In a 14-paragraph letter to readers, Arkansas Democrat-Gazette publisher Walter E. Hussman Jr. explains why the paper’s newsstand price is going from 50 cents to $1 on weekdays and $1.25 to $2 on Sundays.
“Our plan is to remain a statewide, seven-day-a-week daily newspaper,” he writes in his paywall-hidden piece. “We also plan to maintain our news staff and provide the type of complete, in-depth reporting that Arkansans have expected from us for decades. But with continued advertising declines, we can see no other way to do this other than fundamentally changing our revenue base. In the future, we will have to rely more heavily on revenue from readers and subscribers.”
(By the way, Ken Doctor addressed this revenue shift in his Thursday Nieman Journalism Lab piece, “The Newsonomics of Majority Reader Revenue.”)
A letter to our readers
June 1, 2012
This week the Arkansas Democrat-Gazette is increasing its price for newspapers sold in vending machines and stores to $1.00 daily and $2.00 on Sunday. We want to share with you why we think this new price is necessary.
The Arkansas Democrat-Gazette has, for more than 20 years, kept its prices as low as possible. The last time the daily single copy price was increased was in 1996, 16 years ago. Up until now, the cover price of the Arkansas Democrat-Gazette has been lower than virtually all other newspapers of its size in the United States. Our home delivery prices are also among the lowest of any newspaper our size.
We have kept our circulation pricing low intentionally. The reason was to maximize our circulation. By doing so, we delivered the maximum audience for our advertisers.
Newspapers have historically offered a unique value proposition. Until recently, a typical newspaper would derive about 80% of its revenues from advertising and 20% from circulation. As a result, much of the cost of producing the newspaper was covered by advertising revenues, allowing circulation prices to remain low. Yet advertisers also benefited by having low circulation pricing, as that maximized the circulation and reach of their advertising.
Since 2006, or in six short years, the advertising business, and likewise the newspaper business, has fundamentally changed. With the exception of some signature and unique events like the Super Bowl and NFL football games, the price of advertising in the United States has declined in recent years. This is due to the laws of supply and demand. At any given time there is a fixed demand for advertising. But in the past decade, there has been an enormous increase in a number of companies selling advertising. From local cable television and niche magazines to satellite radio advertising, from the Internet, including general sites like Yahoo! and Google, and specific sites like AutoTrader.com and CareerBuilder.com, and now Facebook and Groupon, the choices have multiplied./CONTINUES Read More