Media: All about ... Newspaper price wars

The Sun has slashed its coverprice in a bid to woo readers.

For The Sun, there is clearly something special about the three million figure. The newspaper's latest initiative, cutting its coverprice from 35p to 20p in London and the South-East, could be seen as a tactic to keep its sale above this totemic level.

Its circulation has been hovering just above the danger zone all summer. Admittedly, many in the business like it when publishers show a feisty determination to maintain their print brands as true mass-market properties. It is, after all, the numbers wot keeps The Sun special.

The contrarian view maintains that this sort of initiative only goes to prove that the newspaper industry is congenitally unable to rise above reckless short-termism. They would rather see the money (price wars are notoriously expensive) being spent on improving the editorial product or being ploughed into more sophisticated marketing initiatives. Or, ideally, both.

It's interesting, however, that this is the first major price cut in a market defined by wholly new conditions. On the one hand, online news provision has entered a faster-moving, video-dominated phase, while on the other, the rules of the newspaper market are being rewritten thanks to the rise of the freesheet.

And that's seen at its most intense in the London market, which not only has a Metro in the morning, but two evening freesheets, London Lite from Associated Newspapers and The Sun's stablemate thelondonpaper.

The notion that these titles are a threat to The Sun is given extra credence by the fact that it is backing up the price cut by introducing a team of street vendors in London.

1. Rupert Murdoch is widely credited with putting price back on the newspaper agenda in 1993. In an attempt to make his prophecies come true (he stated that there would ultimately be room for only three mass-sale daily newspapers in the UK - one red-top, one mid-market and one quality), he cut the coverprice of The Times sporadically in a campaign lasting six years - with the price often dropping from 45p to 10p.

Nominally, the target of this campaign was the sector's market leader, The Daily Telegraph (its circulation hovered just above the million mark in the early 90s, while The Times struggled to achieve a third of that figure), but the title that actually suffered most was The Independent, which made a predatory pricing complaint to the Office of Fair Trading.

The campaign was a relative success for The Times - its sale peaked above 850,000, as the Telegraph's circulation dipped below one million. The market entered an uneasy truce in 1999, when the OFT rejected the predatory pricing charge, but warned News International that it must seek permission for further price initiatives.

2. Longer-term, whether or not the pain was worth it is debatable. The Daily Telegraph's daily sale during August 2007 was 887,644, while The Times sold 638,820 (both of these figures include bulks).

3. Coverprice became an issue once more in the spring of 2002, this time in the mid- and red-top markets. The Daily Mirror led the way, by reducing its price from 32p to 20p; The Sun followed suit; the Daily Express eventually got drawn in (also matching the 20p price); while the Daily Star really went for it by dropping to 10p. The Daily Mail was the only title to resist the temptation to get involved.

The outcome was confused and inconclusive, with titles gaining and then losing the most marginal of advances in market share. The only winner was arguably the Mail, whose circulation held up without compromising its balance sheet.

4. But the Daily Mail wasn't quite so steadfast in January 2006. When the Daily Express and the Daily Star both advertised that they were dropping their prices by 10p to 30p, the Mail followed suit - but, tellingly, only in London. Other regions had to continue paying the full price. The skirmish was shortlived.

5. The Sun has been using sporadic price-cutting on a regional basis for much of this year. Its price has been as low as 10p in Scotland, and it was down to 25p in the Granada region over the summer.

6. The Sun's August daily sale was 3,158,045 - down by 2 per cent year on year. The price cut began on 5 September.

WHAT IT MEANS FOR ...

ADVERTISERS

- For agencies and their clients, the three million figure isn't as psychologically important as it appears to be for The Sun itself. The title wouldn't be removed from any schedules solely on the basis of absolute circulation levels.

- Dominic Williams, the press director at Carat, says: "Reaching out to find new readers is generally a good thing, but in this case, the feeling is they're trying to tempt back the readers who were once loyal, but for whatever reason have gone elsewhere. I'm not sure you really win back loyalty on the basis of price cuts - and any gains will inevitably be short-term."

- On the other hand, Williams and other observers point out that the price initiative is not being undertaken in isolation. The Sun is continuing to promote itself credibly as a brand that delivers across many platforms.

RIVAL PUBLISHERS

- Mirror Group Newspapers, which has ignored The Sun's previous regional initiatives, is unlikely to follow its rival's lead in the South-East either. Industry estimates reckon this will be costing Murdoch at least £500,000 a week. He has far deeper pockets than the Mirror Group - but even he surely can't envisage continuing this initiative across an extended period.

- Quality titles seem more inclined to raise prices. The Guardian's weekday coverprice has just increased by 10p to 80p.