Is There Economic Sense in a WSJ-Digg Marriage?

Editor’s note: This post was submitted by Muhammad Saleem.

If you’ve been paying attention to the blogosphere, then you’ve most certainly heard about The Wall Street Journal Online dropping the registration and payment requirements for visitors coming from Digg.com. This is a part of a new philosophy that the company is testing where access will be given out free to sources that send high incoming traffic, in the anticipation that the ad-revenue from this traffic will make up for the loss in subscription revenue.

Murdoch said he believes that a free model, with increased readership for wsj.com, will attract "large numbers" of big-spending advertisers.

This decision may seem like it makes obvious sense for several reasons:

A majority of the ’social media friendly’ content on WSJ.com is not necessarily unique, and if not freely accessible on that site, similar content is obtainable elsewhere. Furthermore, if your content is not free, then your content is not socializable. No one in their right mind will pay a subscription fee to read one article, and if no one (out of the potentially tens of thousands of readers) is going to pay to read the content, no one will submit it to social media sites, and consequently you lose a large audience. Therefore, and to capitalize on an average of 30,000 visitors per article from the front-page of Digg, it makes sense to take down the pay-wall.

At the same time, WSJ’s opinion that they will be able to re-earn lost revenue through ads, is a mistaken one when it comes to socially driven sites like Digg. It’s no secret that a large part of the Digg traffic is either banner-blind or disables ads completely using Ad-block. Even the ones that don’t block the ads are one-third as likely to click an ad when compared to organic traffic.

This move will definitely increase the readership of the online news outlet and will most certainly further solidify the brand. However, while it is great to see that mainstream media is becoming more comfortable with new media and embracing it more comprehensively, I remain skeptical with respect to the revenue model as far as social media traffic is concerned.

Read the original announcement by Kevin Rose

Muhammad is a social media consultant and is currently ranked #3 on Digg.