Could News Ltd take its newspapers free?
There’s growing evidence that News Ltd is joining newspaper proprietors in other parts of the world in thinking the unthinkable – and in Australia’s case, I think that may mean taking the company’s metro newspapers free.
Right now, I believe that senior staff at News Ltd are looking at the economics of it.
The evidence is not conclusive – indeed when I put it to Greg Baxter, News Ltd’s director of corporate affairs, last week he flatly denied it.
But four pieces of the jigsaw hint in that direction.
1. The word “free”
Most recently came the comments of News Ltd’s editorial director Campbell Reid, which were broadcast over the Easter weekend. Towards the end of a debate on ABC National ‘s Saturday Extra programme, he used the word “free”. (It’s worth looking at the transcript, by the way – it was an excellent debate.) He told the audience:
“In five years time, newspapers will be significantly altered by the financial pressure of the changing forces in advertising. And some of them will look different, feel different, be thinner, smaller, fatter, wider, come out on different days, be at a different price, potentially be free.”
And earlier in the same debate, he said: “I’m not pretending that like the executives at The New York Times, we at News Ltd aren’t lying awake at night thinking about how we get ourselves through not only this economic downturn but a structural revolution, in the way information is consumed. But can I say this to you: that as we wrestle with these problems at News Ltd, we’ll give up on a lot of things in order to keep our business afloat, but the last thing we’ll give up on is good journalism.”
2. The word “reach”
Second, was a conversation I had last week with somebody close to the sales operation of one of the tabloid mastheads. This person’s problem was simple – it’s hard explaining to advertisers why your circulation is 5% less than last year but you want 5% more yield. This person would much prefer to be doing sales on a product that reaches twice as many readers, even if it’s free. For this person, reach will decide the paper’s fortunes.
3. The word “reach” again
Third came last week’s announcement of the mysterious group project director role for Shane Rodgers. Again, it’s possible to over-analyse these things, but chairman’s John Hartigan’s words also included that word reach. The project or projects marked, he said: “significant investment in journalism with the aim of improving the quality and reach of our mastheads”.
So something big is brewing at News. A couple more things to throw into the mix. David Penberthy – the man behind the soon-to-launch The Punch currently has a weekly column in Sydney’s Daily Telegraph. It’s over a generous DPS. It’s a design that could just be testing how the audience reacts to opinion pieces written originally for the web.
4. The bigwig comes to town
And fourth there was this month’s visit to Sydney of Robert Thomson, editor of the Wall Street Journal, on a “holiday” that seemed to be mainly spend in the Holt Street offices.
So let’s take a scenario of how News Ltd’s portfolio might look in five years’ time?
The metro titles – Sydney’s Daily Telegraph, Melbourne’s Herald Sun; Brisbane’s Courier Mail, the Adelaide Advertiser and maybe the Mercury in Hobart and Cairns Post – effectively become one free, locally editionised daily, perhaps updated with an afternoon edition where MX, News Ltd’s freesheet, already has a footprint (Sydney, Melbourne and Brisbane).
They then carry far more comment content, generated by The Punch. Perhaps with a model where there’s a separate news team with an editor in each city, but uniform features content? The streamlining of the News Ltd features desks in Sydney and Melbourne suddenly makes sense.
The audiences on offer to advertisers would dwarf anything that Fairfax’s titles – assuming they remain paid – could offer, potentially pushing them into an ad revenue death spiral. And for Rupert Murdoch, publishing strategy is often simply about hurting your opponents more than you hurt yourself.
Clearly there are obstacles. How would they distribute? Do they pay newsagents to do it for you even without a cover price revenue? Do they need them? If not, are they willing to sound the death knell for the Australian newsagency industry? Intriguingly, I gather that most of News Ltd’s contracts with newsagents are due to expire or be renewed in the next couple of months – so it’s an opportune time for a renegotiation of terms.
And there are unknowns. How would Fairfax respond? If Kerry Stokes had acquired Fairfax by then, what would adding The West into the mix do to the model? Would it unbalance the cosy WA arranagement of News Ltd Sunday Times and Stokes’ The West on weekdays, with neither one pushing too far onto the other’s turf? Does an Asia Pacific edition of the Wall Street Journal enter the mix?
Or could there be a halfway house? In London, the Evening Standard gave away Standard Lite while maintaining a paid edition as a means of giving advertisers greater reach.
What does seem obvious is that News Ltd does not intend to simply ride this out. Something is in the air.
