The Reading Camp in MTR

You cannot beat a rivalry company who sell goods for free, can you? Who's gonna buy from you if they could get elsewhere for free? The answers should be straightforward enough: No and no. Put it into the prospective of the newspaper industry, however, the answers would be a little tricky.

Skeptics said pay newspaper would face the fate of pay-TV Rediffusion back in the late 1960's, when free-to-air TVB started. TVB established its broadcasting business in 1967 by offering free access and beat the British-controlled, once incumbent, Rediffusion while Rediffusion charged subscription fees. The overwhelming success of TVB's "pricing strategy" forced Rediffusion to give in billing in 1973, merely six years after TVB was established. Still, its initial success on viewership, combined with its later efforts on primetime dramas, which were just as appealing, TVB has for the past few decades, sustained its prominent position in Hong Kong's TV broadcasting industry.

The history of TV broadcasting history appears to support an obvious point: Cutting price wins more customers. Cutting price to zero wins all. This hypothesis holds true to almost all business. Newspaper business is an exception. Both TV and newspaper are media business. As TVB beat its rivals by offering free viewing, why free newspapers cannot kill pay-newspapers?

The reason is obviously on the hardware. TVB does not deliver television sets into your homes. It only sends airwaves and you have to buy whatever television sets you like in order to receive the airwaves. However, newspaper publishers buy the paper materials.

The cost of setting up broadcasting stations, hiring scriptwriters and actors/actresses and producing dramas are relatively fixed, no matter how many viewers there are. The more viewers the broadcaster has, the higher advertising rates it can charge. As the additional cost for serving a new viewer is zero, it is best for the broadcaster to have as many viewers as possible.

Newspaper business is different. As it involves paper materials, by giving away newspapers for free, it fully subsidizes the readers for the paper costs. Certainly, the advertising rates rise with the readership. But it also depends very much on the quality of the readership, which would directly affect the benefit of the advertisers.

Although they often bolster circulation statistics, free newspapers do not want to waste papers. They want the papers to reach the most valuable readers for their advertisers.

Please refer to my previous article "Before you read a newspaper". It is wrong, however convenient, to think that supply chain of newspaper business, those of either free or pay-newspapers, is like this: raw information --> reporting --> editing --> printing --> wholesale --> retailing. No, it doesn't work like that.

In fact, information is plentiful. What is scarce is your attention. When i think of new cars, i immediately recall the image of the Audi A4 i saw in an ad on today's newspaper. If you ask me what today's headline news is, the first thing i recall from today's newspapers is Grand Promenade with pretty ladies and blue sky. i can't get it wrong, can i? The ad of this Shau Kei Wan property estate appeared on the entire first page of today's the Hong Kong Economic Times as well as the Hong Kong Economic Journal.

Advertisers of properties, cars, luxury watches, beauty services want your attention so much that they are willing to pay for the paper materials for you if only you glance the newspaper next morning.

However, the advertisers do not entirely trust the circulation statistics when they consider placing an ad. The advertisers also concern about the quality of the attention -- whether readers just throw away the newspaper in two minutes or they spend a considerable time and effort on it.

It is easier to identify the more serious readers for pay-newspapers. If you need to pay for it, you would probably read it. Otherwise, you won't buy it in the first place. The $6 charged for the newspaper indeed serves the purpose for the publishers to identify the more serious readers.

It is a bit tricky for free newspaper publishers to identify serious readers. But for free newspapers, everyone gets them for zero cost. Some spend a few minutes on them. The others put them on the table and forget them. A few desperately take them for the use of wrapping up their dog's wastes during nightwalk. In the meantime, free newspaper publishers waste their paper costs and advertisers waste their marketing budgets.

How about a fair deal? Free newspapers are as usual, but those who take them would have an obligation to stay in a designated area, a "reading camp", for a considerable period of time without doing anything else. Strangers are all around you, and you are unlikely to find a friend to chat and kill time. You are virtually "invited" to read in this "reading camp".

This "reading camp" idea sounds very odd, something could possibly happen only in the former Soviet Union or Nazi Germany. No, it didn't happen then. Instead, it happens to you every morning during the ride to work by the mass transit railway.

MTR train is an ideal "reading camp". i noticed that there are more people sleeping in bus than in MTR trains. The seats in MTR trains are not comfortable enough. The light is bright in MTR trains, keeping you from asleep and facilitating you to read. The train runs steady enough. There is no beautiful landscape scene but black tunnel walls outside the windows, sparing your eyes. It is just impossible to listen to radio as radio frequencies are blocked under the ground. Food and beverages are not allowed in the train.

Under such an environment, you are all set to get your head down on a newspaper. And you get trapped there until arriving at the destination.

It would be too creepy to open a board-sheet-sized newspaper inside these crowded moving capsules. Therefore, publishers tailor their newspapers into tabloid sizes to fit the tiny space among commuters.

Therefore, those people who grasp free newspapers and rush toward the platforms are very likely to be more serious newspaper readers. They immediately get their certification ISL 9000, ("I Shall Look"), as qualified suppliers of attention, each eligible for the waiver of the $6 payment.

Free newspaper publishers seem to have discovered these "reading camps" much earlier than i did. Metro has run a successful business by signing a contract with the MTR Corporate for the rights to distribute their newspapers inside each of the subway stations. am730 and Headline Daily send their distribution workers near many entrances of subway stations.

Will free newspaper kill all the pay-newspapers just because of their zero pricing? My answer is no because free newspapers will waste a lot of paper if they target readers who do not travel by MTR. The few coins quite affordable by many readers will continue to work as an old trick to find the right readers.

Next time, i will touch on the role the newspaper contents play.

Jun 6, 2006
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