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    This is the personal blog of Simon Kendrick and covers my interests in media, technology and popular culture. All opinions expressed are my own and may not be representative of past or present employers
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The inefficiencies of cutbacks

The Observer have announced that they are streamlining their offering into 4 sections. In the process, they are ending 3 of their 4 monthly magazines (several of which, I believe, are award-winning).

It is highly unlikely I will continue to buy it.

As a non-subscriber, my switching costs are minimal. I may prefer the tone of its coverage to other titles, but value – at least perceived value – plays an important role in the purchase decision. The quality of the magazines (along with the relative ease I can do the crossword) were major draws to the title. Both versus its competitors, the Saturday Guardian and its website.

And I don’t really feel like paying the same for less. So I may experiment once again with the Times, transfer my pennies over to its sister paper, or stick to the website.

Of course, I am assuming that the cuts mean that these articles will be discontinued. They may well be moved into the other sections. But given the need to cut costs, I am expecting that if this does happen, it will be on a much reduced scale.

This move may cut the Guardian group’s costs, but it is also going to negatively affect their revenues. They must be sure that the net impact of their finances is beneficial. But the net impact on their brand and identity is surely negative.

There is also the possibility that the move to streamline the Observer could have a secondary motive to make the Guardian look better by comparison.

Other titles such as the Express, Independent and People are already shells of their former selves. I’m hoping the Observer doesn’t go this way. It would be far better to convert it to web-only or end it completely than to see it published merely for appearances.

sk

Image credit: http://www.flickr.com/photos/uherrmann/

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The cost of giving it away

I am one of a declining number that likes to read a Sunday newspaper.

Recession notwithstanding, I am also one of those people that tends to struggle more in terms of time than money.

Therefore, I generally only have time to read one newspaper a week. The choice of newspaper is effectively zero-sum. I choose one newspaper; the others miss out.

I’ve deviated from that choice in recent weeks. Whereas I used to pick the Observer without fail, a lazy Sunday prompted me to give the Sunday Times a go.

And I enjoyed it. So much that I bought both newspapers again the following week. With time constraints restored, substantial amounts were left unread.

I therefore need to make a choice between the two titles.

And my choice is likely to be dictated by the quality of their websites. Both the Observer and Times offer the majority of their content online in an ad-supported free access model.

But rather than an excellent website causing me to buy the print edition, an excellent website may cause me to forego the print edition.

While print and online may complement, they also duplicate and cannibalise content.

If I am paying for a premium model, I want the greatest improvement in utility to justify that.

This example points to a problem with the Freenium model that I have.

It doesn’t work in perfect competition.

It works for companies like Flickr because Flickr stores my photos and logs my activity. Utility and the cost of switching increase the more I participate.

Newspapers don’t reward relationships (aside from getting the answer to the previous days crossword). So in each transaction, the additional utility in the premium model needs to be justified both against the free version and the competition.

Where (premium, competitive) newspapers are of equal quality, hikes in utility are dictated by the quality of the (free) website.

An inferior website equals a greater hike.

And so the loser in the pitch for my pocket may be that which has invested the most in their website.

Does this mean newspapers need to sabotage their websites in order to increase the value of their premium products? Such as bringing back walled gardens or keeping the best content offline? Henry Blodget thinks so.

Me? Newspapers aren’t my forte so I will resist the urge to speculate. But it raises an interesting question about their ongoing viability in a converged world.

sk

Image credit: http://www.flickr.com/photos/flavio_ferrari/

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