From what I can glean, the conversations at News are at an early stage and decisions haven’t been taken. But if the move to free happened, it would be as dramatic as when Murdoch killed the print unions by moving the printing of his British titles to Wapping overnight (and in the process saved the country’s newspaper industry).
A move to free would be just as risky – and typically Murdoch.
Tim Burrowes – Mumbrella
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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Gosh. That’s some speculation…
Here’s why I think it COULD work: because advertising clients are idiots. I’ve been in enough meetings with clients to know so many of them DON’T understand audiences and quality of audiences but are simply looking for a big number. If News can deliver a dramatically bigger readership number clients will respond (I accept the argument you can’t push for rate increases as circulation declines).
Here’s why I think it WON’T work (and probably WON’T happen): because it’s a band aid. It misses the point. And if News Limited is spending ANY time on it they’re more deluded and incompetent than I thought they were. I know I sound like a broken record, but the game is NOT to save newspapers. The smartest people at News should be figuring out how to make digital much more profitable. The race should be to become the FIRST to stop printing because the online model works, not to be the last. It only delays the inevitable. Use the downturn to start the shift NOW, don’t wait for things to get more desperate.
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To reinvent themselves, papers have to decide what, if any, content has on-going value that they can charge for. Many of us like reading papers over breakfast, on the train/tram/ferry, relaxing on the weekend, etc. So there must be a way to publish content that is less time-sensitive that punters will pay for ie. opinons,lifestyle, comics, crosswords, etc. (maybe not a daily tho). Their online versions should be where up-to-date, events-based news coverage is found.
Dividing print and online ‘content’ might save the printed version. Just replicating each other is a slippery slope to the death of printed newspapers!
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Thanks for your comment, Jason.
The quality of audience argument is a totally valid one. But that doesn’t necessarily vanish with free papers.
In the UK, Associated managed to actually get a premium out of its freesheet Metro on the basis that this was a hard-to-reach, cash-rich audience of commuters. If you saw people racing to pick it up you’d tend to agree.
MX hasn’t totally won that argument yet, but I’d argue that it suffers from a certain level of journo-snobbery and is well tailored for its audience and in that respect a better product than many people give it credit for.
And Tim N, you certainly do describe a product worth paying more for – but isn’t it halfway to being a magazine?
Cheers,
Tim – Mumbrella
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This all seems very well informed. I wonder if a kite is being flown for News to see how the market reacts
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Wow, this is huge. I wonder if magazine publishers will start considering the same thing too.
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This video from TED via Merge blog is an interesting aside. It looks at how radical re-design can positively influence circulation.
http://mergeblog1.wordpress.co.....ko-on-ted/
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This would instantly change the newspapers to a distribution (sorry, reach) model requiring the titles to be CAB audited rather than ABC. So, with the potential changes to the CAB requiring ‘proof of request’ for freely distributed titles, how will the major newspapers do this on a daily basis. Advertisers are demanding tranparency in regards to how many people, and who exactly, receive the publication. Selling on reach alone may give you a bigger number and may appear to help a sales team, but this could all be in vain if the ‘reach’ cannot be qualified under the proposed new rules. Magazines must play by these new rules – will the newspapers be expected to do the same?
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Hi DADW,
Maybe somebody from the CAB / ABC could answer that technical point (Gordon – are you out there today?) but I suspect that the technical rules of an audit body would not be a major factor in News Ltd’s thinking. I presume that if it happened it would be similar to whatever the mechanism is for MX at present.
Cheers,
Tim – Mumbrella
My question would be how would they retain the distribution they currently have? Newsagents/servo’s etc would have no reason to stock them … not sure they could have MX Style bins in public spaces across the nation without a massive potential litter issue.
Hi Ben,
I reckon that’s the make-or-break question. Presumably the only possibility would be a dramatic renegotiation of terms with newsagents that was no longer based on a payment-per-newspaper model.
Interesting conspiracy theory. It has been done before: Microsoft gave away IE to kill of Netscape, is the example that springs to mind.
And, of course, Google specialises in the the economics of the giveaway, proving that you can make money out of giving stuff away for no charge.
But if you accept that, then everything Rupert and Robert Thomson recently said about how giving it away for free online was something that could not be sustained is also part of that conspiracy.
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Very interesting – but distribution would be the key, as already mentioned.
MX is only handed out in the major CBD areas, as its costs News for the labour. A flat fee?… would retailers pay for a loss leader to get customers in the door? Only if that boughgt them some sort of exclusivity. A bit too intangible for the average Joe or Apu I’d imagine. A license to sell? Might wortk for big ticket items like petrol but not for newsagents, as its often only the paper that drives consumers into the shops in the first place.
