On October 12th, the Evening Standard will drop its current 50p cover price, and go free in London, as Lebedev and his fellow shareholders desperately try to find a way to drag the London title into the realms of profitability. A surprising announcement to say the least.
Let's re-wind 3 months. London Lite (estimated annual losses of £10m) battling head to head with the LondonPaper (estimated annual losses of £12m) sucking the shallow puddle of London advertising revenue dry. The Evening Standard (estimated annual losses of £12m) has run its "We're sorry" brand campaign, the re-design is bedding in, and the Eros card has been consigned to the bin to be replaced with the pre-payment Standard card. By the way, we like the strategic view that giving customers a card allows you to engage in a proper two way dialogue, it's fundamental to a successful media business we fervently believe.
2 free papers, up against a paid for title with a maximum 50p cover price, all losing money. When Murdoch closed the London Paper, we felt that a deal had been done behind the scenes, allowing the London Lite to be withdrawn at a later date, removing the ongoing exposure of Associated to the annual losses. We didn't however think that the Standard would go free, this hadn't entered into our consciousness.
What vision of the future has the Standard glimpsed to make them take such a dramatic step? Yes, they had already been giving about half their print run away through variable "pricing" after 6pm. Yes, their audience reach had shrunk making them less of a mass market advertising vehicle, but by concentrating on a "quality" positioning and maintaining a positive purchase decision through a 50p price point, they had a differentiated advertising sale solution reaching a discerning upmarket audience.
The outcome? All circulation revenue sacrificed in an attempt to double or treble audience reach, putting them head to head with London Lite (part owner still of the Standard), and making the new Standard card redundant before it had begun to deliver value. Moving to a mass market free model, when all around us, we see free newspapers gasping their last gasps? Why didn't they take a 10p cover price position (it worked so well for The Times in the 1996 summer of sport that daily Monday sales topped the million level) and retain some income from this stream?
What they actually have done is bet the farm on making up all the revenues needed from display (and classified??) advertising, in a market where there remains consumer and advertiser choice, and a market which has a poor recent track record of being large enough to deliver the volumes required at the requisite prices. And they've abandoned their one-to-one relationship with paying customers on the Standard card, which could have built knowledge and thrown off third party goods and services revenues going forwards.
It smacks of going over the top at dawn, or ignoring the arrangements of the deckchairs to concentrate on a welcome party for the iceberg. If anyone knows who has advised them "strategically" we'd love to know, and would welcome (and publish here) their thinking behind the decision, to shed some light on this last roll of the dice.
We think this is idiocy of the highest order, and fear that 2010 will see the closure of the Standard. We hope we've missed something really obvious here, and the title will thrive, and will of course keep up our dialogue and commentary over the next few months.