Media Forum: Should quality cost more?

campaignlive.co.uk, Friday, 29 June 2007 12:00AM

Will rivals follow the Financial Times' coverprice hike, Alasdair Reid asks.

Perhaps John Ridding, the chief executive of the Financial Times, has just given birth to a new price comparison system - a successor to the Mars Bar benchmark previously favoured by economic historians.

Justifying his decision to raise the coverprice of his paper by 30p to £1.30 last week, Ridding referred to a takeaway Starbucks coffee and suggested it was ridiculous that a drink should cost more than a quality newspaper. Especially in an era when newspaper readers were demanding so much more. "If the audience is going to make such demands, then it should pay for the service," Ridding insisted. "Quality journalism is undervalued."

The market is polarising into free and premium products, yet the premium end of the market still struggles to leverage any decent return on newsstand sales. But history, it has to be said, is not on Ridding's side - or those who might seek to emulate him.

Since the repeal of stamp duty in 1855, which paved the way for a truly mass press medium of penny titles, the coverprice of most serious newspapers (the FT aside) has consistently remained well below the price of a large loaf of bread. So this is not an industry with any sort of a track record in talking itself up - and, in fact, it's arguably far more prone to the coverprice wars of a decade ago.

On the other hand, the medium has never faced the sorts of sustained pressures that it's currently experiencing. So, is Ridding right? Should newspapers be braver in asking their readers to pay the going rate for quality content?

Guy Zitter, the managing director of the Daily Mail, says that from one standpoint, he's right. "What you get for your money these days is excellent," he points out. "Unfortunately, that's not the only perspective. You could argue that in an era when there are free newspapers and the internet has introduced the idea that information and news should be free, paid-for newspapers are rather overpriced.

"Look at The Sunday Times, which is strong in its market. When it put the price up to £2, the circulation fell. And people forget that we still have coverprice wars, albeit geographically contained these days. The Sun is 15p in Scotland."

That's not how Marc Mendoza, the managing partner of Media Planning Group, sees things. He says: "I don't believe the readers of the FT will baulk at paying a few extra pennies, and while it might not work for every title in every market, I think we've seen a parallel situation on the London evening market with the Evening Standard. The readership has now been boiled down to the people who buy the Standard because they really want it. Other papers might be looking at that. And, yes, circulation might be affected. But if, say, the circulation of a paper goes down by 20 per cent because it has raised its coverprice, advertisers might be persuaded to pay only 10 per cent less. The paper could actually justify charging more on a cost-per-thousand basis."

But Vanessa Clifford, a managing partner at MindShare, isn't so sure about that: "I don't think you can deny that some people are prepared to pay more, in some cases, for better quality. It's also true that everyone working in media appreciates what an incredible amount you get from a newspaper - or some newspapers, for your cash. But everyone's looking across a whole range of multimedia channels to see where they can go to get exactly the sort of information they need. Look, even, at FT.com - at £99 a year, it's much cheaper than the paper - and everyone expects it to be at least as good as the print product. So I'm not convinced."

Yet Dave King, the executive director of Telegraph Media Group, remains optimistic. He concludes: "The market is dividing into those who take what they can get for free and those who are prepared to pay for quality - and the market will become increasingly polarised. This applies to new media, too. There is price elasticity here - there are those who believe there are things worth paying for."

NO - Guy Zitter, managing director, Daily Mail

"From one perspective, Ridding is right - what you get from a newspaper for your money these days is excellent. But if he is suggesting that we should all put our prices up, he is just plain wrong."

YES - Marc Mendoza, managing partner, Media Planning Group

"In the quality market, if they all put their prices up by 20p and held their nerve, I don't think there'd be too much damage to circulations. The FT has a Biblical status. Who can put a price on the Bible?"

NO - Vanessa Clifford, managing partner, MindShare

"Newspaper owners are making brands available across all platforms, so we're encouraged to be sophisticated about where we go - and much of it is free. So I question the whole proposition."

MAYBE - Dave King, executive director, Telegraph Media Group

"There is more price elasticity in the quality newspaper sector - and this applies to new media, too. People are prepared to pay for quality. But we should look at what happened to the circulation of The Sunday Times when it went up to £2."

- Got a view? E-mail us at campaign@haymarket.com.

This article was first published on campaignlive.co.uk

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