MediaPost reports that a number of print newspapers are raising their prices at the newsstand to offset rising costs and advertising losses:
As their print circulation falls, big metro dailies are charging more at the newsstand. They are hiking prices to offset the growing costs of production–including ink and paper–and distribution, where they are feeling the squeeze from high gas prices. This paradoxical strategy may shore up revenues for some companies, but it’s a risky proposition.
Most recently, The New York Times announced last week that it will raise its newsstand price by 25 cents for the second time in as many years from $1.25 to $1.50, effective August 18, along with a 4.5% increase in the home delivery price. The last newsstand hike, from $1 to $1.25, came in July 2007. After no increases from 1999-2006, the decision to raise prices two years in a row is testimony to the rapid slide of the newspaper industry.
As Outsell analyst Ken Doctor points out in the piece this begins a potential downward spiral: as papers cost more people turn to the Internet more, thus compounding the problem that newspapers are trying to solve in part by raising rates. This is not unlike traditional directory assistance, which is raising rates even as call volumes are falling to the Internet and other free sources of information.
There’s an argument to be made that daily newspapers at the newsstand should go free to boost readership. People could still pay for the conveniece of at-home delivery. I haven’t done the math and so don’t know how much that would cost newspapers. But in my anecodtal experience, people do like to read and want to read the newspaper and often pick them up if discarded by another reader.
Here’s at least one argument against free distribution, however. What do others think?
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July 28, 2008 at 4:19 pm |
I suspect the papers are also increasing their ad rates to offset revenue shortfalls. The combination of higher prices for advertisers and subscribers should accelerate the industry’s death spiral.
July 28, 2008 at 4:21 pm |
That’s the danger and the problem.
July 28, 2008 at 9:18 pm |
The New York Times can withstand the increase and come out almost unscathed but if this is a trend and not just an anomaly we will see community newspapers begin to lose their single copy revenue stream.
I’ve been in exec meetings where it was believed that the increase could actually increase home delivery.
Newspapers need a multi-tiered distribution model- Somewhere to get it free, somewhere convenient to pay for it and a luxury priced home delivery model.
July 28, 2008 at 10:00 pm |
I had a debate with a journalist friend about this over lunch. His position was they create more value — perception of value — by charging more. It’s ultimately an empirical question.
July 29, 2008 at 9:58 am |
I agree with Stan, the multi-tiered approach address each market segment of readers.
What I find staggering is the strange believe that just because a newspapers distribution is free it’s readership somehow has less value. Do people read in a different way if it’s free?
Yellow Pages, shopper publications and of course the web proves that freely distributed products can generate response for advertisers – the key issue is the effectiveness and relevancy of the distribution.
By way of anecdotal evidence – we have over 30 copies of different national newspapers delivered to our offices for staff to read in their lunch and rest breaks. None of these people actually paid for the papers, yet these are avidly read because they are easily acessible. One the few occassions when the papers haven’t been delivered – no one has rushed out to buy one.
July 29, 2008 at 7:51 pm |
I know there are experiments around free in the market and I wonder what success or lack thereof they’ve had (beyond the examples I found).