Posting in Technology
Information should be free, but newspapers should charge more for it.
One of the great disruptions seen in the Internet era has been the massive proliferation of free information sources, something that has hit hard at the fortunes of the newspaper industry. However, the best approach for newspapers may be to charge more for their content, versus going the other direction.
Simon-Kucher & Partners, a marketing and strategy consulting firm that specializes in pricing, just issued the results of a study which finds that consumers aren't sensitive to price increases in newspapers, and the struggling industry would be better off attempting to increase its margins.
In fact, documented price increases have grown circulation revenue for print newspapers, according to Simon-Kucher. In their words, "consumers are very unlikely to react to print newspaper price increases, putting them in the same category as lifestyle drugs and albums from cult rock bands."
While raising print prices may shrink an already anemic readership base, it may "also be their best hope of staying afloat," the study urges. One factor is that it's likely the remaining customers have a high degree of loyalty. Plus, Simon-Kucher adds, "print advertising is becoming a smaller and smaller piece of newspapers’ revenue puzzle." The New York Times Company, for instance, now generates more revenue from circulation than from advertising -- the New York Times Company Q2 2012 results show circulation revenue of $233 million and advertising revenue of $220 million.
Some notable examples (selected examples from 2009, with revenue realization in 2010 and reporting in 2011) from the study include:
- Washington Post – Newsstand price from $1.50 to $2, circulation revenue +10%
- Dallas Morning News – Newsstand price from $0.75 to $1, circulation revenue +11%
- Boston Globe – Newsstand price from $0.75 to $1, circulation revenue +9%
The Simon-Kucher hits close to a key element of the evolution of newspapers: that on the Web, they are overlapping television networks in many ways. In fact, in some cases, they are virtually indistinguishable from network websites. The USA Today site carries video, and the CBS News site carries readable text. Newspapers, with their brand, have the potential to take a leadership role in converged media.
In fact, subscription revenue provides the funding to advance into the converged media space, Simon-Kucher points out. "Raising prices generates the profits that can help companies invest in changing their business model, which is essential for a company’s future success," the report states. In the newspaper industry, the consultancy recommends plowing all money into the digital side of the business, including tablet apps and digital advertising solutions. “The print business isn’t your legacy; it’s your bank,” the report's authors state.
Andre Weber, a Partner in Simon-Kucher’s New York office, elaborates on the upside to be had from raising prices: “The New York Times has implemented three separate price increases in the last four years, doubling the newsstand price from $1.25 to $2.50. Price increases, along with innovative subscription models like the Weekender and online paywall, have helped them turn around their news division, increasing operating profit almost 13% year-over-year in the second quarter.”
(Photo: Joe McKendrick.)
Aug 7, 2012
The current newspaper as in the one made from dead trees, has become so outdated, inefficient and an ecological nightmare. Just let it die and move on. It is only the older hangers on that still read the paper. Most of the younger percentage of the population receives their information electronically, that's up to the minute not a day old. Cut down the trees, oil to ship the trees to the paper mill, the energy and pollutants to make the paper. (doesn't everyone want a paper mill in their back yard?) The oil to ship the paper to the printers, then oil to deliver the paper. Get to see only the information the bias Editor decides you should see and most of that advertising to support the spiraling costs. Read for a few minutes then throw it away, more oil to haul it to the landfill. If lucky the paper gets recycled, more oil to get to prosessing plant, to say nothing of the polluting chemicals, more energy shipping, around and around. Its an obsolete media format. Let it go the way of the Town Crier, the 5 1/4 floppy, the 8 track tape. True the electronic media requires an energy and infrastructure investment, but that's a one time thing. Not an ongoing waste of resources. Just the media is transmitted not the millions of tonnes of paper its written on.
Decide what you want the result to be and find a consultant who gives you that result. Yes newspapers are necessary and we need them. But they need to get with the times, they have been the leaders in many ways, they can still be. But don't price out your new customers, set the price very low, and with free stuff to drag in viewers to increase business.
Newspapers shot themselves in the foot and are currently laying in the beds they themselves made. The internet is where it's at for information and news. When it comes to internet advertising, web hits ARE your circulation. If newspapers want to survive, they need to embrace the web and go for the hits. They will have to generate more traffic by becoming more popular. Then they can charge more for advertising. The premium web advertising dollar is based on performance and winning against the competition is more than just running a competitor out of town. This competition is real and the only way they will make it is by pleasing the masses. If they fail to please the masses, they can kiss it goodbye
This type of opinion illustrates why most consultants are overpaid hacks. Why is the news delivered electronically more valuable than the same news printed and delivered on paper? It isn't. You're paying for the content, not the media upon which it is delivered. If anything, the price should go down because, by reducing or eliminating the printed version, the publisher can eliminate a huge amount of overhead, which should then be used to improve the quality of reporting. The only motive at work here is the profit motive. If you want to charge a premium then eliminate all ads on the electronic delivery. As it is, they're going to charge a premium, make you watch ads, and deliver the news 48 hours after I can find it free on-line. The end result is fewer young people will subscribe. People who love to read the paper, lousy writing and reporting and all, will eventually tire of being screwed. Poorer people can't afford to subscribe now, which is creating a knowledge rift in our society, and that is going to be paid back in kind at the polls when they're persuaded exclusively by political ads on TV. Their opinion is sold by the newspapers to the highest bidder. On the middle class street where I live, two out of ten houses get the paper. Where do you think the rest of them get their news? Remember, there are three kinds of lies: lies, damned lies, and statistics. This statistic is only a temporary number, and is a damned lie. Give it ten years and see where these three papers are then.
The proliferation of free news on the Internet has led to a drastic drop in the quality of news reporting over the past decade. Gone are such staples as validation of information from multiple sources, fact checking on basic information and even basic grammar and spelling has fallen by the side of the road. Churnalism, recycling other peoples slightly edited work and publishing it as your own with nominal credit to sources, has resulted in corrupted information becoming Internet fact after the second or third generation of a story starts to look nothing like the original. If the original story was written by a sloppy reporter the 2nd generation of the report often bears little semblance to what actually happened or was being reported. One of the most egregious cases of poor churnalism resulting in bad press for people who did not deserve it was a series of news reports about a 2009 study done on women graduates with STEM degrees. The original study looked at career choices women made after graduating. Specifically, what influenced those choices and the long term impact on the women. The study found that colleges and universities almost overwhelmingly pushed women near graduation into teaching professions. The fact was teaching professions paid recent STEM graduates less than industry jobs, regardless of gender. That trend made it so that on average women were earning substantially less than their male peers 5 years after graduation. Sloppy reporting on the first article, call it the source story, led to a flood of churnalistic articles ripping private industry for underpaying women. Yet that was far from the facts. But even today the president himself quotes this study report when slamming industry for the war on woman. He should know better. I do not mind a move to some kind of paid model as long as there is a return to the old standards of reporting.
Although I agree with your comments on how "churnalism" has become the standard for mainstream news, reporting that is biased or otherwise conforms to a political narrative is nothing new. It's as old as the medium. Some papers can and do charge for access, and people pay. Wall Street Journal comes to mind. The New York Times recently has. People who are willing to pay for these papers understand that they are paying for content superior to what is free on the Internet. On the other hand, inferior publication will not be able to do this. Their content will have to be free because few will be willing to pay for it.