Ask the Tribun Timur Editor
Banyak yang meramalkan masa depan surat kabar akan suram. Ya, kalau diam saja, sementara lifestyle masyarakat terus berubah. Artikel berikut ini terlihat seperti melawan arus.
http://blog.inksniffer.com/2007/07/24/mediageneraladvertising-readersnewspapers.aspx
The price is wrong: Why newspapers have to learn how to get more from readers for what they do
Posted by Sniffer dog at 7/24/2007 10:34 AM and is filed under Readers,Innovation,NEWSPAPERS,Newspaper pricing,Display advertising,Books,Distribution,Journalism,Advertising,US journalism
You will I'm sure have heard about Media General's terrible numbers. Profit down by 28.7%, ad revenues down by 11% on 2006. This is meltdown territory.
I'll spare you another run through the reasons why the internet cannot be our only future. (Media General's 8% interactive division is pleased by 61% growth though its revenue only just covers interest payments on two new TV stations the company acquired).
But let's be clear: there's no positive spin to be spun on these numbers. The fact of declining revenues is very real and while it can, I believe, be halted, it probably can't be bounced all the way back. And if we want a future rather than a slight extension of the present, we have to do something about this decline other than cut costs. So if that something isn't gambling blindly on online growth what is it?
There are only two sources of revenue we understand: advertisers and readers. If advertisers are deserting us, then we either lose money or we ask readers to pay more. Happily I've seen that approach work.
Can consumers be convinced to pay more for US newspapers? Well, the good news is that newspapers in the US are currently very cheap, and largely for reasons that are not inevitable.
The first reason they're cheap is that the desire for the network effects of being the biggest print presence locally has always forced an emphasis on volume - and anyone who's ever drawn a price curve will tell you that lowering of price leads to an increase in volume of sales. (They can't tell you how steep the curve is though, and that's where the real fun is).
It's been a sound model for many years. The cheaper the newspaper the more people will find enough value in it to buy it. The more people buy it, the more reach you have, particularly if you've seen off any print competition. The more reach you have, the more you can charge for advertising.
The second reason newspapers here have been historically cheap is the way they're sold: in three, six and 12-month blocks. When I buy a single copy I compare the opportunity cost of 25c at that moment of purchase and it seems a minuscule amount of money that buys me almost nothing else worth having. So I buy without caring whether the newspaper is very good or not. It doesn't have to be very appealing to be worth 25c.
But when I'm sold a subscription I'm asking myself what else I could spend $80-$150 on this year, and that's a very different question. It turns a newspaper into a big ticket item instead of a trival one. I wonder how much coffee I would buy at Starbucks if they made me buy my coffee in six-month batches - they would be asking me for $400 instead of $4.85 (tall latte and a double chocolate loafcake since you ask).
So a price is arrived at that minimizes the expensive sounding cost of a subscription (80% of sales) rather than maximising the price of a single copy (20% of sales)
Thirdly, I'm guessing that single-copy prices have stabilized at 25c in my area because refitting machines is expensive and especially so if they have to be fitted to take new coins. That has probably made the question always one of doubling the price or increasing it by more than 40% in one go, which strikes terror into every newspaper person I've ever met.
So the price of a copy of the newspaper is less than it could be, largely because of the way we choose to sell it.
How do we get around it? In an nicely counter-intuitive way, I think the best way to get people to pay more for newspapers is to make some parts of them free.
Here's the conundrum: newspapers chase readers to sell some of their attention to advertisers. So you want as many people reading your newspaper as possible so that their aggregated attention is more valuable. But advertisers tend to want to be in the main news section and often steer clear of other sections. But despite that, you still have to produce a high volume of those other sections like sport and business because everyone gets one Model T paper. It doesn't serve readers, it doesn't serve advertisers. It's a waste. With fewer advertisers to subsidize the waste, we now have an incentive to stop.
Let's use sport as an example. The interesting thing is that much of a consumer's sense of the value of the paper may well be tied up in sections that advertisers don't value, like sport. Personally I like Gary Shelton in the St Pete Times more than I like most of the main news section. Sport may only interest 35% of a title's readership, but that 35% love it. So an efficient paper would have a high-volume, free-to-readers news section and a low-volume, high-caliber, charge-to-readers sports section.
To make it work you have to produce a compelling sports section that's worth money. But I can imagine inspiring a team to do that if I was prepared to invest in it. Currently I as a publisher don't see any immediate return from investing in journalism because it's so diluted across the product, it's invisible to readers (on the whole) and they won't all pay for it because they don't all value it the same. So in classic pricing terms, I can incrtease the benefits or features of the product but it has no impact on price. Ergo, no one actually has any incentive to invest in the product and it declines in quality over time.
In my new imaginary world, I as publisher, can listen to my sports editor and measure whether his investment in talent is paying off or not in increased sales for his section. I can have a marketing plan that takes advantage of cheap niche marketing on the web. The potential for virtuous circles of investment in journalism is there.
The other good part of this approach is that it aligns our online and print strategies. We put ourselves firmly back in the business of generating and presenting compelling exclusive content where it's still achievable, and participating in the information commodity market where where it isn't. This is actually the essence of the NYT Select scheme which is snootily disregarded by click counters but is a serviceable alternative business model for newspapers who want to fight on content rather than search engine optimization.
Second we have to be flexible and imaginative about how we charge readers. It will involve asking them to perceive the price differently. An example: how much would a Monday sports section be worth to me during the football season in Tampa. Would I pay a buck a week? Yes. Would I pay $20 for 20 weeks. Hmmmm, I probably would, even though I grumble at paying $60 for 365 copies of the whole Tampa Tribune.
Why do I think differently? Because the price comparison that came first to my mind is the cost of a three beers at one Bucs game. Or the cost of parking at the stadium. I wouldn't compare the cost of the whole newspaper to those things, and the cost of a newspaper subscription would dwarf those things anyway. But when a newspaper is charged as a valued sports item, in a smaller package, with a price that is reasonable in context it's worth more.
Some newspapers already vaguely understand this approach. In the UK we used to occasionally give away cds of three songs from big music stars. Circulation would always surge by 10-20%, depending on the popularity of the artiste and would invariably disappear the following week. The price comparison for a consumer was the cost of a cd, to which our price compared favorably and therefore it would appeal to non-readers for whom the value of the newspaper was close to zero but the value of the cd was above the cover price. Because we had to give the cd to all readers it was an absurdly expensive way to gain 40,000 readers for one week. But if you offered a token to get the cd from a record shop, the uplift in sales wasn't anything like as good.
The psychology of pricing is something every newspaper publisher should get to grips with, though many have only a rudimentary grasp of its possibilities. I would recommend the clearly written "Price Advantage" by Marn, Roegner and Zawada (which has its own price advantage of being a cheap way to get a McKinsey opinion on pricing).
I have a feeling that most US newspaper publishers do not believe that consumers can be convinced to pay more for their newspapers. They believe that the market sets the price somehow and it's low because that's how people see newspapers. There's also a sense that at a time when titles are being attacked by free newspapers and free information on the internet, raising prices is suicidally silly. And it certainly would be if it came without distribution innovation and product unbundling. But as I've said before, once we can deliver different papers to different people we'll be up and running as an industry again.
Ten years ago I wouldn't have believed I'd pay $3 for a coffee every day even when there's a free pot of acceptable quality stuff at work. But I do. I pay more for a hybrid car even though I know I won't save the extra money I spent on gas for 10 years. Choice, environment, product quality, passion, belief: there are all sorts of axes along which we can move to shift our price upwards.
Once we start taking distribution innovation seriously.
No comments:
Post a Comment