One of the most irritating things about newspaper price rises is
the lack of advance warning. There you are with 45p in your hand when
suddenly the man behind the counter is asking you to put your hand in
your pocket again.
It's at this point that you might toy with the idea of giving a
different title a try, one that doesn't abuse your loyalty. But just
recently, there hasn't been much point in switching allegiance, because
- either by cunning plan or suspicious coincidence - prices on several
titles have risen simultaneously.
First there was the Financial Times, whose readership is perhaps more
immune to price increases than most. But then The Independent also went
for it and suddenly The Guardian and the Daily Mail were at it too.
Others are almost bound to follow suit.
You can see the reasoning. The advertising slowdown is biting and
newspapers are likely to be hit severely, with the ad market looking
vulnerable right up to the autumn and possibly beyond. Rising newsprint
prices don't make the situation any easier.
And, though the advertising market is in severe recession, the economy
at large isn't. We all have money to burn. Who will notice 5p a day, for
On the other hand, the last thing newspapers want is to alienate their
buying public. That really would put the business as a whole into a
tailspin and the long-term trend for newspaper sales is not good. So is
this really a wise time to be hiking cover prices?
Guy Zitter, the managing director of the Daily Mail, now 40p, is
confident that it is: "We are in a strong position at the moment. The
last time we put up cover price was in 1995 when we were selling
1,832,000 and had a mid-market competitor. Our May 2001 ABC figure was
2,415,000, up 32 per cent, our previously mid-market rival had gone
downmarket and its sales have fallen off a cliff. We are left in a
battle with The Times and The Telegraph, whose cover prices, if you
ignore their subscription offers, are 40p and 45p respectively. The
Daily Mail brand is stronger and our product is better."
Zitter reveals that sales for the week ending 16 June averaged
2,429,000, showing no loss on the previous comparable week and up year
on year by 33,000 copies. He adds: "The ABC results for June will
vindicate the cover price decision and its timing. If they don't, does
anyone want to employ a balding, overweight ex-MD? We believe we can
continue to grow circulation at 40p, delivering reach and increasing
value to our advertisers. Maybe it is for this reason that July and
August are up in forward booking terms against last year."
Of course, you expect that level of confidence from the Mail, arguably
the strongest newspaper across the whole of the market. But is that
confidence justified? More importantly, is it shared? Tim Kirkman, the
press buying director of Carat, argues that there may well be a strength
in numbers here: "It must be the first time in history that they've all
- or just about all - seemed to agree on something.They had no choice
really and it would have been far worse if they'd not responded to
declining ad revenues in some way. It's not just display advertising
that's suffering, just about everyone has a freeze on - the recruitment
side, for instance. The only one not feeling that as badly as the others
is The Guardian, which tends to carry a lot of public sector
Kirkman adds: "But the fact is that they all have to find more revenue.
If you have circulation of one million and you add 5p to the cover price
that will deliver around pounds 5 million by Christmas. So everyone has
done it and I don't think it will affect circulation too much. The
Telegraph hasn't, but that's because it is hovering around the
psychologically important one million mark and only a small shift could
push them below it. They don't want to risk it. Yet. Realistically
though, they too will have to follow suit. The other one that hasn't,
The Express, believes it is going to get a big surge in circulation. We
But what of the theory, supported by evidence of what happened to The
Times during the circulation wars of a decade ago, that the newspaper
market is far more price-sensitive than was previously believed? Kirkman
says: "If one had gone up by 10 per cent and the others hadn't, then
there would probably have been an effect. I think everybody is
price-sensitive to a greater or lesser degree - even ones like The
Guardian who believe they aren't."
So is The Guardian really that secure? Marc Sands, the marketing
director of The Guardian and The Observer, agrees that the company isn't
exactly at the stage of tearing its hair out because of ad revenue
fears. And he points out that he's already been through this process in
the Sunday market with The Observer, which raised its price back in
This proves, he says, that price hikes have nothing to do with fears of
an advertising recession. "There wasn't even the hint of a downturn when
The Observer price rise went though, and the reassuring thing is that
its circulation has continued to rise. In circulation terms, the
election was fantastic for The Guardian. So The Guardian price rise has
been on the agenda for a long time, and similarly, ad revenue wasn't a
factor. We regard The Guardian as a premium package and believe that
this should be reflected in the price - we have never competed on price
and have never had a history of price cutting."
But will advertisers be concerned? Phil Horton, the marketing director
of BMW, certainly isn't. He states: "From a business point of view you
can understand why they've done this. And when you think about the size
of the increase we're talking about - it's only 5p. I've always thought
that newspapers represent excellent value for money on a unit basis. I
presume they have reams of data on price elasticity, but from my point
of view - as custodian of the BMW brand - I would much rather they were
charging the right price for a quality product."
Horton is not surprised to see the market moving in step. After all,
that's generally what happens, one way or the other, in the car
He concludes: "No one wants to see circulation fall any further than it
has been and we are certainly delighted to see that papers like the
Financial Times and the Mail are holding steady.
"Everyone wants to be associated with winners. The newspaper industry as
a whole will be stronger for these price increases."