Sunday, August 9, 2009

Newspapers should emulate Comcast, not put up pay walls

With all the talk from newspaper moguls about making the public pay for online news, it might do the industry titans well to check out their cable bills. And the latest earnings report for Comcast versus their own.

There's a lesson in the tangled collection of charges Comcast hits its customers with. I called one night recently about my $195.58 monthly Comcast bill. That's for service to two TVs and so-called "high-speed" Internet. So I'm paying the cable company roughly $2,400 a year, when I pay roughly $770 for seven-day delivery of The New York Times.

The gap seems way out of line. But it also helped make sense out of last week's earnings reports. "Profit at Comcast increases 53%, largely on higher prices," reported an Associated Press story on The Times' Web site. I'm sure the newspaper moguls wish they could report similar good news. Instead, the Times is selling off assets to survive.

One of the main solutions of Murdoch and other newspaper big shots for industry woes is to make users pay for online content they're already getting for free. Maybe they should take a look at their cable bill and try a different approach.

Comcast dings me first for standard cable (think the daily newspaper). That costs $55.99 in Denver. Can you imagine if the newspaper could get half that for a seven-day subscription? Raising the street price of the daily paper to 75 cents from 50 cents is too timid. A decent newspaper should easily cost a buck. The Times is right to be at $2.

When I called to cancel my local paper (The Denver Post) recently, the representative put up little fuss. Had I thought of Sunday only? he asked. Wouldn't I miss the coupons? I could get the e-edition the other six days. Wow! Exciting. Not a word about the value the paper can add through special services. Not a mention of what it could deliver to my cell phone or the cell phones of the four others in my household on my Verizon family plan. (OK, they don't all live with me, but they all have a connection to Denver.) Not a word about text messages. Or e-mails. Or special packages of news. Or any benefit other than the print newspaper.

You can be assured that Comcast isn't satisfied with a "Standard Cable" order. And I guarantee you its agent, unlike the newspaper person, started scrambling to fix my package when he learned I was unhappy with what I was paying. He wasn't about to lose me and even told me where to call on a weekday to get my price lowered. (Of course my immediate thought was that the company had been happy to charge me to the hilt until I raised an objection.)

Comcast also gets me for the "Preferred Package." That's $16.95.

Then I get Dvr/hdtv. That's $15.95.

I like HBO. That costs me $19.99.

I get STARZ, too. That's another $19.99.

Then I get the Digital Additional package, for $6.95.

So my total, before taxes, for cable television is $135.82. Ouch!

Then comes high-speed internet. That takes a bite of $45.95. The reason I put quotes around "high-speed" is that the agent was immediately willing to double the speed of my service without charging me a penny. (How come I didn't get the real high-speed without asking?)

Then comes $13.81 in taxes. (We would have been happy to get that much for a newspaper subscription most years at the Rocky Mountain News.)

That brings me to the total: $195.58. And the question for the newspaper industry: Is there really nothing more you can bundle into your bill? Can you not offer deeper services than a basic subscription that will make my life better? If you could - and I believe you can - wouldn't that help alter your economic equation? Couldn't many newspapers make money from new revenue streams, if they would only create content or services people would be willing to pay extra for and then charge them for what they want.

This is why I think the membership model is so much better than the subscription model. Not just the museum-style membership package the Times is apparently considering. Not that that might not help, somewhat. But there's so much more it could do.

Would you pay extra for a membership if it would save you money? I do. My family belongs to Costco. If customers see benefits, they're willing to pay. Which is why just focusing on getting people to pay for news online is so narrow-minded. And why the incremental pricing model of Comcast is such a smart approach.

118 comments:

  1. John,

    Comcast sets the standard for lousy customer service and terrific employee abuse. That said, I take your point about tiered pricing as a useful model. One question: I'd be fascinated to hear about your decision to cancel home-delivery of the Post. (As a former longtime Rocky reader, I've been tempted myself, but have yet to do the deed.)

    ReplyDelete
  2. John,

    I will be happy to assist in possibly getting a better deal for you. I work for Comcast. Don't hesitate to contact me. I'm here to help.

    Regards,

    Mark Casem
    Comcast Corp.
    National Customer Operations
    We_Can_Help@cable.comcast.com

    ReplyDelete
  3. Hi John - Like the blog.

    I want to challenge the notion that newspapers should try to sell add-ons - which is something for too long they've relied on - coupons, classifieds, a new layout, etc. etc.

