Pricing out of the market

A few years back, The Economist offered a three option subscriber plan (i) an web only subscription for $59; (ii) a print only subscription for $125 and (iii) a web and print subscription for $125. Dan Ariely points out that this makes consumers more likely to pay $125 for both as it seems like a good deal.

A Rhode Island newspaper, the Newport Daily News is trying something new:

The Daily News will now charge $145 annually to a newspaper subscriber, $245 if a subscriber wants the paper and access to the paper’s web site—and, here’s the key figure, $345 if the subscriber only wants the web site. Yes, you’re reading correctly; this means someone has to pay an extra $100 not to get the newspaper.

This is not some sort of behavioural economics experiment as The Economist blog conjectures. Instead, it is the Daily News deciding that ads don’t work on the Internet even if it costs them nothing to put content up and so they are only offering the options to subscribers. No one will pay for the Internet-only option because if you want that you can get both and throw the paper out (or send it to someone who wants it, etc). The Australian Financial Review essentially practices the same strategy. The point: it hates the web.

2 thoughts on “Pricing out of the market”

  1. Alternative explanation: these papers despair of selling the paper to customers on its own. They know that to keep up sales of the paper – which contains the highest-revenue ads – they must bundle it with Web site access.

    Likely result: Newspaper advertisers will start marking down (faster) the value of newspaper sales.

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