HOME
          
LATEST STORY
The newsonomics of auctioning off Digital First’s newspapers (and California schemin’)
ABOUT                    SUBSCRIBE
March 24, 2011, 10 a.m.

The newsonomics of Sunday paper/tablet subscriptions

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

Digital news business models are playing out on pool tables these days. Break the balls and you have no idea where they’re going or how they’ll impact each other.

We’ve got paid content models of varying kinds. We’ve got the new combining “free world” of AOL/Huffington Post+ taking aim at the emerging paid world. We’ve got continuing revolutions in advertising models and technologies. We’ve got the knitting together of professional publishing and higher-end “amateur” publishing. And we have the biggest introduction of a digital device, the iPad, that we’ve ever seen, while smartphone adoption continues to create a news-anywhere world. Draw back the pool cue, punch a ball, and new patterns emerge — some planned, many quite unintentional, and maybe a few dramatic in their impact.

This week, The New York Times is scattering balls all over the news publishing table, introducing its pay system in the United States on March 28. The potential unexpected dramatic impact: the makings of a new business model. It’s a simple idea really, and one that hatches both out of the Times’ pricing models and the emergence of the tablet as the first real replacement-for-print reading device.

The idea: a Sunday newspaper/tablet subscription. And it’s an idea that over the next three to five years could prove a real transition strategy for metro dailies as well, as well as community ones.

You don’t see the Sunday newspaper/tablet subscription called out in any of the Times’ announcements, or on its pricing page, and there’s a fair amount of subterranean speculation as to the Times’ intent — but more on that below.

I talked to a number of people in the days after the Times’ announcement who had quickly done the math in their heads, and figured out that the Sunday print subscription, giving them all-access to Times’ digital delivery, was the best deal that they could cobble together. (The Times is including complete digital access to any print subscriber, at no extra price. The Lab’s Josh Benton called it the Frank Rich Discount.)

Let’s take a quick swipe at the newsonomics of the idea, following up on last week’s broader look (“The Newsonomics of the New York Times Pay Fence“) at the plan. In the New York market (where it has something less than half of its circulation), the Times charges $4.90 a week, or $252 a year, for its Sunday subscription. Outside the metro area, the rack rate is $7.50 per week, or $390 per year. That’s the full rate, but it’s easy to nab the introductory rate of $3.70 per week, or just $192 a year. And if you don’t like that, choose from the Times’ many options: Monday-Friday, Sunday only, Saturday and Sunday, Monday-Saturday, Friday-Sunday, Sunday-Friday, seven-day….who says newspaper publishers aren’t flexible?

Now, let’s do the new digital-only pricing plan math. The Times gives me tablet and online (desktop, laptop, but not smartphone) access for $20 every four weeks, or $260 a year. Why not pay $68 less, and get the Sunday paper in addition to the tablet access? How many print subscribers have decried the daily papers piling up, an eco-unfriendly lifestyle, and wondered what to do, especially as they find more of their time going to digital reading, of the Times and other news? In fact, with the savings, by dropping seven-day print, at $600 or $700 a year, you could pay for a shiny new tablet within two years!

The Sunday paper gets you plenty of reading for a week; the Times has impressively built up the product, even through the recession. European papers have long thought of the Sunday or weekend product separately from the daily, with most of the U.K. quality press still having differing nameplates and staffs for Sunday and daily; the Americans are just playing catchup here.

Yes, I’m focusing on the tablet here because I think it will offer us the best replacement-for-print experience over time. Clearly, though, many readers find the online web clearly suitable as a replacement as well, and this Sunday/online access package works even just as well for them.

In fact, one impact could be to provide a boost to Sunday print circulation. Across the country, Sunday circ has declined at close to the rate of daily, though there’s a fair amount of nuance here. In the last semi-annual report, the Times’ Sunday circulation was down three percent, compared to six percent for daily.

We’re focusing, in this moment, on reader revenue, but it’s still ad revenue for the Times and nearly all dailies that represent their biggest income. Here, too, the Sunday print/daily digital access plan holds a lot of promise. Sunday has always been a big day for daily publishers, but through the last decade, it’s become a bigger day. In fact, Sunday isn’t just the biggest day; it’s fast becoming the pivotal day. In fact, current profitability can often rest on Sunday.

I asked Randy Bennett, senior vice president of business development for the Newspaper Association of America, about the importance of Sunday advertising. “Sunday provides the most ad volume and although NAA doesn’t track profitability by day, we hear from many newspapers that Sunday is their most profitable day and much of that is driven by preprints,” he says. “For some newspapers, 80–100 percent of profitability for Sunday is preprints. That’s why so many newspapers are focusing on Sunday circulation strategies to boost distribution and continue to provide a broad footprint for preprint advertisers.”

