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It is hard to think or write sensibly about the future of newspapers, or their place in the vast social construction of what we call “news,” without describing the personal experience of them. For instance, I’m accustomed to buying my New York Times every morning on the way to work. I enjoy the daily exchange.

But when last Sunday the dealer asked for $6 instead of $5, I decided not to buy the paper. The dealer wasn’t amused. But then the Sunday Times already seemed overpriced to me, too much fluff, too little pith, an enterprise living beyond its means. Later I performed a quick calculation.

At $18 a week, my Times habit would be costing me $936 at the corner store. I decided to compare the cost of home delivery. When I checked the paper’s website, though, I couldn’t find an annual price– just a low weekly teaser rate. That piqued my curiosity.

The Wall Street Journal, I discovered after a few clicks, charges $375 for home delivery of a paper edition (I’ve been reading it online for some years, $207 a year). And the Financial Times, to whose newsprint version I subscribe two years at a time, costs $297 annually (it’s on the doorstep by 6 a.m.). Both papers publish six days a week instead of seven, and they take holidays off.

The Washington Post, which, like the Times, publishes daily, doesn’t even bother to quote a price for home delivery. It promises only to charge “the prevailing rate,” after 26 weeks at the low teaser rate of $1.27 a week. When I phoned, I learned the regular rate for eight weeks was $49.78. That forced me to grab the calculator to come up with $324 a year, not a bad price, but I don’t live in Washington.

So back I went to the NYT website. This time I located the normal rate, in the extra-light fine print at the bottom of the teaser page – $14.80 a week. That’s $770 a year – better than the corner newsstand price, but still a hefty piece of change.

Is it worth it? Or to put it slightly differently, can the Times hope to sustain a price more than twice as high as its competitors? In both cases, my guess is, probably not.

Like other owners of newspapers, The NYT Co. (NYT) is wrestling with a remarkable reversal of fortune that has occurred practically overnight. Less than a decade ago, though the atmosphere was thundery, newspapers were coining money. Popular metropolitan dailies still enjoyed a near-monopoly on many kinds of advertising.

True, the mood then was plenty thundery. Start-ups like Craig’s List and Monster.com were moving in on the highly profitable classified and help-wanted lines. But revenues had held up well in the dot.com boom.

Then in 2002, Google (GOOG) discovered a new business model – computer-mediated search-based advertising, driven by key-words. A highly-promising new medium sprang into existence practically overnight. Advertising allocation decisions shifted dramatically in response.

Investors who’d bought newspapers on the way down, at what they had thought was a bargain price, learned to their sorrow that “low” still had a long way to go. (This is the story of the Tribune Co. bankruptcy.) Especially in the United States, the newspaper industry fell into disarray. It’s been scrambling ever since. See for example The Economist’s cover this week, Back to the Coffee House, surveying the wide range of boisterous new entrants to the industry.

Such aggressive pricing by the NYT Co. is a risky response to this brave new world. Its flagship Times is a remarkable product, it is true, and it’s possible they’ve hit on the appropriate idea, like charging twice as much for a fancy vodka in the expectation that even more people will be tempted to buy it. Somehow I doubt it, though. They are pursuing the same strategy with their subsidiary, The Boston Globe, which, as a dominant regional paper, has no close substitutes – $637 a year, compared to $323 for the Post in Washington and $390 for the Los Angeles Times. It is too soon to tell with any certainty how the Boston experiment is working, but circulation declined alarmingly.

The thing is, newspapers are focal points – among the most compelling in modern society. They thrive on network effects, meaning their value ultimately depends on the number, loyalty and quality of their customers – in other words, their circulation. The Web has given the papers powerful new leverage by extending their influence far beyond the limits of their home delivery. But there is much reason to expect that their authority will continue to derive from their newsprint editions, since, for the foreseeable future, that’s where the money is. (Print ads still cost much more than Web impressions, by a factor of ten or a hundred to one.)

Yes, there will be significantly less revenue than in their golden age. Yes, newsrooms will be smaller. But assuming the advertising industry settles down in the next few years, newspapers will remain at the top of the news value chain, thanks to the interplay of their digital and newsprint editions.

(It doesn’t help that The Economist, which likes to describe itself as a newspaper, periodically announces the death of newspapers. They did it in 2006. They were at it again last week, quoting a wide array of journalism school professors. Has no one on The Economist’s editorial side noticed that their newspaper has doubled its print circulation in the last ten years, to 1.47 million copies a week?)

An important wrinkle in the Times’ cross-platform pricing strategy has been noted by Joshua Benton, of the Nieman Foundation Journalism Lab. The new rate card offers a discount to subscribers to the digital version who consent to receive a paper copy of the Sunday Times as well — $390 a year with the Sunday paper, vs. $420 for digital access without it.

The ploy is designed to keep Sunday circulation as high as possible (the Sunday paper is famously profitable). But the differential between seven-day home delivery and digital access — $770 vs. $390 a year – will surely tip ever more people towards the online edition. Within a decade or two, the Times could conceivably have become a bulky weekly attached to a fancy webpage. It will have squandered much of its enormous influence if it does.

Is there an alternative? Yes, at least in principle. The Times could capitulate to the spirit of the age: cut back on staffing, slim down the paper, bring the price of a subscription back in line with industry standards, and concentrate on boosting circulation. Would the Times be a very different paper if they cut everything in half? It would depend, of course, on which half they cut. It’s possible to imagine a very appealing two section paper, appearing five days a week, plus the Sunday package.

What do we know about this debate within the councils of the NYTimes Co.? Next to nothing, I am afraid. Dow Jones has been especially perspicacious on the Times historically, but today Rupert Murdoch’s antipathy is well known. Most other news organizations (Bloomberg, Pearson, Conde Nast, Time Inc.) have been chary. And appearances to the contrary, the Times doesn’t – can’t – cover itself.

Executive Editor Bill Keller, 62, is stepping down from the top job in the newsroom in August, somewhat sooner than expected. (He’ll remain a writer for the paper.) Keller has publicly differed with Times chief executive Arthur O. Sulzberger Jr. on the significance of the newsprint edition more than once these last few years. Are there significant factions within the paper? In the ranks of its strategic consultants? Among the high-minded and long-suffering cousins who control the company, through their ownership trust? There will be answers to these questions in the future, but for the present, loyalty outweighs both exit and voice.

For now, customers like me are faced with a trilemma. Do I continue to pay twice as much, for a newspaper that, generally speaking, I don’t have time to read, feeling slightly euchered all the while? Do I surrender to its tilt to digital consumption, presumably hastening the demise of the weekday print edition that I prize? Or do I simply quit buying the paper altogether, in protest? It is a cruel choice. Bare-knuckles for them, white-knuckles for those who prefer newsprint.

Source: A Bare-Knuckles Pricing Strategy for The New York Times