Monday, November 15, 2004

Dow Jones to Buy MarketWatch: The Benefits of Non-Subscription Access Weigh Heavy

The New York Times notes along with AP and CNET News the announced purchase of MarketWatch, Inc. for about USD 460 million in cash, or about $18 a share. The press release from Dow Jones has a lot of great details on the whys and wherefores of this purchase, but the Times article by Andrew Ross Sorkin captures the essence of the situation: with a surge in online advertising MarketWatch's 5.8 million unique visitors look to be significantly more attractive than the 701,000 subscription-only visitors to the WSJ Online site. Guess that experiment last week with non-subscription access to the WSJ Online site showed what they wanted to see. What's missing from the general news coverage, though, is the institutional side of this equation: with Thomson Financial's investments in bolstering MarketWatch coverage there was a possibility that MarketWatch would become yet another major threat to Dow Jones' presence on financial trader desktops. As I noted in an earlier weblog of the companies early rumored to be in the running Pearson might have made sense if they were looking to complement their financial content holdings for financial and consumer markets, but at the end of the day it was the Yanks that pulled this one off.

While this may not be the most perfect cultural match that's probably a good thing for Dow Jones, which is trying to move beyond a traditional press room mentality to a way of doing business that embraces a new generation of investors and content consumers that are very happy with a Web-first content service. Dow Jones' own online efforts are not disappearing anytime soon, but wisely they have acquired an outlet that will both bolster earnings and provide a brand that is in a better position to appeal to younger subscribers and more attuned to the routes to financial success in online content. The online subscription model is not dead, but having staked an early claim to monetizing content the "old fashioned" way on the Web Dow Jones must consider how to layer premium services on top of an open ad-driven core of open online content.
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