Readers are willing to pay more for the right product offering
By SANDY MACLEOD
If you're a newspaper executive these days, there is no doubt you spend much of your thinking time trying to make your best bets for the future. Our business is changing rapidly. Part of the equation on which many of us focus most of our attention is finding new sources of revenues. In the past 24 months, most of that attention has been concentrated on digital offerings, whether it be monetizing our websites, doing deep dives into mobile applications or trying to figure out just what we should do with the iPad. Meanwhile, just under our noses lies a group of loyal print subscribers that might just be willing to pay more if we can get the product offering just right.
The Dallas Morning News has been featured recently as an example of a bold experiment, with the doubling of circulation subscription rates over a short period of time. The San Francisco Chronicle has followed a similar path after the installation of their new production equipment, and the Boston Globe leads the way with a weekly subscription price now over US$12 per week. Here in Canada, you have the Toronto Star and Globe and Mail that have been raising rates for years and have held readership relatively flat.
Other city newspapers in Columbus, Arlington and San Diego have all been playing with price, using the services of Mather Economics from Atlanta. The premise used by Mather is a deep look at the history of readers individually to determine each subscriber group's sensitivity to price levels. We've taken pricing to a whole new level. (For the record, the Toronto Star is in the early stages of a Mather investigation into its subscription files in the hopes of unlocking new revenue opportunities.)
Another emerging trend may be the opportunity to allow readers to opt-in for specialty products and share a premium for the product and home delivery. I see the Chicago Tribune is looking to offer a new weekend publication, working name Five Star, into their market in the coming months. It looks to be a glossy high-quality “deep” read targeted at heavy news readers. I understand it could bring as much as $5 a copy, which would be an interesting experiment.
Surely it can't be as simple as just raising rates, though? I believe there is more to the story. While it may be enticing to just push that subscription rate a little bit more, we do have to understand our readers are savvy and that news is available for free in many markets in print and online everywhere.
Here's a few thoughts to follow when looking to grow reader revenues:
Content matters: The combination of deep editorial cuts and aggressive circulation pricing will leave you with a battered readership base. I'm not for a minute suggesting that we should not cut costs. But it should be done in such a way that the publication's ability to still deliver unique and locally focused quality news is not hampered.
Don't forget the thud factor: I was recently in a series of focus groups on a new product concept and we heard consistently that readers have noticed the reduced size of the newspaper over the past 24 months. This decline in our case has been driven more by advertising lineage declines rather than a news reduction. But readers don't care and they especially don't care when we consistently raise rates.
Take it slow: I realize this may be difficult in all cases, but we have taken a slow but steady approach to growing our circulation revenues. Readers balk at huge one-time price increases. If at all possible go with regular but smaller rate adjustments. Ideally, a couple of points above inflation every 10-11 months, you will be surprised at the impact over a five-year period.
Quality matters: Here I'm referring to print quality and the reliability of your distribution. As subscription rates for top quality newspapers approach the US$500 annual level, we need to make sure we don't mess up on the back end. What readers might have tolerated when the papers were a quarter is no longer acceptable when they are paying a couple of bucks a copy. Do you have a system in place that measures print quality, and what about delivery service? The age-old complaints per thousand metric is simply not good enough anymore. How quickly is a delivery problem resolved, what about multiple complaints how are they tracked? We have to get this correct.
Talk to your readers and listen: Research and analysis should play a huge role in how we price our products. Especially if we are looking to add specialty products such as what the Tribune in Chicago is contemplating. Between our readers' panel, online subscriber research, and focus groups and in some case formal telephone surveys, we are begging to better understand what our readers expect from us. That's key when looking at offering specialty products that you expect to have them pay for separately, there needs to be a value equation outside what they expect you to deliver for their core subscription price.
There is little doubt that digital offerings will be the longer - term future for newspapers. But in the near- to mid-term we should not throw the baby out with the bath water. There is still money to be made in print; we just need to think about the business differently. Revenues from readers can easily represent 30%-40% of total revenues over the next few years. But don't be greedy, diminishing the quality of your news content, not investing in research and offering a poor delivery experience combined with rate increases is a recipe for disaster. Approach this opportunity more strategically and long-term sustainability begins to play into the equation.
Sandy MacLeod is the vice president of consumer marketing and strategy at The Toronto Star. You can contact him at (416) 869-4654 or email@example.com.
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