Wednesday, September 10, 2014

Why do Sunday newspapers cost so much?

As I picked up the Sunday New York Times at a Starbucks in a leafy neighborhood in Chicago, the twenty-something woman behind the counter started to ring up $2.99, the going rate for the Sunday Chicago Tribune.
“Actually,” I said, “it’s $6.”
“It is?” she said incredulously.
“Yeah,” said the youthful male colleague beside her. “Why would anyone spend that kind of money for a newspaper?”
 “Well, the Sunday paper has lots of special sections that you don’t get during the week, like a magazine, book reviews and travel,” I said. “And lots of people buy the Sunday paper for the coupons and the ads” – even though I knew my NYT would contain no local classifieds or Best Buy circulars.
“I guess so,” said the young man. “I have looked at the paper at my grandparents’ house a couple of times, but I still don’t see why anyone would spend that kind of money on a newspaper.”  
This mini focus group gave me lots to think about as I walked back to my sister-in-law’s house. 
First and foremost was the question of how newspaper publishers could sell the value of their truly valuable products to the sub-geezer set.  With studies consistently showing that two-thirds of the print audience is over the age of 55, newspapers clearly aren’t making the grade with twenty-somethings, thirty-somethings and even most forty-somethings. 
Second and equally vexing was the question raised by the Starbucks lad: Why are Sunday papers so ridiculously expensive?
And then it hit me: The answer to both questions is to drastically drop the price of Sunday papers in order to remove price as the formidable barrier that it represents to first-time, fallen-away and wavering readers.
Whether they argue that newspapers cost too much or that they don’t have time to read them, people who don’t buy newspapers are really saying that papers are more expensive than they are worth.  Consumers daunted by weekday editions priced at $1 – or more – are hopelessly repelled by Sunday products costing twice as much, if not more.
There is a better way.
If publishers reduced the steep prices of their Sunday products, they could attract new and former customers to boost circulation on the day of the week that typically delivers half of their advertising revenues and often more than half of their profits. To offset the decline in circulation revenue, increased Sunday readership ought to attract more advertising. 
Although publishers may argue that Sunday newspapers are premium products deserving of premium pricing, they need to face the fact that a growing number of consumers don’t agree with them.
After analyzing a random sample of the nation’s daily newspapers between 2004 and 2014, I found that the industry’s print circulation has dropped precipitously in the last decade.
Total weekday sales among the nation’s 1,300-plus newspapers plunged 47% in the decade to a daily average of approximately 29.1 million as of March of this year, according to data from the Alliance for Audited Media. Aggregate Sunday circulation in the same period dropped 40% to a weekly average of approximately 34.7 million. 
Thus, only a quarter of the nation’s 115.2 million households today consume a weekday paper and only 30% of households take Sunday papers.
With more than two-thirds of the nation’s families not consuming newspapers, there is considerable upside for publishers who do a better job of conveying the value proposition of their products.
Of all the audience-building options at their disposal, cheaper pricing for quality Sunday papers would be the best bet. Here’s why:
From special sections to comics to op-ed columns, the content in the Sunday paper is more comprehensive, and therefore more compelling to read, than any other edition of the week.  Because Sunday papers carry more advertising and coupons than any other day, the typical edition has the potential to pay for itself many times over. Since it is published on the day that many people get a break from their ordinary routines, the Sunday paper represents the greatest opportunity to command attention on a day that Mom isn’t rushing off to work and Dad isn’t hustling the kids to school.  
Although the Sunday paper ought be the gateway to attracting new readers – as well as keeping existing ones – most publishers price the product so aggressively that they turn off all but their aging core readers.
Markets support premium pricing when demand is high and supplies are low.  With an abundance of news, information, entertainment and advertising available through the free or exceedingly cheap digital media, consumers today have many more choices than in 1993, when the Internet was a whippersnapper and average Sunday circulation peaked at 62.6 million.
If publishers want to sustain the biggest and most profitable revenue source that they have, they need to get real about the pricing of their Sunday products. 
© 2014 Editor & Publisher


Blogger David Rothman said...

Nice post, Alan. The issue, of course, isn't just price. It's also time. Come Sunday, paper newspapers are competing with plenty else online--especially their own digital editions, so convenient to read on iPads and the like. What's more, digital editions don't smudge up fingers. Oh, and then there's the little matter of carrying out the soon-to-be trash.

Those details by themselves don't count that much. But they add up.

What's more, part of the fun of newspapers these days is sharing links with friend and family. Try doing that with pulped wood. Perhaps publishers should subsidize fax machines to make paper editions more of a social medium.

Although I go back to the days of Smith Coronas, I say: Be prepared to let go--sooner than we might think, even if paper editions are still major revenue sources. For now, yes, lowering the prices of Sunday papers would make sense. Let's hope ad revenue would grow as much as hoped, with more readers. If not? Raise the the costs on other days just a tad.

David Rothman

6:35 PM  
Blogger MrMediaPro said...

Alan, I read your posts religiously and commend you for trying to keep the lights on. I think your off base on this, it's not the cost of the newspaper, it's what's in it that governs the true value. I would venture to say you could offer a 30something the Sunday NY Times for $1.00 and there would be little interest. My focus group of one is my son, age 33 who reads everything available digitally but could not tell you the last time he physically touched a newspaper. And to think the Tribunes of the world had the ability to digitize their papers since 1999/2000 but probably figured this digital stuff was just a fad. I guess they thought it was well worth the $.33 to print and deliver the paper vs. the then $.03 to do same thing digitally. Or maybe they just thought the unions would just disappear...I have an "all you can eat" digital package from The NY Times but actually have the Sunday paper delivered as it reduces the total package cost. Being in advertising I understand about print dollars/digital dimes but we all know the math doesn't work.

8:35 AM  
Blogger Mary Kay said...

I think you are on to a worthwhile experiment, Alan. At a minimum, if might increase digital signups for M-S, adding incremental value albeit not that of a print subscription. I am back to reading the NYT in print and reminded of how much more one learns from print than digital as you are forced to face news and ideas you'd otherwise ignore and, like a library, the unexpected grabs you. Perhaps that should be the value promise of print news - welcomed surprises and catalysts to your creativity versus "news."

10:41 AM  
Blogger Martin Langeveld said...

Not just Sunday papers; every day is priced too high. Coincidentally, the New York Times just sent me a snail mail invitation to get a home-delivered paper subscription, for the "lowest available price" of $1099.95 per year. That's $21.15 per week or $3.01 every single day. Now this is in the wilds of Vermont, and perhaps it's cheaper in Short Hills and Scarsdale, but even for geezers like me that kind of pricing is a non-starter, and you have to wonder what they are smoking in their marketing department. I would consider either a print or digital subscription if it got down to Netflix-level pricing of under $10 a month.

7:08 AM  
Blogger JHop said...

Seems like only yesterday that the wise guys of the industry were campaigning to raise the single-copy price. Every paper I can think of eventually fell in line. Would you say that was just another case of underestimating the Internet's effect on print?

8:18 AM  
Blogger The GrassRootsGuy said...

People in fashion, automobile, liquor and almost any industry EXCEPT journalism will tell you the key to raising prices is to create cachet. That's why some people spend $60,000 on a Mercedes with no more style or function than my $18,000 Hyundai. When it becomes as cool to carry the news(paper) as a bottle of water, people will pay... plenty... just as they pay for the newest smart phone...

7:44 AM  

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