Why papers are less popular but more expensiveSeptember 27, 2013
On the surface, it doesn't make sense: as newspapers become less popular, they become more expensive for readers.
Fairfax is the latest publisher to flag cover price increases for its Sydney Morning Herald and The Age: www.theaustralian.com.au/media/fairfax-plans-cover-price-increases/story.
One thing is certain - it won't help to sell more papers. Initial data from the UK shows a recent price increase there has affected circulation: www.theguardian.com/media/2013/sep/26/sun-on-sunday-sunday-mirror-sales-drops.
But newspaper companies are increasingly left with no choice as their classifed and display advertising revenues fall. The once mighty 80-20 model (80 per cent advertising revenue/20 per cent circulation revenue) is long gone. Newspaper companies still need revenue but they know that asking advertisers to pay more is a tough ask.
So it comes back to the reader and, when some newspaper companies sell millions of papers each week, a little increase can go a long way while the scramble for a more sustainable revenue model continues.
The key to handling the price rise is communication with readers. The worst backlash comes when publishers notify readers of the price rise on the day of the increase. But some smart publishers have got well ahead, even shipping out thousands of 10-cent coins to newsagents as a goodwill measure for readers who have not brought the extra money.
But publishers know there are only so many times they can ask readers to pay more. It's not a long-term solution.