Why newspapers should prescribe tablets

As an avid newspaper reader I take great interest in their prospects and am eager for them to find a way out of their current perilous situation. Publishers are desperately trying to stem the tide of readers deserting their printed editions, but what if this threat were treated, instead, as an opportunity?

My daily newspaper costs £44.63 a month to buy every day. Print production accounts for a substantial portion of  publishers’ costs, so they could make huge savings by delivering content via an alternative platform, whilst maintaining circulation and advertising levels.

The same newspaper is offered to subscribers for £9.99 a month as an app and Android tablets are readily available to the public for less than £200. How much imagination would it take for a publisher to negotiate a bulk purchase of tablets at a discounted price, then bundle their resale into an attractive subscription package for readers?

A 12-month newspaper app subscription for, say, £30 a month, including a free tablet device, offers the following potential benefits:

  • a discount to readers of up to £14.63 a month against the cover price of the print edition;
  • readers would effectively own a free tablet after ten months;
  • the publisher would still clear the £9.99 they have set as the monthly price of the app;
  • the publisher could make a one-off profit on the sale of the tablets;
  • the publisher could make huge, ongoing, savings on print production costs;
  • the publisher would have an attractive digital customer base, offering an open channel for e-commerce, particularly downloadable items such as music, e-books, games and software;
  • the tablet manufacturer would enjoy a bulk sale.

I doubt the £9.99 charged monthly for the app is profitable. It suggests print production accounts for 75% of all costs, which sounds unfeasibly high — in which case publishers still need to take one or more of the following actions to make their business viable:

  • increase circulation. This is not as implausible as you might think: digital content has a global marketplace;
  • make further cost savings elsewhere. It’s hard to imagine where these might come from, as most publishers have already cut to the bone wherever possible;
  • increase advertising revenues. This is most unlikely as they have already lost most classified advertising and face huge competition for what display advertising there is;
  • find other revenue streams to supplement the traditional 50/50 mix of income from circulation and advertising — publishers would have to raise their game to compete with e-commerce leaders, who have a big head start and lots of expertise;
  • consider a paywall. Most have decided against this, but offering free content on a website undermines app sales;
  • offer exclusive content in the app, to make it more appealing than the free content on the website;
  • increase the app price. Presumably, the £9.99 monthly charge is what they think the market will bear, so an increase is unlikely any time soon.

Print circulations are falling fast, while newsprint costs have soared by 25% in the last year, so the point at which the balance tips in favour of a digital-only delivery platform for newspapers is coming closer by the day. Publishers need only a simple graph, showing revenue and costs, to determine the date when printed newspapers become a liability rather than an asset. Will they jump, or wait to be pushed?

I find it hard to imagine my daily routine without a newspaper, but I recognise that it is more important for publishers to secure their own future, than to commit themselves to any particular platform.

It must be a daunting prospect for newspapers to sacrifice their print editions, but it is no longer a question of if this will happen, only of when.

© 2011

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One Response to Why newspapers should prescribe tablets

  1. Pootering says:

    Clay Shirky discusses the newspaper business model in his article: http://alturl.com/xeee8

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