Papers May Survive the Net - If the Price Is Right; as Classified Advertising Migrates to the Web, Newspaper Economics Are Ripe for a Rethink

Article excerpt

Byline: PETER WILBY

ANEWSPAPER has many similarities with a pint of beer. Both go flat in a short space of time. Both can intoxicate or depress, depending on your personality and mood. Both were traditionally consumed most on Sundays. And both are sometimes carelessly discarded. So I think a Sunday paper should cost about as much as a pint (average UK price: [pounds sterling]2.05) and a daily about as much as a half-pint. As a journalist, I would, wouldn't I?

Yet the idea is not as daft as it may sound. Last weekend, The Sunday Times hiked its price from [pounds sterling]1.60 to [pounds sterling]1.80, making it 20p dearer than The Observer, 40p dearer than The Sunday Telegraph. At the other end of the market, the weekday Daily Mirror is up from 35p to 38p, making it 3p more than The Sun and 8p more than the Daily Express, whose proprietor, Richard Desmond, surely cannot long sustain the estimated cost of [pounds sterling]500,000 a week for a price cut that has modestly reversed a steep decline. The actual figures (excluding bulks, which the Express claims now to have cut completely) are up from a low of 796,592 in November to 849,001 in January. But it is still down year on year more than any other daily except the Star.

In an interview in this paper two weeks ago, moreover, Simon Kelner, editor of The Independent (70p weekdays), argued that "now is the time to be a bit more aggressive about pricing" and proposed [pounds sterling]1 for a daily and [pounds sterling]2 for a Sunday.

The economics of newspapers, I suspect, are changing dramatically. If classified advertising continues to migrate to the internet - and the world's biggest classified board, Craigslist, already has 10 million users - the business base of most newspapers will alter more radically than at any time in the past two centuries. After all, the modern newspaper began as a vehicle for advertising; until 1966, The Times had nothing but classified ads on its front page. Owners kept cover prices low because they got much, often most, of their revenue from advertising. They wanted to deliver the maximum number of readers to advertisers so they could keep the rates high.

The loss of classified - the future of display advertising is more murky, but that is threatened by the booming magazine market and cable TV as well as by the net - would turn that on its head.

Certainly, newspapers will lose readers if they raise their prices, though the relative success of broadsheets in the past year or so, despite steep price rises, suggests they may not lose as many as some fear. But provided they can charge enough to make a profit on each copy sold, they can survive and prosper on significantly reduced circulations.

This is easier said than done. The Independent, which failed to establish a foothold in classified, has always struggled to find enough readers willing to pay a premium price. To hold even a reduced readership, newspapers will need to be stronger editorially and, in an increasingly globalised world, where people want to know what is happening in Peking as well as Peckham, strong editorial costs money.

I refuse, however, to be pessimistic.

Newspapers have strong brands and many will establish them online, as The Guardian, particularly, has done.

Perhaps the web will eventually become a newspaper's main medium, with the printed version surviving as a niche luxury, rather like a leather-bound book. If so, we may be talking of vintage champagne prices, not beer prices.

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