Media: All about ... Newspaper coverprice rises

What are the implications of the new trend in pricing, Alasdair Reid asks.

The time has come, it seems, for publishers to raise newspaper coverprices while the going's good. Last week, for instance, The Sun eased off slightly on its discounting in London and Scotland. In the case of London, it marks the end to an initiative that began back in September 2007, when the newspaper cut its coverprice from 35p (which has remained its standard price across most of the UK) to 20p in the South-East.

The motive, we were led to believe, was an attempt to keep The Sun's national headline circulation above the notionally significant three-million mark. This was undoubtedly more important from a psychological rather than commercial viewpoint, especially where the advertising market is concerned. After all, media agencies place far more emphasis on the full-price sale and that's easily broken out of the ABC figures these days.

But the target was achieved - the paper's April headline sale was more than 3.1 million - and News Group has clearly decided it's time to claw back a little revenue by raising the London price to 25p on weekdays.

The picture north of the border is slightly more complicated. The Sun's discounting campaign in Scotland goes way back to February 2006, when it dropped the price of The Scottish Sun to just 10p. News Group's rationale here has been to take on Trinity Mirror's Scotland-only brand, The Daily Record. And the policy has argu-ably been successful, with The Scottish Sun's headline sale now a whisker shy of 400,000, while the Record trails behind on slightly more than 363,000.

But The Sun has been easing off on its discount here too. In January, the price had crept up to 25p and last week it rose further to 30p, which is still 5p cheaper than The Daily Record.

After all, even Rupert Murdoch's pockets, though deeper than most, aren't bottomless, and at £623 million, News Group revenues for 2007 were down by £20 million year on year, according to recently published figures.

Yet, if the economy catches a real cold this summer, an unwary publisher could find itself cast as public enemy number one if it's caught trying to raise its prices just as a recession bites.

Indeed, we had a foretaste of this back in April. When the Daily Mail raised its price by 5p to 50p a month ago, Express Newspapers responded in tones of moral outrage. "Staggering hypocrisy," it thundered. The Daily Express freed up some editorial space (on page two, no less) to fulminate against the moral depravity of its rival, pointing out that the Mail, with its newly instituted cost-of-living index, was campaigning against gratuitous price rises.

And, of course, this is just the sort of petty sniping that you'd expect - the mid-market has always witnessed the dirtiest of fights, going back decades. But there's no doubting that price has become an increasingly sensitive issue.

Even at the best of times, newspaper proprietors have always had to strike a balance between volume and yield when calculating coverprices, while factoring in the activities of their rivals. Now, the picture has been complicated yet further by the seemingly inexo-rable growth in metropolitan freesheets - and the threat of recession just made the calculation doubly difficult.

1. As recently as early 2006, commentators were predicting that (thanks in no small part to the rise of freesheets) the whole newspaper market, from red-tops to qualities, was about to be plunged into a ferocious price war when, within days of each other, The Daily Express, the Daily Star and the Evening Standard lopped their prices - with other publishers indicating they could possible follow suit. However, meltdown didn't happen.

2. In fact, The Sunday Times took a brave step the other way when in September 2006 it became the UK's first £2 paper. Since then, the broadsheets have followed a robust policy. The Times has eased up from 65p to 70p; The Daily Telegraph increased its coverprice from 70p to 80p; The Guardian, again, 70p to 80p, and the Financial Times added a whopping 50p, taking its price from £1 to £1.50 (all weekday edition prices).

3. And perhaps the most conclusive evidence of hardening price policy is provided by The Daily Sport - back in April, its relaunch as a daily newspaper version of a lads' mag hit the streets with a coverprice of 50p.

WHAT IT MEANS FOR ...

MEDIA OWNERS

- The conventional wisdom is that publishers cut coverprice to buy circulation - and arguably the most successful outcome of this sort of strategy came in the 90s when discounting took The Times from a sale of around 400,000 to a peak of around 800,000.

- But it slipped back from that high water mark, obviously - and the reality has always been that coverprice cuts deliver more or less short-term gains.

- New pressures threaten to make that short term even shorter these days and the reality is that, in the digital age, the long-term sales graph for printed matter of all kinds is likely to be downwards. Many observers actually believe that, in an environment when so much content is available for free (including from free newspapers), the whole concept of the coverprice is doomed.

- So it makes sense, as recession looms, for newspaper publishers to derive as much cash flow from coverprice as they possible can.

ADVERTISERS

- The irony is that advertisers and their agencies don't always value the temporary extra circulation and readership bought by discounting - and indeed other promotional devices. "In many instances, coverprice cuts don't really deliver new readers on a worthwhile basis," Dominic Williams, the press director at Carat, says. "They attract fickle readers who wander in and wander out again. So I think it's possible to argue that price cuts can be damaging - and that it's in the long-term interests of publishers to increase prices."

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