Why readers are worth more than the cover price

Now this, I admit, is a little sad, but I may be one of the only consumers in the Middle East who can get passionate about the issue of newspaper subscriptions. For instance, I thought it was the coolest thing on earth when I discovered that back in London, for no more than the cover price of the newspaper, I could have the Financial Times couriered to my doorstep, direct from the printing press.

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By  Tim Burrowes Published  June 18, 2006

|~||~||~|Now this, I admit, is a little sad, but I may be one of the only consumers in the Middle East who can get passionate about the issue of newspaper subscriptions. For instance, I thought it was the coolest thing on earth when I discovered that back in London, for no more than the cover price of the newspaper, I could have the Financial Times couriered to my doorstep, direct from the printing press. It generally arrived at about 4am and if I failed to beat it home it was an excellent indicator that the next working day was going to be a tough one. I became something of an FT nerd, excitedly telling everyone I knew about this marvellous service. My doorstep delivery now is Emirates Today. I get to play a daily morning game testing my speed and agility as I attempt, in one smooth movement, to open the front door and grab the paper, which is jammed under the outside door handle, before it falls to the ground, or the cat escapes. And, until last week, my weekend treat was a home delivered printout of the UK newspaper The Guardian. I say until last week, because this service, provided by a Dubai-based company called Todaily, has now come to an abrupt end, which comes as a big clue to the economics behind subscriptions. Because the real money isn’t actually in the cover price, but in what you, as a consumer, are worth to the advertiser. It’s a topic that we discuss in our live issue on page 11 this week. It’s how newspapers can afford to give readers cashback offers or vouchers worth more than they’re paying for a year’s subscription. And it explains why the Todaily home delivery economic model didn’t work. It’s all about the advertising. The more eyeballs you can deliver to advertisers, the more they will pay for advertising. And the more people who advertise with you, the more people choose to look at your advertising. And the more the punters look, the more of a response rate the newspaper delivers to their advertisers. So for locally based papers that works great — especially for classified sections. And for the same reason, it doesn’t work so well for Todaily’s international editions. Even by charging five times the cover price of local papers, it’s not enough to make the delivery costs worthwhile, without the benefit of local advertising too. But the danger is that newspapers get involved in a space race that neither can win, competing to offer bigger and bigger incentives to readers. Free phones is one thing, but where on earth do you go after that? There is also the distinct possibility that readers will stop valuing the newspaper as anything more than a by-product of the free things that they’ve been given. It’s a problem that magazines around the world have been suffering since they became addicted to cover mounting free gifts. It wasn’t unheard of for UK readers to buy a women’s magazine for the free flip flops, then drop the title straight in the bin without even opening it, let alone reading it. And there’s no value for the advertiser in that. The disease is even worse in the US, where publishers give guaranteed minimum circulations to advertisers — and if they fall below those figures then they must give hefty rebates. So specialist companies have sprung up, selling on subs at massive discounts. And another way of keeping newspapers in front of readers’ eyes is to give away free CDs and DVDs. The theory is that the reader will buy the paper for the gift, but after sampling the product will be so impressed, they’ll continue to purchase it every day. In fact, they tend to be disloyal and just buy whichever paper has the best free offer on the day. Which brings us back to the greatest benefit of the subscription model — at least it locks readers in for a year. And that offers the cat 365 opportunities to bolt for freedom.||**||

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