Media: Forum - Is qualities' price rise wise?

Should the quality newspapers raise their coverprices, Alasdair Reid asks.

By any logical measure, quality newspapers have been under-priced for as long as anyone can remember. That's largely down to the fact that the market is so relentlessly competitive. Britain has one of the most saturated newspaper markets in the world and "dog eat dog"-style competition has always been keen, even during those relatively rare periods when we're not in the midst of a coverprice war.

But, of course, since 1993 we have, on and off, seen newspapers locked into the most epic war of attrition in the medium's history. In hindsight, it's a wonder the sector has survived at all. At one point in the mid-90s, The Times was selling for as little as 10p on a Monday and though its avowed target was The Daily Telegraph, the title suffering the most damage was The Independent, which complained to the competition authorities that it was in danger of being forced out of business by predatory pricing.

It had a point. By and large, quality newspapers no longer pay their own way and need to be supported as acts of philanthropy by generous media barons or subsidised as loss leaders by media conglomerates.

So price-rise announcements (at The Times from 70p to 80p, which prompted a 10p rise at The Daily Telegraph from 80p to 90p, followed by a 20p rise at The Independent) are, you could argue, no more than common sense. Especially as all titles have invested considerably in their products, not least in going full colour and revamping their online operations.

Brave investment, you might argue, given that everything else (fuel, food and clothing) is going up in price and disposable incomes are contracting unpleasantly. With each day that passes, the commitment to a daily newspaper purchase must seem like extravagance.

Especially as those same newspaper groups have been so keen, in recent times, to educate us all that news (in the form of commuter freesheets and lavish web operations) should be available for free. So, are they doing the right thing?

Probably, Alison Brolls, the head of marketing planning, global marketing services, at Nokia, reckons. Their hand is perhaps being forced by increased costs of raw materials, but these titles should be more confident in their status as valued products. She adds: "Qualities, to some extent, enjoy a loyal following of readers interested in news, commentary and opinion on current affairs from some of the world's best columnists - and, as these readers have higher-than-average levels of disposable income, you'd expect them to absorb such rises."

On balance, Nik Vyas, the group press director, ZenithOptimedia, agrees: "It's probably an astute business decision. Consumers still have the choice of consuming the same content for free online if they wish and they are fully aware of this - people still reading the paper are doing so as this is their preferred delivery mechanism. Consequently they are unlikely to be put off in droves by an increase of 10p."

However, that's not how Mark Gallagher, an executive director at Manning Gottlieb OMD, sees things. He says: "Publishers might take the view that, if everything else is going up, why not newspapers. And it's also true that they need to cushion themselves against current downward trends in the ad market. But we saw what happened a couple of years ago when The Sunday Times put its price up to £2 and it immediately lost circulation. Every time you put a newspaper's coverprice up, you lose another chunk of the least loyal readers."

But Marc Mendoza, the managing partner at MPG, agrees that publishers should have faith in the proposition that quality will out. He concludes: "When you look at the quality of the product, how long it takes to read it and how much it costs, then you have to argue that qualities provide massive value and are underpriced. Quality products often do well in a downturn. I think you'll find Waitrose, for instance, isn't doing too badly. And Audi. And the quality end of the holiday market. So this isn't a bad idea in the current climate."

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YES - ALISON BROLLS, head of marketing planning, global marketing services, Nokia

"You question people's value judgments when quibbling over a price rise of a few pence. Especially when some may not think twice about spending more than twice that on a cappuccino."

YES - NIK VYAS, group press director, Zenith-Optimedia

"Even if a paper does lose a few more readers, gaining 14 per cent from coverprice revenue would more than compensate. They'd have to lose a lot of readers quickly for the increase to be a fundamental mistake."

MAYBE - MARK GALLAGHER, executive director, MG OMD

"They need to cushion themselves against downward trends in the ad market. So these price rises are a preparation for what the market may bring in future. But if they affect circulation, agencies will be demanding better value."

YES - MARC MENDOZA, managing partner, MPG

"I don't think price elasticity is quite the issue that some people think in this sector. It's also true that in this economic climate, premium brands can improve their market share. There's a flight to cheap, but there's also a flight to quality."