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Call it the Frank Rich Discount: The Sunday New York Times moves from premium product to loss leader — and the best deal for digital access

It’s a truism that subscribing to a newspaper (in America, at least) never actually covered the cost of reporting, printing, and delivery. The traditional breakdown for a U.S. paper was 80 percent of revenue from advertising, 20 percent from circulation revenue. The goal was as mass an audience as you could assemble, so newspapers were willing to subsidize a low cost for the end user — 25 cents at the newsstand! eight bucks a month and we’ll hire a child to deliver it to your front lawn — to reap the rewards in ad dollars.

But that was before the Internet, and the circulation story of the past few years has been newspapers hiking their circulation prices — arguing that, as subscribers drop dead or discover the Internet, the loyal few(er) who remain should pay more of the freight. The Boston Globe now runs $637 a year for 7-day home delivery; The New York Times costs $769. Price increases like those have led to realities that would have seemed bizarre to a newspaper owner in 1980, like NYT circulation revenue actually passing ad revenue for a quarter.

But the new New York Times paywall announced today is, in some odd way, a return to that drive for print circulation at all costs: The Times is now actively subsidizing both the print paper and delivery. It’s now less than free — considering the high rates they’ll now be charging for online access and that the full digital bundle will come free with any print subscription. And yet, if my math is right, it’ll actually make the Times more money.

Let’s say you’re a multiplatform kind of guy and you like the Times’ stories on the web, on your iPhone, and on your nifty new iPad. How much will that cost you?

Option 1: You can buy their top-tier “All Digital Access” bundle, which gives you nytimes.com in a browser, the Times’ iPhone app, and the Times’ iPad app for $35 every four weeks — or, since that odd timetable sneaks in a 13th payment each year, $455 a year.

Option 2: You can subscribe to Sunday-only home delivery of the Times, which comes with the “All Digital Access” bundle at no extra charge. Your cost, at least if you live in the Boston area: $30 every four weeks, or $390 a year.

That’s right: The New York Times will now pay you 65 bucks a year to accept the Sunday paper into your life. (And onto your lawn, although probably not delivered by a child at this point.)

Call it the Frank Rich Discount, in honor of the just-departed Sunday Times columnist who moved to New York magazine a few clicks before the paywall’s arrival.

Who counts as a subscriber?

The Internet has thrown the definition of a “subscription” into a blender, but generally speaking, the Audit Bureau of Circulations has demanded that, for something to count as a subscription, the customer has to pay something for it. That’s why we’ve seen such shenanigans with the pricing of digital-replica e-editions, whose actual usage ranks somewhere around that of cassingles and Commodore 64s, but which get counted as “subscriptions” even if they charge even a penny over the home delivery rate.

But for this subset of digitally oriented subscribers — a subset I suspect will shortly include me — the Times isn’t even getting that penny. They’re giving up 125 of them every week for the privilege of putting a +1 to the print subscriber total that they show to advertisers. Who would have thought the Sunday New York Times — the inarguable jewel of American newspapering, the single most expensive and single most prestigious artifact of a centuries-old industry — would be turned into a loss leader, the equivalent of the Safeway pricing milk and sugar cheap so you’ll come in and pay the big bucks on frozen dinners?

But here’s the wrinkle that makes this a sensible choice for the Times. While it’s possible that the Times has cut a special deal with Apple, the more likely version of events is this: A print subscriber who gets “free” access to the digital bundle lets the NYT Co. keep 100 percent of the subscription revenue generated. A digital-only subscriber — at least any who pay from inside iPhone and iPad apps — will have 30 percent of his revenue sent to Apple. If that’s true — and it fits with what we’ve been told — then the Frank Rich Discount actually makes the Times an extra $71.50 a year for those customers.

That’ll pay for at least some of the gas in the delivery trucks. And it means that, if your (worthy) goal is to support the Times, but you don’t really want a daily print newspaper, the Frank Rich Discount is the most cost efficient way to do it. You save more money ($65 a year), the Times makes more money ($71.50 a year, at least before delivery/printing costs), and you get an actual, physical Will Shortz crossword puzzle to fill out every week.

What to do with the paper?

The only tradeoff of the Frank Rich Discount is that you have to take the Sunday paper, whether you want it or not. Not a great hardship, surely, but some folks really don’t want a new four-pound stack of newsprint every weekend to instill a sense of civic-minded guilt in the whole family.

So maybe it’s time for some creative solutions. Want the digital bundle? Subscribe to the Sunday paper, get the digital bundle for (less than) free — but have the Sunday Times delivered to a local library instead of your house. Or a community center, or a nursing home. Or, if you’re feeling cheeky, maybe directly to a recycling center, or a Boy Scout camp for kindling? That moves the Frank Rich Discount from win-win to win-win-win.

                                   
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  • Jackfenton

    The point is that the Sunday paper has the bulk of the print advertising, which is far more lucrative than anything online. So if they build up Sunday circulation, they improve ad revenues. Why this is so hard for you to figure out is the better question.
    Jack Fenton

  • http://www.facebook.com/martin.langeveld Martin Langeveld

    Snarkiness aside, Jack Fenton is correct: it is in the Times’s best interest to have you as a Sunday subscriber in print, because in that Sunday package is a ton of preprint advertising from big box stores and others — the last ad category for which newspapers can still charge quasi-monopolistic prices because the retailers still have not figured out how to get themselves off that drug. To drive traffic to their stores week in and week out, they *must* get that circular into as many homes as possible at a reasonable price, and newspapers offer that service. As soon as the retailers figure out how to deliver the same ad content to a tablet and get similar results, that game is over for the papers, and this pricing scheme would be abandoned. (See AP iCircular, a project aiming to develop such a digital circular.) Typical Sunday preprint rates at a paper like the Times would be on the order of $20-$30 per thousand. If there are 25 circulars in the Sunday paper, that’s 50-75 cents per week or $26-$39 per year per subscriber, plus the value of the ROP ads and classifieds — all in all more than balancing out the entire $65 discount. For now.

