Newspapers’ bundled pricing is ‘not a birthright’

More on business models. There are a couple of things in this piece about the Unraveling of Newspaper Economics on Seeking Alpha that resonate for me. Thanks to @shanerichmond for the link.

It was written by Robert Heath in response to a meeting held behind closed doors by senior newspaper execs from a number of companies in the US. The meeting was called to discuss ways of monetising news content online.

His main point is that newspapers have traditionally benefited from bundling content and having us pay for the whole bundle despite the fact we only want to read one or two sections – News and Sport, say, or Business and Sport, or News and Lifestyle.

He notes too that up to 85 per cent of that bundled content can be up sourced from outside the newsroom – agencies, freelances, horoscopes, weather, classifieds, sports results, for example.

Now imagine you’re a newspaper subscriber (maybe you still are). If you could disaggregate the horoscopes from the weather from the sports from the local news from the international news from the business news from the TV listings from the almost non-existent stock price listings, how much would you pay for the parts of the paper you actually intend to read? Probably less than the $10-$15 per week it currently costs at the newsstand. Probably less than the $6-$8 per week it costs for a subscription.

Probably a lot less.

This is the problem faced by the newspapers. Bundling is a pricing strategy that delivers surplus economics to the supplier by enticing customers to buy more than they would if the bundled products were sold separately. By weight, much of your local newspaper (and its website) is information sourced from third parties (stock listings, classified ads, lightly edited excerpts of corporate news releases, etc.) now readily available elsewhere on the internet (see note 1). By disaggregating the newspaper’s traditional bundle of content, the internet may be exposing the market value, or to use the API’s term “true value” of the original editorial content produced by the publisher itself.

As publishers experiment with new or revamped online pricing models they may find that the true value of their original content will give real meaning to the term micro-payment. No newspaper has a monopoly on “the news”.
…

For well over a century the newspaper industry has enjoyed handsome economics supported by bundling economics and enviably low marginal distribution costs. These returns became even more attractive as many cities (in the U.S. at least) became one-newspaper towns. Bundled pricing, low marginal costs and monopolistic (or at least oligopolistic) market structure is a wonderful way to make a living. It is, however, not a birthright. And the government has no role helping the newspaper industry compensate for its loosening grip on its historical monopoly.

The rest is here (and there’s a lot more).