10 May 2010

South Africa: Newspapers' Ongoing Battle to Survive

Johannesburg — WITH the newspaper industry worldwide in turmoil, it's not surprising to find newspapers trying different things to survive.

Newspaper wars are in themselves not unusual, but in SA they are not as common as they are overseas.

What has surprised the media and marketing sector in Gauteng was that the Citizen and The Times have chosen totally different strategies to win readers, and ultimately advertising rand.

This year Caxton-owned newspaper The Citizen dropped its cover price 33% from R4,50 to R3 and after a two-month trial campaign towards the end of last year saw circulation increase.

The Avusa-owned newspaper The Times - which started as a free subscription-based sister newspaper to the Sunday Times - began charging R2.

Avusa , which owns The Times, also owns half of Business Day.

Mike Robertson, CEO of Avusa Media Division, says the R2 cover price for The Times was a "price that covered all costs but still makes a profit".

It still undercuts The Citizen's cover price, not to mention the Sowetan - also Avusa owned - and a number of other newspapers. It was also hoped that The Times would attract the occasional reader who cannot afford to pay for a subscription.

The Citizen's cover price drop brings it in below the cover price of the Star and the Daily Sun, among others.

Prof Anton Harber, head of Wits Journalism Department, believes at the end of the day it's about value for the reader.

Media magnate "Rupert Murdoch has fought and won many a newspaper war by cutting prices but, at the same time, also getting editorial right," he says.

Harber believes cover price drops are a short-term solution. His concern is that a reader who moves for price will move again to a paper with a lower price.

Gordon Patterson, MD of Starcom and deputy president of the Audit Bureau of Circulations, agrees that value is a key determinant, providing the cover price is not too steep.

"The Citizen's decision to drop its cover price was viewed by the advertising industry as an attempt to increase the number of people who want to buy it and the frequency of purchase," he says.

"The Times' decision to implement a R2 cover price is less understood."

Patterson believes The Times' upmarket content does not match the price. "It's fairly sophisticated content and I am not sure if it would appeal to someone who can only afford to pay R2 for it."

Chris Moerdyk, marketing analyst and consultant, takes a more philosophical view of the matter.

"Newspapers and magazines have become more expensive to advertise in, and advertisers have become more careful about how they spend their money, so publications need to invest first in quality content. But they also need to appease advertisers, because that is where the real money is. And the only way to give advertisers value is by increasing readers."

He says that while spending on advertising doubled in the past 10 years or so, the number of publications has increased 50-fold - and the advertising pie has not grown.

The advertising industry, which wants to make sure it is getting value for money, is also sceptical about an enormous increase in circulation.

The media industry is littered with stories for and against lowering prices, like the London Evening Standard, which doubled its circulation since going free, or tabloid newspaper the UK Daily Star, which dropped its price and increased circulation year on year in November by 15,3%. The question is whether it is sustainable, and only time will tell.

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