Remember That Old Saying, “There Ain’t No Such Thing As A Free Lunch?” -- Same Apparently Applies to Those New “Free” London PM Newspapers

Philip M. Stone September 11, 2006

Associated Newspapers and News International have figured out a novel way on how to partly fund the launch of their new Free London PM newspapers – charge more for their paid-fors.

Can it be any coincidence that just one week after News International’s free PM tabloid thelondonpaper launches that the company announces a 20p price rise for The Sunday Times, from £1.80 to £2, and for The Times a 5 pence increase Monday – Friday taking it to 65 pence, but for Saturday when the edition has multiple sections it goes up 10 pence to £1.30.

At Associated Newspapers, where management has already raised the cost of their London PM, The Evening Standard, by 25% -- a 10 pence increase from 40 pence to 50 pence -- the company has also announced that its Mail on Sunday is going up by 10 pence, to £1.40, but for the moment at least there is no price increase at the Daily Mail.

In real money terms what does all of that mean? The Sunday Times has a paid circulation around 1.35 million, so a 20 pence rate hike increases circulation revenue by £270,000 a week.  Circulation at The Times is 675,000 so its increases should produce a weekly revenue increase of £236,250, combine the two and it comes to a shade over £500,000 weekly minus whatever increased sales commissions and similar that there may be.

Since Murdoch is said to have invested some £20 million into the launch of thelondonpaper, being able to recoup that initial investment in less than a year via his paid-fors isn’t bad going.

At Associated Newspapers, if the Evening Standard was to hold its 300,000 circulation – it was said to have dropped around 7,000 in the first week of the free PM newspaper war -- then the 10 pence increase would be worth some £150,000 a week and the increase from the Mail on Sunday with its 2.285 million circulation is worth £228,500 so combined its close to £380,000 weekly minus any extra costs.

Which just go to show that the buyers of those newspapers are paying for the privilege of Londoners picking up the 400,000 copies of Associated’s London Lite and the 400,000 copies of News International’s thelondonpaper.

Newspapers in the UK are being hit hard by an advertising downturn and also by circulation slides – readership of the nationals as a whole are down nearly 4% this year – so raising prices may not seem to be a way to encourage more readership, but the guys who get paid the big bucks seem to disagree. Their actions show they still believe their newspapers are too good of a bargain at the newsstand and they are continuing the trend to increase prices.

As one editor complained recently, “Why should the daily newspaper cost less than the daily cup of coffee?”

News International could well argue that its price increases for the paid-fors are necessary because the Times Newspapers haven’t made money for as long as Rupert Murdoch has owned them.

The Sunday Times offered a free Jimi Hendrix CD to soften the pain of the price increase (that promotion alone could well cost it around the  £270,000 it gets from its first week’s increase). No British newspaper has ever been as expensive as £2 before and there are some in what used to be called Fleet Street who are worried there may be sticker shock attached to the number “2”.

Other publishers see this as an ideal time to join the price-hike bandwagon. The Telegraph Group which has announced it is switching to an integrated digital newsroom as it moves to new offices across town, has also announced it is not only going to fire 133 staff including 54 editorial, but it, too, is increasing the newsstand price of its newspapers.

The Saturday edition of The Telegraph was increased by 10 pence to £1.40 and The Sunday Telegraph increases its cost by 20 pence to £1.80 – where the Sunday Times used to be.  Taken together the Telegraph Group should see an additional £220,000 weekly minus sales commissions and the like. 

These price increases may in turn start to make the British even more selective in their newspaper reading. It’s not uncommon for the British to buy more than one newspaper daily -- perhaps a quality and a scandal tabloid – but with the prices increasing as they are and the Internet becoming ever more of a player there are many analysts out there who believe people are already in the process of changing their buying habits and these new increases will see further cutbacks to buying just one newspaper.

What has hurt the vibrant British press in particular over the past five years is that it hasn’t had a really good story with long legs attached since the death of Princess Diana, and circulation has dived ever since then. With Diana, there wasn’t a day when there wasn’t some sort of news or picture exclusive that drove up circulations of all papers – tabloids and the so-called quality press – but since then it has been a hard news slog.

The papers actually did well last month – August is usually their slowest month because so many of their readers are on holiday. The plane terrorism story that caused so much chaos at UK airports destroyed the start of the holidays of many readers who were caught up at airports personally in the biggest story of the day, or were at home packing and wondering if they would get away, and they wanted to read all about it.  

Which again goes to show that when it comes right down to it, readers will flock to their newspapers, and pay for them, if they have really decent coverage of an event that affects them directly.

Which brings us back to the point that ftm has made for so long to publishers who are trying to figure out how to get their readers back – it’s the journalism, stupid.

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