Friday, March 02, 2007
Are “the new frees” building dangerous expectations?
The great thing about the new breed of free papers — those ones distributed to commuters — is they’ve legitimised the free as a newspaper format within the industry by showing they can get readers by providing quality content.
The potentially bad thing could be that they’re building dangerous expectations among the mainly-young economically-active readers advertisers want most that they can expect and get a decent read for free.
So why should they ever pay again?
That, surely, is the danger to the paid-for papers they’ve created through the dash to get readers at any cost. Look at the Evening Standard in London, which is haemorrhaging readers because of the war between the two quality frees being thrust at the city’s commuters.
The question many newspaper executives must be asking themselves is will we ever get these readers to pay for a paper again?
It’s just like the covermount wars amongst the magazines and tabloid papers — by raising buyers’ expectations all you do is increase everyone’s costs and ensure mutually-assured destruction in the form of ever-rising costs and ever-decreasing profits as the costs of promotions rise as the stakes in the game do too. If you don’t have a decent covermount you don’t sell. If you do, your profit goes down. Either way, no-one wins.
Anyone who’s studied Game Theory will recognise this as the game known as the Tragedy Of The Commons, in which all the farmers lose out because they all act selfishly by refusing to rein back on the grazing of the common grassland. It’s exactly the same in the North Sea with the illegal landing of fish over and above quotas – the fishery suffers and everyone loses out because no-one was prepared to show proper control for the common good. They all act selfishly thinking only short-term.
So in the long-term, if the new frees keep going as they are, cover prices can only come down in response to reader reluctance to pay for quality papers. And some groups might be forced to drop cover prices altogether.
Over time all groups could see their cover revenues reduce as their costs go up, leading to less profit and an eventual consolidation of the groups as the weakest ones are forced out.
More consolidation in any industry generally leads to less choice and less price competition as it goes into oligopoly.
But will readers by then have refused to pay for papers at all, instead getting their info online and through frees only? Could it lead to the death of paid-for papers as we know them?
Who knows. But the current dash to maintain overall readerships through commuter frees could endanger paid-fors long-term.
Only time will tell.
The potentially bad thing could be that they’re building dangerous expectations among the mainly-young economically-active readers advertisers want most that they can expect and get a decent read for free.
So why should they ever pay again?
That, surely, is the danger to the paid-for papers they’ve created through the dash to get readers at any cost. Look at the Evening Standard in London, which is haemorrhaging readers because of the war between the two quality frees being thrust at the city’s commuters.
The question many newspaper executives must be asking themselves is will we ever get these readers to pay for a paper again?
It’s just like the covermount wars amongst the magazines and tabloid papers — by raising buyers’ expectations all you do is increase everyone’s costs and ensure mutually-assured destruction in the form of ever-rising costs and ever-decreasing profits as the costs of promotions rise as the stakes in the game do too. If you don’t have a decent covermount you don’t sell. If you do, your profit goes down. Either way, no-one wins.
Anyone who’s studied Game Theory will recognise this as the game known as the Tragedy Of The Commons, in which all the farmers lose out because they all act selfishly by refusing to rein back on the grazing of the common grassland. It’s exactly the same in the North Sea with the illegal landing of fish over and above quotas – the fishery suffers and everyone loses out because no-one was prepared to show proper control for the common good. They all act selfishly thinking only short-term.
So in the long-term, if the new frees keep going as they are, cover prices can only come down in response to reader reluctance to pay for quality papers. And some groups might be forced to drop cover prices altogether.
Over time all groups could see their cover revenues reduce as their costs go up, leading to less profit and an eventual consolidation of the groups as the weakest ones are forced out.
More consolidation in any industry generally leads to less choice and less price competition as it goes into oligopoly.
But will readers by then have refused to pay for papers at all, instead getting their info online and through frees only? Could it lead to the death of paid-for papers as we know them?
Who knows. But the current dash to maintain overall readerships through commuter frees could endanger paid-fors long-term.
Only time will tell.
