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Raising cover price hurts newspapers in long run

A warning for newspapers grasping at expense cuts: Be careful not to exacerbate the problem you’re trying to solve, which is declining advertising revenue.

Shortfalls in advertising revenue are not solely an income problem. The revenue drop is first and foremost an effect of declining circulation, which is why it makes no sense to increase the cost of your newspaper as a supposed solution.

I’m talking to you, Spokesman-Review. Here’s what Editor Steve Smith said to staffers in a memo that was leaked on Romenesko:

We will raise the daily single-copy price to 75 cents (from 50 cents) in some select outlying areas and raise Sunday single-copy to $2 from $1.50. This will generate an immediate and significant revenue boost. There are no plans at this time to raise home delivery prices.

What the Spokesman-Review can expect is not a steady surge in revenue; instead, it’s a further drop in circulation. And advertisers aren’t going to like that. It contributes to a negative storyline.

Advertisers try other mediums for their messages for a lot of reasons. One is they perceive newspapers as on the decline. Anything that erodes circulation isn’t going to turn around this perception.

The longer-term solution is to reduce the cost of the newspaper across the board, with an eye toward making single-copy free as quickly as ABC will allow.

Reducing the cost of newspapers will inevitably slow the loss of circulation or increase it temporarily, and that always makes the newspaper more effective in the eyes of advertisers.

Comments (2)

Spokane could help itself a lot on the revenue side by making its web site free -- at least a lot more than raising the cover price.

Amid the budget cuts, I would hope there's someone in Spokane asking that question.

It would be an immediate boon to the site's traffic, but that doesn't mean anything in terms of revenue unless they commit to a sales effort.

And, obviously, the free online model (which I totally support) means they can no longer count online subscribers toward their ABC circulation numbers, making the sales effort only more vital.

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