January 25, 2013

Two weeks ago, The Post raised its prices for single-copy sales of the newspaper (as opposed to home-delivery subscriptions) . This change was unannounced, which I think is the wrong way to do business when your business is transparency and accountability.

Still, the new prices — increased from $1 to $1.25 for daily editions and from $2 to $2.50 for Sundays — are not out of line with those of other metropolitan dailies. The New York Times, for instance, charges $2.50 daily and $5 Sunday ($6 outside of the New York metropolitan region); the Boston Globe is $1.25 daily and $3.50 Sunday; and the Los Angeles Times charges $1.50 daily and $2 Sunday. Of 10 metropolitan dailies I looked at, most charge $1 for daily and $2 or $2.50 for Sunday.

Now, a 25 percent price increase (on the daily paper) is almost 15 times higher than the 1.7 percent inflation rate, as readers, particularly those on fixed incomes, protested to me this week. But this increase, as with others in recent years, is not about inflation. It’s about survival and about how the economics of news is changing.

Before the Internet came along, big newspapers earned about 80 percent of their revenue from advertising — classified ads plus the revenue from pages of ads for Hecht’s, Giant, Safeway, car dealers, airlines and other retailers. The other 20 percent came from circulation — single-copy sales and home subscriptions. That’s why for a very long time the paper cost a quarter — until 2001, in fact, when The Post raised the price to 35 cents. Advertisers paid the freight.

Today readers pay the freight. Classified ads have largely disappeared, going online to free sites such as Craigslist. Although retailers — the Targets and Mattress Discounters — remain some of The Post’s biggest advertisers, especially in the Sunday advertising inserts, they have many more ways to reach you, among them direct mail, television, radio and the Internet.

Print advertising revenue industry-wide has been declining since 2005. The financial crisis in 2008-09 accelerated the decline. Now, according to The Post’s most recent financial report, for the quarter ending Sept. 30,the rough split of revenue was 45 percent from advertising and 55 percent from readers through the purchase of subscriptions and single copies.

What about all those ads in the online Post that fill your computer screen, expanding and shrinking seemingly at will and standing in the way of the video clip you want to watch? Well, the revenue from those is included in the advertising total but is outpaced 2 to 1 by print ad revenue.

What The Post charges for online ads is a tiny fraction of what it can ask for print ads. Why? Because the competition for online ads is intense across hundreds of Web sites and they’re not nearly as effective — and hence, as expensive — as print display ads. Although they may seem to be everywhere, they don’t earn much for The Post. Online ad revenue is inching up but only inching.

Now, if you subscribe to home delivery or buy your Post at 7-Eleven, it may irritate you to pay for that paper copy while online readers get the same news free. I don’t blame you. It annoys Warren Buffett, the famous investor and Washington Post Co. shareholder, too. “You shouldn’t be giving away a product that you’re trying to sell,” he told CNBC last February. “Newspapers have been giving away their product at the same time they’re selling it, and that is not a great business model.”

That said, the idea of charging for the digital Post goes against my populist grain, and probably that of Donald E. Graham, The Post Co.’s chairman of the board, as well. In a democracy, everyone should have access to good information at an affordable price so they can be informed, participating citizens.

But I’ve changed my mind on this. I think that The Post will, and should, move toward charging for its news regardless of where it’s published. The Post should charge an “all-access” fee — your subscription will cover the print edition at home in the Washington area, plus digital access through your computer, tablet or smartphone.

For most of America’s history, news has been a cheap yet precious commodity — a penny, a nickel, a dime, a quarter. It is still precious, but it may no longer come cheap.