Or as Jim Moroney, the Dallas Morning News publisher, puts it: “Sunday is the bread-and-butter of ad revenue for newspapers.”

Remember how the Detroit papers cut back to three and four days of print publication, in the dark days of the deep recession, two years ago? They are still on that publishing schedule, and here’s the key reason why: They retained 93 percent of seven-day ad revenue when they went to new model, says Dave Hunke, now publisher of USA Today, and the guy who, as Gannett’s lead in Detroit, led those changes.

You can figure that Sunday provides 35 percent or more of many metros’ print ad revenue. Add in one or two other days of print during the week, as Detroit has done, and you pick up another “total market circulation” day, the day when other mass-aimed advertising is delivered through inserts, as well as mass-oriented, in-paper display advertising. That’s how you get closer to that 93 percent number.

Publishers could keep daily print, with reduced products and revenue expectations, or follow the Detroit lead, and by 2015, say, no longer be in print daily.

So, the math is clear, and aspirational. Keep the Sunday reader, the Sunday reader income, and the Sunday ad revenue. Keep the daily attention of readers through digital access. Package the Sunday and daily directly — or indirectly. Manage down your print costs as quickly as you can, laying the foundation for a mainly digital 2020 world.

Sunday could be the linchpin in that strategy, keeping enough traditional revenues in place as the great migration — as said WSJ publisher Les Hinton, recently, “The issue is balancing out the migration” — continues.

This isn’t an easy strategy to pull off (and there are many other strategies falling out of the plan), but it’s at least a new route. There are many question marks. Among the top ones: how digital ad revenue will develop on the tablet and smartphone and change online, and how long newspapers can keep those preprints as merchandising goes increasingly digital. But a combination of Sunday print and emerging daily digital reader and ad revenue gives publishers something to work with, and lots more than they had a couple of years ago.

Is the Times’ Sunday paper/tablet subscription a stealthy back-door plan, or an unintended consequence of the new scheme? The Times’ Martin Nisenholtz told All Things Digital’s Peter Kafka, “I can’t remember a single discussion where we linked the digital price point to our print subscriptions.”

Really? I’m not sure how you can spend 14 months planning a new system and avoid the topic, since 80 percent of the Times’ sustenance still comes from print.

In the end, it doesn’t make much difference. The Times prices; readers adjust and work the system; the Times adjusts. And so on. Meanwhile, the rest of the daily press, in the U.S., Europe, Latin America, and Asia, may find out whether a new business model, out of a planned or unplanned pregnancy, may have been born.

Photo by infinitewhite used under a Creative Commons license.

POSTED     March 24, 2011, 10 a.m.
SHARE THIS STORY
   
Show comments  
Show tags
 
Join the 15,000 who get the freshest future-of-journalism news in our daily email.
The newsonomics of auctioning off Digital First’s newspapers (and California schemin’)
More than 200 newspapers are up for sale — as one group, in clusters, or one by one. Where they go could have a big impact on how the industry will look in the coming years.
Could a Bay Area news nonprofit take over some of its biggest newspapers?
There are plenty of reasons for it not to happen. But news nonprofits could end up being vehicles for civic-minded locals to take over dailies as they continue to drop in value.
Through The Wire: What happened with The Atlantic’s experiment in aggregation?
The Atlantic invested years and money into figuring out what they wanted The Wire to be. Now, after relaunching and promising reinvestment, the site is being brought back under the wing of its parent.
What to read next
751
tweets
Wearables could make the “glance” a new subatomic unit of news
“The audience wants to go faster. This can’t be solved with responsive design; it demands an original approach, certainly at the start.”
677Designer or journalist: Who shapes the news you read in your favorite apps?
A new study looks at how engineers and designers from companies like Storify, Zite, and Google News see their work as similar — and different — from traditional journalism.
594Ken Doctor: Guardian Space & Guardian Membership, playing the physical/digital continuum
The Guardian is making its biggest bet on memberships and events by renovating a 30,000 square foot space to host live activities in the heart of London.
These stories are our most popular on Twitter over the past 30 days.
See all our most recent pieces ➚
Encyclo is our encyclopedia of the future of news, chronicling the key players in journalism’s evolution.
Here are a few of the entries you’ll find in Encyclo.   Get the full Encyclo ➚
New West
Medium
ProPublica
The Blaze
The Daily Voice
Publish2
Press+
FiveThirtyEight
Newsday
Topix
Poynter Institute
Placeblogger