Are news site pay walls likely to work?
The newspaper industry seems to be venturing yet another bet on this business model, but skepticism remains. There's been no shortage of buzz around Rupert Murdoch's latest plans for a daily digital newspaper alternative, and musings about charging for online content continue at the New York Times.
Speaking with Henry Blodget at the Business Insider IGNITION conference, Eric Hippeau, CEO of The Huffington Post, says, "The history of newspaper pay walls is littered with disasters." He notes only two prominent exceptions -- WSJ.com and FT.com. He qualifies the latter, however, saying it probably isn't large enough to be relevant, as it only has 135,000 paid online subscribers, a fraction of the total brand.
This isn't a surprising position, of course, given that The Huffington Post uses an open, advertising-based model. Yet, there is reason to doubt the ability of this approach to generate a considerable amount of value. The recent sale of TechCrunch to Aol, at a total price of up to $40 million, indicates that the upside may be limited. This is further suggested by the recent assumed valuation of Gawker at approximately $20 million and The Huffington Post, according to Blodget, bit higher ... a size he playfully calls "puny."
Of course, Hippeau counters that The Huffington Post has only been in business for half a decade or so, and he's obviously optimistic about the future.
Todd Larsen, President, Dow Jones, also sees a limited upside for online pure-plays like The Huffington Post. Sharing the stage with Hippeau and Blodget, he sees "tremendous advantages" to having an established print brand to support the online property.
Asked directly whether The Huffington Post would be worth more than the Wall Street Journal in five years, Hippeau says yes ... and Larsen replies, "Not likely."
Until time passes and we can arrive at an answer, the debate will continue over whether an ad-driven business without a subscription component can create considerable value. Recent valuations cast some doubt on this, but it doesn't look like pay walls will offer a viable alternative.