  • http://www.niemanlab.org/ Joshua Benton

    Yes, Jack, as I said in the piece — but the point is that basic fact was just as true yesterday as it is today, and the Times has not traditionally paid people $65 a year to take the Sunday paper.

    In fact, the dramatic circulation rate hikes we’ve seen in the past few years have been about the exact opposite — actively trimming circulation to reduce the churn of discounted/disloyal subscribers and leave behind the fewer people who really, really want the print paper. This goes in the opposite direction — again, not unreasonably, for the reasons I outlined, but it is the opposite direction.

  • http://www.niemanlab.org/ Joshua Benton

    Martin, I think the pre-print argument is absolutely 100% correct for 99% of newspapers, but are preprint big-box circulars really a big business for the NYT? I’ve never been a NYT home delivery subscriber, but there are basically no preprints in the Sunday newsstand edition. And I’ve got to think Best Buy et all would not view the NYT as the mass target for anything, since NYT subscribers are a tiny fraction of total newspaper subscribers in any non-NYC-area market. (Wouldn’t you put Best Buy circulars in the Boston Globe instead of the NYT if you wanted to reach Boston-area consumers, for instance?)

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  • http://twitter.com/nikkiusher nikkiusher

    josh, how do you think all the premium service journalism features into the sunday subscription frank rich discount idea? this brings a lot more readers to say, T magazine.

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  • http://redesignmobile.com Rocky Agrawal

    Target has a wonderful iPad app. Much better than their printed circular. And I don’t have the environmental guilt using it.

    http://redesignmobile.com/2010/11/22/target-ing-ipad-savvy-shoppers-with-a-fresh-take-on-paper/

    They also have done a better job making the transition from paper to tablet than most newspapers have.

  • http://www.facebook.com/martin.langeveld Martin Langeveld

    Right, this is a NYC metro area issue. Maybe somebody could weigh in with a typical Sunday (or Saturday home delivery) preprint count in the Times in NY metro area.

  • http://www.facebook.com/martin.langeveld Martin Langeveld

    Right, this is a NYC metro area issue. Maybe somebody could weigh in with a typical Sunday (or Saturday home delivery) preprint count in the Times in NY metro area.

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  • Arby Writer

    And the discount gets even better! This weekend, I stopped by a NYT kiosk in the Boston area which was promoting the print version for 50% off for the first SIX months (if I let them bill my credit card). Bringing my total Sunday plus total digital outlay to $91 for the first six months of this experiment!

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  • http://www.facebook.com/bobkfoster Bob Foster

    $30 every 4 weeks? I signed up for the Sunday times at $15 a month, the price of the least desirable online subscription.

  • Cas127

    “the fewer people who really, really want the print paper”

    Or who pay using other people’s money (libraries, schools, colleges, governments, etc.).

    The NYT circ list is getting to have all the legitimacy of the book “sales” figures for political payola, er, biographies…

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  • jrc+

    If you don’t want the dead trees delivered to your doorstep, use this address:

    The New York Times Company
    620 Eighth Avenue
    New York, NY 10018
    (212) 556-1234

  • Ernie50Johnston

    Your win-win-win solutions are VERY clever and actually do good for whole groups of people who are lacking in resources. Bravo!

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  • http://twitter.com/pricingright Rags Srinivasan

    The power of the distribution channel (Apple) is amazing. Its 30% fee is driving NYTimes to seek arbitrage through other means. Sooner or later when print Ads all dry up they may still mail though first class mail, a single sheet “Sunday Edition” to not pay the high cost of digital distribution.

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  • http://twitter.com/pwthornton Patrick Thornton

    Most stores would expect to make part of the sale price from a product sold in their stores. See other business models such as Whole Foods and Target.

    Apple makes very little profit from the app store, by the way. And it costs nothing to offer a Web page viewable on Safari, Apple’s best-in-class mobile browser on the iPhone and iPad. In fact, nytimes.com is significantly better than the iPad app on the iPad.

  • http://twitter.com/pwthornton Patrick Thornton

    All that is true. No one is denying that the Sunday paper makes a lot of money.

    All Joshua is really saying is that the New York Times will lower the cost of subscribing to their content if you take another medium on top. If you just want online — which many people do — the Times will discount your subscription and throw in the print product as a freebie. Even though it obviously costs them money to print and send you that printed copy that you may not want, they still make subscribing cheaper.

    It’s curious on a few levels. The Times and other paper’s have made a concerted effort in recent years to raise subscription and newsstand rates to generate more revenue and demonstrate the value of the print product. This has the opposite effect. The Times is willing to essentially throw the print product in for free and give you a discount.

    While we may understand why that is, the average consumer certainly won’t. I can’t imagine that it will convince people of the value of paper.

    It’s also curious because while it may raise Sunday circulation, it may very well lower the quality of each subscriber. How much value does someone who is getting the Sunday edition only so they can get an online discount really worth?

    It also demonstrates how poorly The New York Times is at selling advertising for its digital products and how many advertiser and ad sales people are behind the times. The Sunday edition won’t be around forever to rely on as a cash cow.

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  • Anonymous

    tinyurl.com/24n4nqb

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  • Tim R

    I don’t think you beat the whole “Frank Rich” adumbration into the ground enough.