Some reports have the Apple iPad (Nasdaq:AAPL) edition of the Wall Street Journal being offered at $17.99 a month, which has generated a lot feedback from bloggers who say that the price is too high, no matter how good the content and quality is offered.
The price of the paper edition of the Journal is $29 a month, while online access to the Journal is offered at $1.99 weekly.
There as been some confusion out there as to why the prices will be different, with some mentioning the content may be different or the physical edition more expensive to produce. Both of which could be true.
As far as the physical edition of the Journal that's obviously more labor intensive and uses paper, so the costs will obviously be more in that regard. But the digital edition for the iPad, if it includes multimedia, would have a different set of additional costs from programmers; but that's yet to be seen in the product, and wouldn't be near as high as all the labor and organization needed to put out the physical Wall Street Journal.
Assuming it is a pretty straightforward edition and not a lot of difference between the two, it then comes to price and whether $17.99 a month is too steep.
Most input so far has come back as being too steep, but then again, the users will have the final say on that, and until it is released and in the marketplace for a while, we won't know.
Rupert Murdoch knows the demographic the Wall Street Journal serves, and for the most part it won't be that the cost is too high, as most people reading it will be in the upper end of the economic spectrum.
The real question to me will be if people will want to carry around an iPad to read the Wall Street Journal and why they would.
The other question is if they do respond positively to it, will it cannibalize the physical Wall Street Journal.
I think with advertising gravitating to the web and no end in site as to when that will level off, Murdoch may not care that much if there is some cannibalization of the original WSJ, as lower labor costs and higher margins, along with increasing advertising revenue is a winner, and that's what the media business has been looking for for a number of years.
Now we have to find out if $17.99 is too much or not. That's important because it seems the days or advertising driving the revenue and profits of a business on its own are over. So finding the right subscription price and advertising base is the future for media companies.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com