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Wednesday, September 26, 2012

The problems with going to free circulation

For at least a couple of years, Nicola and I and our consultant, Ken Blum, had talked about the possibility of going to free circulation. It was so difficult to get people to subscribe to the paper, that we felt the only way we were going to help our advertisers was to get the paper out there for free. There were many problems with that idea, though. First, we’d lose about $50,000 to $60,000 in subscription and over-the-counter revenue. Next, we’d lose about $20,000 to $30,000 in legal notice revenue, because state law required that the newspaper must have paid circulation. With just two line items alone, we’d be losing about $80,000 in revenue in one fell swoop. Plus, our printing and mailing expenses would go up dramatically by printing and mailing 6,700 copies (in the 83634 ZIP code) or 9,700 (all households within the Kuna school district).
It was obvious that we’d have to more than double advertising rates in order for it to work. As it was, especially given the depressed economy, businesses were having a hard enough time paying $24 or $30 for a small ad in the paper every week. To expect them to pay $75 or $100 per week, or $300 to $400 per month, did not seem tenable.
A reduced — practically free — subscription rate, though, would allow us to maintain at least some subscription revenue and all of our legal notice revenue. With higher circulation, the idea was that you’d be able to attract more advertisers, ads would have a better return on investment for the advertisers and you might be able to charge a little more for the ads, making up for the lost subscription revenue.
But you'd have to get a really significant number of new subscribers.
It was worth a shot. We had tried just about everything else.

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