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Voices: Back Story

Globe raising price again

BY: Bruce Mohl and Paul McMorrow


The Boston Globe is raising the newsstand price of its daily paper by 25 percent next week as it scrambles to prop up circulation revenue in the face of declining advertising income.

The state’s preeminent news organization managed to fend off a threatened shutdown in 2009 by negotiating givebacks from its unions, but the upcoming price increase and the bleak advertising numbers indicate the newspaper, while stable, is not out of the woods yet.

The New York Times owns the Globe. In its financial reports, the Times lumps the Globe in with its other New England property, the Worcester Telegram. Over the last decade, the revenue brought in by the two Massachusetts newspapers has plunged and the source of that revenue has changed dramatically. In 2001, the two newspapers reported nearly $641 million in total revenue, with 70 percent coming from advertising, 25 percent from circulation, and 5 percent from other sources. By 2011, overall revenue had fallen 38 percent to $398 million, but now advertising represents just half of the revenue pie and circulation accounts for 40 percent.

Advertising revenue cratered over the 10-year period, falling 56 percent, while circulation revenue held fairly steady, dropping only 2.6 percent. The Globe managed to stabilize its circulation revenue at a time when its subscriber base was shrinking by 50 percent by raising the price of the daily newspaper.

Both newsstand and home subscription prices increased substantially in 2009, but that created a vicious cycle. The price hikes boosted circulation revenue, but they also prompted an exodus of readers, which contributed to a decline in circulation revenue. By 2011, circulation revenue was trending lower than what it was before the 2009 price increase.

The cycle may be starting again. The Globe plans to hike the newsstand price of its daily paper from $1 to $1.25 next week, with the cost rising from $1.25 to $2 outside the Greater Boston area. No word yet on whether home subscription prices will increase again as well.

One interesting twist to this drama bears watching. The $3.50 price tag of the ad-heavy Sunday Globe didn’t change in 2009 and it isn’t changing next week. As a result, the circulation of the Sunday paper is starting to stabilize. During the most recent six-month circulation period, which ended in September, the Sunday Globe reported a 1 percent increase in subscribers, while the daily paper’s circulation continued to drop, falling 6 percent.

The Sunday gains may continue, in part because the newspaper is giving digital subscribers a financial incentive to buy the Sunday paper. When the Globe unveiled its password-protected website BostonGlobe.com last fall, it set a price of $4 a week. But readers can get the same digital access to all Globe content by subscribing to the Sunday paper – for $3.50 a week, a savings of 50 cents.

The Globe is engaged in a desperate balancing act: It’s trying to lure digital subscribers and shore up Sunday circulation even as it struggles to raise revenue by hiking the price of the daily newspaper and scrambling for ad revenue. There are a lot of balls in the air.

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pjlane31
Says on 03.31.2012
at 9:48 PM
I was in my local Supermarket this last Sunday night and noticed the racks that hold the Sunday Globe were still full of unsold papers. They just do not seem to try very hard over there anymore , so many stories are re-hashed from the NYTimes on down . The newspapers politically correct and left leaning editorials are tiresome , it seems most of the writers are transplants live in Newton , Brookline and have no sense of local history or politics other than following Pravda rhetoric from the Times and banned books in Weston, The only way to save this newspaper is for it to be bought by locals and rebuilt and staffed from the ground up with a real New England presence.
meterman
Says on 03.30.2012
at 11:27 AM
I believe this increase is terribly shortsighted. By addressing current revenue instead of circulation, the problems will just perpetuate. Greater circulation would attract more advertisements and would also position the Globe to increase advertisement rates.

Before this once great newspaper eventually becomes extinct, I would have liked to see a major push to resurrect itself to some semblance of its former glory.

They should have considered a "price cut" (let’s call it an investment in the future) followed by a massive promotion and subscription drive. When greater circulation evolved, the momentum would finally be back with the newspaper instead of against it. Positive momentum is critical to producing hard hitting journalism and gives people a damn reason to buy it every day. Bring back and maintain quality reporters and columnists. Conduct costly investigations. Bring back the TV guide and other sections that were eliminated or marginalized.

This increase is a fine example of "focusing on the problem instead of the solution" or better yet, “25 cents smart and dollar stupid!"
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