What should a newspaper cost in 2008? Two dollars? A penny? Different amounts for different people? I have heard all three answers within the last month — evidence that the standard 50 cents may be part of what is broken in the industry’s traditional business model.
Start with the case for a substantially higher price. Most papers abroad cost two, three or four times the going rate in the United States. Most still receive slightly more than half their revenue from circulation — here it is 80 percent advertising, 20 percent circulation.
My trips to the corner store on a recent holiday junket to London typically set me back about $3.50 for two of the quality dailies. I am hardly typical, but I certainly didn’t balk. This was the week of Benazir Bhutto’s assassination and there was a lot to read in these papers. The Financial Times, in particular, pretty well defines a daily you would pay $2 for (its cover price in the United States).
I floated the higher prices idea at a lightly-attended session on good ideas from abroad early in the recent Capital Conference in Washington. I got a strong second from international consultant Jim Chisholm. Later, at a session of his own, Chisholm, a cheeky Brit, chided American publishers for fielding “the cheapest papers in the world.”
You could defend our system as different but effective back in the day when classified revenues were flowing like water and 20 percent margins were a slam dunk. But those times are gone and not coming back. Time was too when a newspaper cost the same as a cup of coffee. You know what happened to coffee prices if you purchased a $4 latte or even a 7-Eleven small regular today. But most newspapers have stubbornly held back from charging more.
Writing in the same week as a fresh report of big circulation losses, I am well aware of the counter- argument. Even at low rates, the demand for newspapers is price sensitive. For subscriptions the tab is higher, and readers feel guilty (and now environmentally irresponsible) if unread issues stack up. So abrupt increases could backfire.
Nonetheless a few papers are taking the plunge. The Austin American-Statesman went to 75 cents a copy and $4.99 for seven-day delivery April 1, the highest price in the Southwest. Harry Davis, vice president for circulation, cited the rising cost of paper and gasoline, among the factors for asking readers to pay more.
The American-Statesman is also getting notice for a pilot program offering new subscribers a $2 a week rate if they lock in for an entire year. That is a direct attack on the churn rate on most trial subs (often 80 percent), which in turn forces papers into expensive direct marketing programs to keep up numbers.
There are other isolated signals that more realistic pricing may be a trend. The Boston Globe has been at 75 cents for a while. The Washington Post, long a practitioner of the low price/high household penetration model, went from 35 to 50 cents December 31 — and I bet they don’t lose 40 percent of single-copy sales. USA Today increased from 50 to 75 cents several years ago and remains one of the few American papers holding circulation totals steady. (Former Gannett CEO Al Neuharth was long an advocate of charging more).
While some are gradually upping prices or experimenting with mixed models like the one in Austin, I also see a counter trend in some of the new Audit Bureau of Circulation rules. Starting in the April 2009 period individuals who pay anything for a subscription can be counted as paid — hence the penny-a-day option. ABC is also redefining as paid sending Sunday-only or weekend-only subscribers the rest of the week’s papers free for up to 120 days (though only if they ultimately accept an offer to pay something for an extension).
Poynter librarian/historian David Shedden reminds me that the Penny Press of the 1830s was a significant publishing phenomenon. Charging a penny versus the prevailing 6 cents, entrepreneurs captured a working class audience that stayed with newspapers until well after World War II. But that was then and this is now.
The Newspaper Association of America does have some fresh research suggesting that readers of discounted papers spend as much time with an issue as those who pay full price. But I am dubious. The super discounts seem reminiscent of the pre-Joint Operating Agreement days in Detroit or Denver when the competing papers had vastly inflated their circ numbers with low-cost and no-cost subs. Once the JOA papers began charging, these “readers” quickly peeled away by the hundreds of thousands. So it’s not so clear that anyone — least of all advertisers — was benefiting from giveaway subscriptions except the newsprint suppliers.
Making the case for charging more, I recognize that, like other business model changes for the industry, this one would need to take place by degrees over a period of years. Already, though, there is talk (explicitly by Gannett in a December 2006 presentation to analysts and investors) that the print edition of the future will be mostly (but not exclusively) for older, more educated, more affluent readers.
If you suspect I have a hidden agenda here, I do. I hope as they consider more aggressive pricing, newspaper execs will ask themselves hard questions about what value needs to be built into a paper for which readers who prefer print will pay, $1, $1.50 or $2. It is a question the Financial Times, for instance, has already asked and answered.
