Rupert Murdoch says The Wall Street Journal has 10,000 subscribers paying for the paper on the two-month-old iPad. That’s an excellent start.

What does it mean for revenue—assuming we can take Murdoch at his word (a big assumption, I know!).

The WSJ costs $17.29 a month on the iPad. That’s $173,000 a month in subscription revenue, or about $2.1 million a year. That’s not going to bring back the salad days, but remember there are only 2 million iPads being used in the world. As more people get them or similar gadgets, the potential subscriber base will rise.

And the app is free right now for subscribers to WSJ.com. So a total of 64,000 people use it. It seems likely that the paper will eventually charge WSJ.com subscribers to use the iPad app, too.

But there are also ads to consider. The Journal itself reported in March that the paper had six advertisers signed up for four-month ad packages costing $400,000 apiece (something I questioned and got confirmed here). That’s at least $2.4 million for the first four months of the app. I’m skeptical that pace can be sustained, but if it is that would put total combined revenue (using the 10,000 subscribers number) at nearly $10 million a year. That’s real money, especially for such a new product.

It’s surely not all net, but most of it is. It costs some money to develop and maintain the app, but—and this is a critical point—the Journal is keeping all of the revenue itself.

Apple takes a 30 percent cut of any app sales on the iPad and iPhone. But the Journal is being extremely clever here. Apple only gets its haircut if you sell the app through iTunes. But the WSJ app itself is free to download. What costs users money is accessing the app (at least most of it. Some stuff, like on WSJ.com, is free). So, the Journal signs you up and charges you itself—and keeps 100 percent of the revenue after Visa and Mastercard take their vig. Now compare that to the atrocious Amazon Kindle model, where publishers “get” to keep only 30 percent of the revenue!

This is something other publications offering subscriptions need to seriously think about. There are tradeoffs. Signing up through the WSJ isn’t nearly as easy as the one-click purchasing iTunes enables. That’s no problem for somebody signing up for a long-term subscription, but it sure is for anyone looking to make an impulse purchase.

I’d suggest a hybrid plan: For anyone signing up for a recurring subscription, force them to input their credit-card information directly to you. But you should also offer a “paper box” option: Pay 99 cents and get 24-hour access. That would be an iTunes “in-app” purchase. Apple gets its 30 percent cut, but the user is much more likely to make an impulse buy.

It’s worth noting that WSJ.com, a decade-and-a-half old subscription site, has about 400,000 online-only subscribers. In two months the iPad has added 2.5 percent to that number.

It’s a good start. Expect it to get even better over the next several months and when Apple drops iPad prices.

It’s also worth noting that The Times of London sold 5,000 copies of its app in the first three days. News Corp. is selling that through iTunes apparently, but getting a hefty $15 a whack for it.

Murdoch is putting the paper behind a Web paywall this month, which will help sell apps. Few are going to pay $15 for something they can get for free on the same machine.

Further Reading:

IPad Review: New York Times vs. Wall Street Journal: In a promising start, the Times looks a lot better, but the Journal is full-featured.

Backwards Steps by the WSJ and NYT on iPad: The papers cripple everyday Web features in their apps for a walled-in environment.

It’s Time for the Press to Push Back Against Apple: Yank iPad apps unless Apple cedes complete control over the right to publish.


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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.