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Thought provoking as always Tim.
A free edition or a halfway house is certainly one direction News or Fairfax could go, especially when you consider what Alan Murray, deputy managing editor of the WSJ (and executive editor of WSJ Online) has said about building reach:
“Don’t charge for the most popular content on your site. That’s the been the mistake that some people have made in the past. Items with broad appeal are better used to build traffic that can be turned into advertising revenue.”
(From an insightful interview over at the Nieman Lab: http://www.niemanlab.org/2009/.....of-wsjcom/)
What better way to build reach than making your most popular newspapers free. Charge a subset of your subscribers at higher prices. Charge advertisers higher rates for more ads appearing to more readers.
One other direction that newspapers are looking at (particularly NYT and The Guardian) is charging for platform access, eg. Data APIs. For example, the NYT recently released hyperlocal blogs with the intention to license redistribution of the hyperlocal platform instead of charging readers or even advertisers.
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The CAB audits the entire distribution of a publication and reports how the publication reached the recipient. CAB’s recent rule changes increase the transparency of the audit process with further analysis of bulk distribution and encouraging publications with high volumes of mailed copies to report requested recipients.
A daily newspaper could report requested copies if it maintained high subscription volumes which would remove the need to track proof of requests on a daily basis. Either way the CAB audit will offer total transparency of the distribution process.
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Please excuse my ignorance, but could it be possible that considering that most (if not all) contracts with newspaper publishers are shortly due for renewal, could Fairfax (for example) stipulate in the new contract that in order to keep our supply of “The Australian” et al. that is compulsory to keep ” The Free Daily” and the associated record-keeping of daily/weekly/monthy distribution/collection of said paper?
If that is the case, all newsagents & distributors of “The Free Daily” would either have to forcibly submit to the new terms & conditions in order to keep their existing supply of Fairfax publications or drop Fairfax altogether……..Is this a possible scenario? And if so…….where do I insert the sharp end?!
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Hi Bangers,
I guess in any contract negotiation one side can ask whatever they like, and the other can choose whether to accept it or not.
And in this case, as far as I know it’s News Ltd rather than Fairfax that may be thinking about this.
Cheers,
Tim – Mumbrella
At the end of they day it is all about circulation numbers. But the Publishers have to ask themselves who are there current customers and why do they choose to purchase either the Age or the Herald Sun or the local paper. The prices are different, so is it the price or the “content “. At our small country town, we currently have 2 local free papers each week, but still manage to sell 12 times more local and city papers, that we charge for, so it must be the “content”. And if we were to charge 5cents for the free paper, I am sure distribution would drop. A subagent/ Service station does not rely on newspaper sales to boost his petrol sales, so if he was not getting income from the sale of the Newspaper, I am sure he would not waste his time having them, which would lead to less distribution. If the Newsagent distributes papers to his 10 subagents, and delivers to his 300 plus customers, is not going to get paid appropriately, then will he give the same effort he currently gives. The home delivery customer may only visit his shop once a week to pay his account, no deliveries, and the customer comes to his shop 7 days a week to collect his free paper, more opportunity to sell him something else in his shop. Which is the best situation? The free paper, will in doubt cut the cost of distribution, cut back circulation, cut back jobs, and there is no point advertising to people who have no money to spend because they have no job. This is all “ just another persons opinion “ but the person who makes the decision on free papers, will not be able to turn back the clock, will still have his top level income, and just say “ well that didn’t work, oops “
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Also News Corp is not particularly good in picking up advertising. Fairfax does much better with advertising. So I would expect that Fairfax would be more likely to adopt the free model as circulation is a problem to them now and their advertising revenue is much more important to them
So I think we are hearing long-term thinking aloud in News Corp rather than a plan. Why would News Corp give newspapers away if they now so many paying for it? If they wanted to follow this model, they could expand their existing free paper.
When they started these free papers, I am sure News Corp looked at forcing newsagents to deliver free newspapers. Because contractors were used suggests that they could not make it work.
I am sure that some newsagents could be forced into delivering these free papers for nothing; many would retaliate by doing the job badly intentionally so this agreement would have to be policed. That costs money, if lawyers are involved big money.
Then of course many newsagents would refuse. For those that refused, News Corp would then have a difficult choice of dropping profitable agents or getting someone else to deliver the free papers.
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