07.23.09
NEWSPAPERS LEARN THE VALUE OF THEIR OWN CONTENT

Consumer research conducted by The Modellers, LLC, a leading predictive modeling market research firm, shows that some key decision-makers of newspaper companies do not always have a well informed, in-depth understanding of the value of their own content.  Many ‘shoot themselves in the foot’ by reducing the quantity and quality of their products, while at the same time raising subscription prices, and then wonder why subscribers peel off in droves.

Randy Hill, Vice President of The Modellers, says “Some newspapers have a good idea of who their core readers are, what they want, and what they are willing to pay.  However, in reaction to declining advertising revenue and lower subscriber bases, newspaper firms have made deep cuts in their products in order to reduce costs and save money.  By doing so, many of them, unwittingly of course, devalued their brand equity by cutting back on the product that readers want and are willing to pay for.”

Results from a recent, complex price elasticity project conducted by The Modellers showed that cutting back the quantity and quality of content had 2-3 times more impact on the propensity of readers to continue subscribing (measured in the form of price elasticity) than did price alone.  This discovery gave a major market newspaper the clarity they needed to re-focus resources on the content areas with the greatest impact on subscriber retention, thus providing the basis for a more consumer-oriented product. The insight into the content-pricing relationship also laid the groundwork for a significant increase in subscription pricing that, based on The Modellers’ forecast, would lead to minimal decline in subscribers (price was highly inelastic assuming optimized content). Current live price testing has confirmed the model’s predictive power, with the extremely large price increase resulting in only minor reductions in subscribership.

Randy continues, “The results of our sophisticated analytics and modeling have provided our valued newspaper clients with the foundation needed to make bold decisions regarding subscription pricing, while placing renewed focus on continued improvements in various drivers of content quantity and quality.  Our work has proven that readers are willing to pay more than they are currently paying, assuming they receive as good, if not better, content than they are currently receiving.  In essence, optimizing subscription pricing and content provides newspapers with the ability to confidently move forward in what is an unprecedented time in the history of print media.”

> Click here to see the full article (PDF).