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Strategic analysis
Why The Guardian Pricing Model Is Wrong

Written by on January 21, 2011

Yesterday I tweeted "The new Guardian iPhone app: http://bit.ly/dRUsgX - I like the multi-channel strategy, but their pricing model is all wrong." That caused several people to request that I elaborate on it, most saying that GBP 3.99/year is really good price. Well, it is. In fact, way too good. But that is not the real problem.

If you read the article "Running The Numbers: Mobile Newspaper Subscriptions" over at paidContent.org, you will find this nice table illustrating the different pricing options.

The problem is that there is different price for different channels. This makes no sense whatsoever. Let me illustrate why. Here is a screenshot of how The Guardian looks on the iPhone - both as an app (for £3.99) and as a web app (for free).

People are not going to pay for something they can just as easy get for free. It just doesn't make sense. All you need to do is to go to www.guardian.co.uk. That is much easier than trying to find it in the App store.

Note: Also notice that you can read the full headline in the mobile web app, but not in the iPhone app. A common mistake the app developers make all the time.

Multi-device reality

An even bigger issue is that we now live in a different world. The average person uses 2.4 devices on any given day. Which one they use depends on which one they happen to be closest to.

At work, they might read The Guardian on their laptop, iPad, or mobile depending on the situation. At home, while relaxing in the couch, they might use the iPad or mobile. And, they will probably use the mobile while waiting in line at the grocery store.

It's great that the Guardian is embracing the multi-channel strategy, but having a different price per channel is a reminiscence of the old world of destinations. People are not reading The Guardian on a specific device. They are reading it on all their devices.

You need to have one price for all channels, so that you do not force people to a specific destination. Turn yourself into a source.

The price

Obviously, we also have to discuss the price. I mean, COME ON PEOPLE. ARE YOU INSANE!!! £3.99 (about $6) for a full year... a year?!?!

Do you want to go out of business? Is that the real plan? ...to destroy any chance of having a future? £3.99 is like two cups of coffee!

Let's look five years into the future. By then the printed newspaper will reach a point where it is no longer economically viable, and media companies have to cut it or go bust.

Newspapers, like The Guardian, have to somehow convert all their print subscribers to digital. However, since a print subscription cost £308/year, they will have to get almost 100 times as many digital subscribers as they have print subscribers today. And that is just to maintain their current level of revenue.

It is economic suicide. Stop destroying your future.

Here is an idea. Apple sells some of the most expensive products on the market compared to their competitors. But, they are the most profitable company of the pack.

Why? Because Apple focuses on creating value. People automatically think that this must be valuable, because they are paying a lot more for it.

People will assume that the value is worthless when newspapers sell for almost nothing. £3.99 for a full year? A pack of toilet paper is more expensive!

How low can you get?

Don't get me wrong. I love the Guardian. I think it is one of the best newspapers on the planet. I follow several of their journalists on Twitter, and I love their tweets. They embrace the link. They connect. They even allow you to share their article in new ways. They have a multi-channel strategy, and they are obviously very in tune with the digital lifestyle.

Their content is really good. I love reading many of their articles. They are not a newspaper that just focuses on link-baits. The Guardian produces value. They provide insights. They put into perspective - they are the good guys!

Nevertheless, they sell the newspaper like crap!

You have to demonstrate that what you have to offer is valuable enough to pay for. You can't do that if you price your product too low.

I know that it is really hard to get people to pay for content online. I am trying to get people to pay for Baekdal Plus, and it is not easy. In fact, it is exceptionally hard. Nevertheless, it is the only way forward.

Stop giving away value for nothing and set one price for access to all channels. Demonstrate that you are worth paying for.

The Guardian should price the newspaper at £3.99 per week, and make it one price for all channels - including the web.

Read also: Forget The Paywalls Build Shareable Paygates.

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Thomas Baekdal

Thomas Baekdal

Founder of Baekdal, author, writer, strategic consultant, and new media advocate.

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