The REAL Story Behind Wall Street Journal Europe’s Planned Switch to Compact is NOT the Cost Savings, Or the Size of the Newsprint.
It’s A Whole New Philosophy of Establishing a Truly Integrated Multi Platform 7/24 News Operation

Philip M. Stone May 12, 2005

The European and Asian editions of the Wall Street Journal have been hemorrhaging money for years for their owners, Dow Jones. There is little circulation growth, advertising is way down, and for all the popularity of the Wall Street Journal’s paid web site, only five per cent of the 750,000+ subscribers are outside the US. It was time for a serious re-think and the new polices announced this week should serve as a perfect laboratory for the media industry as a whole. Go To Follow Up & Comments

Mainstream media have picked up on the cost savings and switching the two editions to compact on Oct.17, and making such a conversion is indeed a major decision for an American-based company, but what has not been picked up so much is that the switch represents a new philosophical approach to how a newspaper and its web site should interact. And if the Journals can make a success of that it will serve as a useful laboratory for the industry in general.

“Our readers want to be served better,” said Fred Kempe, editor and associate publisher of the Wall Street Journal Europe (WSJE), in an interview with followthemedia.com. “ We want the newspaper to be very readable, and easy to navigate.  We want to make the web site an integral part of our product. Readers will have the newspaper in the morning and they will be able to find updates on the web site throughout the day and night.”

To do this the WSJE intends to strongly market its print edition and the Internet as one integrated buy, although it will still allow just the newspaper or web site to be purchased separately. “There will be a distinct value put on the Internet product, but we don’t have the pricing yet.” Kempe said.

Currently an annual web subscription costs $79, but a print subscriber gets a discount to $39 and so the marketing people will have to play with those numbers to see what works for an integrated product, but the real change will come if the print edition and the Internet service really do  “speak”: to one another. “There will be much more cross-fertilization between them,” Kempe promised.

Recent times have not been kind to the WSJE. Its subscriber numbers rose by just 997 in the past 12 months to its current 86,156, and advertising lineage took a 21% hit in Q1. The Asian Wall Street Journal (which will change its name to the Wall Street Journal Asia) has just 80,883 subscribers and it saw an 8% advertising downturn in Q1.

In the meantime its main pan-Europe/Asia competitor, the New York Times owned International Herald Tribune, published in Paris, has a circulation of some 241,000 and last year experienced double digit advertising growth. The IHT and the two regional Journals both claim they have cornered the senior executive businessman niche.

Dow Jones forecasts it will save some $17 million annually, starting in 2006, because of lower printing costs, plus some other savings including sending some staff back to New York, including Kempe who will take up the new post of assistant managing editor, international where he will work particularly to ensure the online service fulfills the needs of an international audience. He said no reporter or editor would lose his/her job in Europe because of the changes.

The New York Times said in its initial story quoting a Dow Jones spokesman that the number of compact pages over the broadsheet would increase by 50% which it said meant the news hole would be reduced by one-third. It issued a correction the next day saying that with that ratio the reduction would actually be one-fourth. But Kempe disputes that. He says there will be no reduction in the news hole, indeed it may even increase a bit, and that they are working currently on a 2:1 ratio of compact pages to the broadsheet.

But he does agree that switching to compact (the word “tabloid” is not appreciated) will mean some editorial changes. ”There will be tighter editing and, yes, stories may run a bit shorter. A 600 word story may become a 500-word story in the compact.”

But he says the popular long-form articles will continue, probably still starting on the front page and jumping inside, but there will be a definite effort to reduce jumps for other stories as much as possible – something that readership surveys have picked up on as a major irritant.

The WSJE has obviously been doing its research. In addition to adopting the multi-platform approach, it also plans to make the print edition as easy to navigate as possible – something that was strongly stressed by reader focus groups at the Washington Post.

Kempe says a lot of effort is being put into navigational aids for the compacts.  While it is still “a work in progress” he expects various folios with clearly marked themes such as management, technology, media, Europe, Asia, and property. Extending that to all industry sectors is easier said than done but, he says, it may eventually be looked at.

The re-designed papers will still publish five times weekly, with weekend coverage published on Fridays; they will not follow the move in the US where a Saturday edition will hit the stands in September.

Dow Jones plans to offer new global advertising packages, including for the first time color advertising on the front page. The packages should be of particular interest since the New York Times achieved great success offering packages combining the New York newspaper with its International Herald Tribune. Although admitting to just double digit growth, some reports have said the IHT has benefited to the advertising packages by as much as a 30% increase.

But one unwelcome experience suffered by European newspapers when they switched to compact size was that advertisers refused to pay the same price for a full page in the compact as they did for the broadsheet. Dow Jones said it did not have anyone available from advertising to comment on how its new compacts will handle that.

Most European newspapers that switched to compact  said they reduced their full page advertising rate by as much as 20% but with hindsight, many said if they had to do it again the reduction would fall somewhere between 10-15%. In some cases they were able to actually increase the price of smaller sized ads. Even so, most compacts say it takes around 24 -36 months to get advertising revenues back to the point they were before the switch, although there are cases where that occurred much earlier.

Dow Jones, no doubt, wants to be ahead of a trend. There have been rumors in London for some time that the Financial Times, also under much financial pressure, has been pondering a switch to conpact and if that were to happen no doubt the WSJE would want to be first. Studies have shown that the first publication within a particular niche to make the switch to compact usually does better than those that follow.

One thing he said not to look for is for the US Wall Street Journal to turn tabloid any time soon. Kempe said there are just too many sections in the US edition to make switching to compact viable. And then there is the question of “culture.”

Outside the US the media print culture is to switch and compact newspapers, particularly in Europe, are now in the majority, but the “culture” in the US to make such a switch lags far behind. Several US publishing groups including Knight-Ridder and Gannett say they are taking a look at turning some of their papers compact, but it is very slow going.

"And, yes, stories may run a bit shorter."
WSJE Editor Fred Kempe

Turning a newspaper into a tabloid sometimes arrests a circulation decline, but it does not often lead to large circulation gains, which is what the regional Journals really need in order to boost advertising. The key to the success of the new Journals now will rest with just how strongly their new publications “talk” with the web site and gives the reader the real feeling there is really one overall integrated product, rather than two separates.

Achieving a true multi-platform integrated service might just be the turnaround medicine Dow Jones needs. But their marketing people, and editorial, have their work cut out for them!

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Dow Jones Appoints Mario Garcia as Lead Designer for Its International Compact Editions; Also Talking with GE About Reducing Its Costs in the CNBC Partnership - July 13, 2005

Dow Jones has appointed Mario Garcia, probably the world’s leading expert in turning broadsheets into compacts, to be its lead designer for turning its international Wall Street Journal editions into compacts.

His work covers not just making the editions compact but that they also integrate fully with the online wsj.com, which is the major strategy for the international editions when they are relaunched. The compact editions are expected in October.

At the same time DJ is in talks with General Electric about the future of its involvement in CNBC, which is currently a 50-50 partnership. DJ is looking for ways to reduce the costs of its international operations that currently run at a large loss.

The CNBC channels in Europe and Asia are said to be losing about $20 million to $30 million annually.