Counterintuitive: Why Murdoch’s overpriced Wall Street Journal iPad subscription may be a stroke of genius
When the Wall Street Journal iPad app hit the Apple app store most people including myself were taken aback by the price for the actual subscription. Priced higher than the print version and web version combined, it didn’t seem to make any sense. Add to that the fact that the subscription based app also includes ads. An overpriced subscription app that isn’t ad free? What’s the deal with that? But after thinking about it, it makes sense. It may in fact be genius.
The WSJ is different than other papers. It has a specialized content aimed at a specific audience. A generally affluent audience that puts a high value on information. While many of us appreciate the content the WSJ has, few of us actually subscribe to it. For Rupert Murdoch, we’re a lost cause. While a cheaper subscription might entice more people to subscribe, that’s not his goal. Murdoch doesn’t want a lot of people paying a little. He’d rather have a few people paying through the nose. While that may seem counterintuitive, it makes sense when you think about why the iPad version also includes advertising. That’s the whole purpose of the high price: Murdoch wants to attract high income subscribers (think $200,000 or more a year). He can then turn around and sell advertising at a ridiculously high CPM.
Companies that lease jets or offer CEO head hunting services aren’t interested in advertising to $30,000 a year just out of college graphic designers. They want viewers who can afford their high cost services. Ads for services like that can run in the hundreds of dollars per CPM.
By creating a pricey iPad app, the WSJ has created a way for the very affluent to self identify themselves and given Murdoch one of the most prized audiences in all of advertising.
Time will tell if it works. It’ll be interesting to find out.
