A casual observer of this month's British newspaper scene might be forgiven for wondering whether Rupert Murdoch is losing his grip. On the streets of London, the News International mogul's new daily freesheet, thelondonpaper, had only just locked horns with Associated Newspapers' London Lite, when his quality Sunday title, The Sunday Times, became the first UK newspaper to charge a cover price of £2. So is the future of newspapers free or slightly more expensive? The answer is almost certainly both.
The unprecedented £2 cover price came as a shock to pedlars of instant media wisdom, who have spent the past few weeks declaring that - if newspapers have a future at all - then it must be as free titles funded exclusively by advertising. How could The Sunday Times justify charging the price of a small burger with fries? Surely the internet-savvy, freesheet-reading public would not stump up?
There has been a crop of Sunday price increases recently, with The Sunday Telegraph going up by 20p to £1.80, and The Mail on Sunday by 10p to £1.40. The Independent on Sunday follows suit today, increasing its price, also by 10p, to £1.80. Cynics advance a simple explanation: advertising revenue is in the doldrums and most circulations are declining, so newspaper groups are recovering lost income by hiking prices.
It sounds simple but there is a blatant flaw. The serious Sunday newspapers are performing much better than their popular competitors. Sales of the IoS rose by 7.91 per cent between August 2005 and last month. The Sunday Times was stable year on year and achieved a month-on-month rise of 3.51 per cent. Last month, overall British sales of quality Sunday titles rose by 2 per cent on July. The Sunday market appears more buoyant than that for paid-for daily titles.
"There is a Rupert Murdoch strategy in action here," says Ivan Fallon, chief executive of Independent News & Media and a former Sunday Times executive. "Rupert believes that by putting up the price of his premium products he can crowd other titles out of the market."
That is not as counter-intuitive as it sounds. For a start, Sundays really are different. Most of us are not at work and do not use the public transport networks on which free newspapers are distributed. Internet usage, too, is correspondingly lower, with fewer Britons able to use their employer's free broadband for a quick glance at the headlines. But there is a huge quality dimension as well.
Ever since 1987, when Andrew Neil introduced this country to the multi-section Sunday newspaper by wrapping travel and books sections inside The Sunday Times' news pages, British quality Sunday titles have contained an immense amount of journalism. The first £2 edition of The Sunday Times came to 598 pages.
"You do get a lot for your money," says Bill Hagerty, editor of the British Journalism Review, "in the case of The Sunday Times perhaps too much. You have to take it home in a wheelbarrow."
That size increased last week with a modest redesign of the title, which now includes more colour in its news pages - a foretaste of what is to come when it acquires full-colour printing presses in 2008. The latest changes include a gadget-laden motoring section and a slightly larger Culture magazine.
"We publish 13 separate sections, of which three are magazines, which could each retail for £2.99," says Andrew Mullins, general manager of Times Newspapers. And he emphatically rejects the suggestion that The Sunday Times is too expensive. "Like the owners of the IoS, we think weekend newspapers are huge value for money. We have had a strategy to get The Sunday Times up to £2 for a long time now. Our price increase reflects our intense belief in the value of quality weekend titles. Many readers keep Sunday supplements for days and use them throughout the week."
"When I was at The Sunday Times, 40 per cent of readers never bought another newspaper," says Ivan Fallon. "The amount of material in there makes for a phenomenally good read. I think The Sunday Times at £2 is pretty good value for money - as is the IoS at £1.80."
Marketing analysts have long understood that premium products sustain their value by not being sold too cheap. "There are many examples where high price is very much part of brand identity," says Murray Chick of Brand Aid. "Being relatively expensive is one way that quality products defend their status." But at the same time, he ridicules the suggestion that quality newspapers are expensive. "Considering the range of content they offer, they are absurdly underpriced. If you compare what the quality titles cost 20 years ago and what they contained with their modern counterparts, their price has fallen in real terms."
When most of us are happy to spend £2.99 on the instant gratification of a cup of coffee from Starbucks, that sounds ostensibly reasonable. "It's a bit like the debate on the BBC licence fee," says Professor Steven Barnett of Westminster University. "If you categorise readers by what they are willing to pay, they fall into two basic categories. There are promiscuous ones who believe newspapers are too expensive and do not regularly buy the same title, and a more literate group who are more accustomed to reading who realise that they are getting a lot for their money."
"Of course, quality titles are taking a gamble by increasing their cover price, but it is an educated gamble. There may well be enough price elasticity in the market to do it without damaging circulation. Among quality newspaper readers there's a large chunk who do not think about how much they are spending. They appreciate their newspaper for its content, not its price."
Andrew Neil agrees: "I doubt the price rise will have any effect on its [The Sunday Times'] sales. It never did when I increased the price."
"Newspapers have to reach a pricing level at which they are properly valued," says Ivan Fallon. "At £2 for a Sunday title, £1.50 for a Saturday and £1 for a daily, all of the British quality titles would be profitable."
But Bill Hagerty counsels caution. "Price rises are contrary to everything else that is happening in the newspaper market and online. Take a look at America. The Washington Post is a huge, multi-section lump of a thing every day of the week - but it has a cover price of just 35 cents. People used to think newspapers were not price sensitive, but these days they plainly are. Many readers used to buy two Sunday papers - a serious one and something fun like the News of the World. These days newsagents report that sort of multiple-buying is very rare."
To those who prophesy doom for the printed word, that is evidence that Sunday price rises are an act of desperation, all part of a newspaper scene in which only the best will survive. That attitude produces apocalyptic headlines on media websites that generate negligible revenue but depict themselves as the way, the truth and the light. The alternative view is that today's quality Sunday newspapers contain such diversity and volume that multiple purchasing is a luxury available only to those with time as well as money.
"If you could calculate a price-per-word equation to compare modern quality newspapers with their predecessors," says Steven Barnett, "you'd find that present-day readers are getting a lot more for each penny spent."
Freesheets make tasty fast food for the mind, but titles that stimulate, inform and entertain are outstanding value for money.
Is 'The Sunday Times' worth it?
"I doubt the price rise will have any effect on its sales"
Andrew Neil, Former Editor, 'The Sunday Times'
"People used to think newspapers were not price sensitive. These days they plainly are"
Bill Hagerty, Editor, 'British Journalism Review'
"Quality newspaper readers look for their paper's content, not its price"
Steven Barnett, Professor of Communications, Westminster University
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