spend much time reading news online, you’ll know that the New York Times has recently undone this decision, opening much of its archives to free searching and freeing its most popular columnists from the late TimesSelect prison. Now it appears that Rupert Murdoch will be leading the Wall Street Journal to do the same thing:

Wall St. Journal to End Fee for Web

ADELAIDE, Australia, Nov. 13 (AP) — Rupert Murdoch, the chairman of the News Corporation, said today that he intended to make access to The Wall Street Journal’s Web site free, trading subscription fees for anticipated ad revenue.

“We are studying it and we expect to make that free, and instead of having one million, having at least 10 million-15 million in every corner of the earth,” Mr. Murdoch said, referring to The Journal’s online readership.

The News Corporation has signed an agreement to acquire Dow Jones & Company, and the deal is expected to close in the fourth quarter. A special shareholders meeting is scheduled for Dec. 13 in New York.

Mr. Murdoch said he believed that a free model, with increased readership for wsj.com, will attract “large numbers” of big-spending advertisers.

Murdoch’s canny enough to build businesses for the long-term rather than the right-now, but it didn’t take him long to come to the conclusion that both the right-now and the long-term payback from the Journal’s excellent online offerings will come in the form of a flood of page hits and ad sales rather than a trickle of subscription fees.