by Mike Masnick

Filed Under:
costs, free, news, subscriptions

london evening standard

In Going Free, London Evening Standard Doubles Circulation While Slashing Costs

from the but-free-doesn't-work!! dept

In October, we wrote about how, just as Rupert Murdoch and crew look to put up paywalls for online content, the operators of the London Evening Standard were going in the other direction and making their physical paper free. So, how's that been working out? mowgs alerts us to the news that the paper has doubled its circulation in just a month. Not bad. But what's more interesting is that it's also slashed its distribution costs massively. It used to cost about 30p, and now it's just 4p per paper.

This actually brings up a point that's rarely talked about in the free vs. paid debate. Charging can be expensive. It takes quite a bit of effort to charge, to take money, to manage the money, to set up the accounting and bureaucracy for managing each transaction. And, even worse, if you're working with third party distributors, like news agents, then you have to handle financial relationships with them as well. Getting rid of the per paper price changes the economics not just on the revenue side, but on the cost side as well -- something that's rarely discussed at all. And, yes, this impacts online news orgs too. Putting up a paywall is going to prove a lot more expensive than most people think on the cost side.

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  1. identicon
    Anonymous Coward, 20 Nov 2009 @ 10:04am

    As far as I know, advertisers pay for what's essentially square footage (or "inchage," in this case) in a paper. The paper can attempt to negotiate the rate/sq-in based on their circulation ("we reach nn,nnn people!"), but that rate does not automatically rise, nor is it a one-to-one accounting. In addition, the people purchasing the advertising might well ask, "Now that it's free, how do you know people aren't just lining their birdcages with it and not even reading it?"

    For the new business model to be more profitable for the company than the old business model ...

    C * (50 - 30 - 12) + Old Advertising Income

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