    Comcast doesn't try to sell the customer anything but what we want - more of the content we want.

    Newspapers should try to sell news. It should be delivered in every way possible. But really the people who buy magazines don't spend $5 for the ads or the special deals. They are bought for content.

    It really is time to remind people why they get their local or national paper - it's for the top-notch news.

    How much will they pay for that? Who will pay for that? Could an NPR model of membership dues and registration drives save newspapers, not just the anachronism of a print product, but as a news-gathering industry?

    ReplyDelete
  4. Hmmm.

    I must admit I'm having trouble absorbing this. First, I'd say most of the country absolutely despises their cable provider, resents the pricing, resents the tiered-system pricing structure and the nickle-and-diming of every last cost, and particularly resents the overall lack of value of most of the additional services they must purchase just so they can get access to the one or two good things they really want (ie, I don't need 100 HD foreign-language soap opera channels just to get HBO, yet I have to pay for them anyway).

    People also consider there to be of little or no value -- and the pricing structure suggests as much -- for the vast majority of the basic-service content. Do we want to imply the paper's a basic service and the Web/e-edition/texts/unnamed special news packages (somehow created by a thinned staff?) are premium services with added value? Are we going to just deliver the lifestyles section and the comics, and then tell people the front-page section and sports are part of "extended basic," while unscrambling our Web site is "premium"?

    To me, there are two huge flaws with this. First, whether it's satellite or cable, if people could dump these services for instant a-la-carte programming, they would. If it were legal to download shows on the Internet, and if everything were streamed on demand, no one would buy cable or satellite. TV providers are now where newspapers were 10 years ago, and they're seeing a population that wants to get rid of them. The savvy have already dumped everything but their Internet connection to stream Netflix, Hulu and the rest of their favorite shows on demand (illegally or from iTunes for a fee), and canceled their Comcast services. It's just a matter of time before this is the new norm. A la carte, for free, on demand sounds a lot like calling up the single news story you want on the Internet instead of getting the whole paper, let alone the additional "premium" services you wish you didn't have to pay for. You're looking 10 years backward, not 10 years forward.

    Second flaw: The monopoly. Cable and satellite are competition indeed, but it's one or the other or nothing at all, and you must pay a pretty penny for either. So people suck it up and pay because we're locked in (though not for much longer). Newspapers have no local monopoly. I could get world news anywhere, and local gossip plus the blogs will mostly take care of my local news (or TV/radio will tell me). Long before you even consider a tiered pricing system, you have to convince local readers that your news product has value that they can't get elsewhere -- something your monopolistic cable provider doesn't have to waste resources on, since they're the only game in town. As staff shrinks, the coverage gets shoddier, and the free competition gets broader, news orgs can't even convince people news has value, or that being an informed and educated local citizen is more important than what happened on American Idol last night. Asking them to pay more for additional (unnamed, unproven) premium services never addresses the question, or problem, of why they're more and more unwilling to even pay for basic services -- the part that's not just our specialty, but our bread and butter.

    ReplyDelete
  5. Thanks for the comments.

    To Mort: You might remember that I wrote a blog post a few weeks back about how newspaper executives should take two weeks to a month and only read their digital products. No newsprint. That way they'd find out what their customers are experiencing and perhaps understand more deeply the currents that are changing journalism. That's what I'm doing with the Post. I was getting four papers. Now I get two: The WSJ and NYTimes. I read the Post on iGoogle. So far so good.

    ReplyDelete
  6. To Comcast cares1: Thanks for the offer. I did renegotiate my Comcast contract today. The agent was very helpful. I dropped some services and switched to special offers and saved a lot of money. Much appreciated.

    ReplyDelete
  7. To enhager: I agree with you about news. I think content is king. But that doesn't mean it shouldn't be defined more broadly and deeply than most newspapers do today. I'm suggesting newspapers follow the NPR model, but take it to another level by giving more types of content.

    I hope this helps.

    ReplyDelete
  8. To Kevinthegreat: Thanks for your thoughtful exploration of the issues. I don't argue with you about customers resenting the cable companies. But that doesn't undermine my point. My point is that customers should be able to choose what they pay for and that newspapers should offer an array of content that appeals to a wide range of interests. As for the monopoly issue, newspapers need to find a way to differentiate themselves. I think they do it with the quality of their reporting. That's difficult in these economic times, but not if they're creative about where they focus their own resources and how they partner with or involve others. I hope this helps.

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