Wednesday, December 3, 2008

A broken business model

Here's a little business problem to figure out:

Your business is failing faster than a first term freshmen, you're pushing many of your most talented employees out the door, your customer base is sliding faster than White Castle hamburger, your product is smaller and provides less content than before and so what is one of the ways you crawl out of the hole?

You raise your home delivered rates for the second time in less than a year.

I'm not kidding, the Flint Journal has told its route drivers that starting early next year (a month away) the home motor delivered rate of $13.49 a month for seven day a week delivery will climb to $14.99 a month.

So is a buck and half the tipping point? Don't know, but it certainly can't help. They must be betting that the number of subscribers who keep the paper will balance out the numbers who will finally say, "enough," and cancel.

So if you are a current motor route subscriber, better to renew for a year now and save $18 bucks. It's not like this area's residents already are crimped on disposable income.

The problem is that ads were once the bread and butter of the news business with circulation just enough to cover the delivery and printing costs. Now, the model is broken and people are being asked to cover more of the direct costs of producing the paper at a time when much of what they are paying for is offered for free online.

Haven't heard if the non-motor rates are also going up, but as soon as I know, you will.

3 comments:

Anonymous said...

Jim, do you think the future of the newspaper business is the internet--i.e. someday every newspaper will be web-published only and will no longer be printed?

Jim of L-Town said...

I think the obvious answer is yes, but the question is how long, and how can, the dead tree version stay alive?

Many people, my wife included, still like to hold the physical paper in their hand and leaf their way through it.

My Dad (82) is the same way. But my children wouldn't read a newspaper if you gave it to them. They do all their reading online or by watching "The Daily Show," which they believe is the best news outlet around. Sometimes I even agree with them on that.

But the future is clearly to find a niche online and find a product so compelling that people will pay to get it.

That's the hard part.

Anonymous said...

The print version needs to focus on the people that actually pay for and read the newspaper each day. There are plenty of older folks out there that don't have computers yet. We need the people still reading the paper every day to be able to tell the ones that have gave up on it, that it's OK to come back and check the Flint Journal out. It's worth it..

But another price increase without adding any value to the newspaper is just taking advantage of the good paying readers that are left.