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RJI tests research method with The Seattle Times

An interdepartmental team at The Seattle Times has been working with a research team at the Donald W. Reynolds Journalism Institute the last several months to develop a method for smart pricing and packaging decisions. The news organization recently announced it will be launching a new digital subscription plan in mid-March.

Among other tools, The Seattle Times is using pricing optimizer research conducted at RJI for their new digital subscription service.

The Seattle Times is using pricing optimizer research conducted at RJI for their new digital subscription service As the newspaper industry adopts pay models for print, online and mobile, the rush to implementation may have unintended consequences: leaving money on the table or driving away loyal, valuable customers.

Researchers at the Donald W. Reynolds Journalism Institute (RJI) at the Missouri School of Journalism have developed an experimental research method, known as the pricing optimizer. The research method surveys local markets to help publishers determine the most preferred bundle and most likely price point to generate the most revenue, while retaining loyal audiences.

Bundles can include various combinations of online, print and mobile products.

Murali Mantrala“The pricing optimizer is really a way of helping a company package all of these different options and price them in a way that is most appealing to the market,” said Murali Mantrala, marketing professor and Sam M. Walton distinguished professor at the Trulaske College of Business, University of Missouri. “Also, if you do this analysis, not only is this appealing to the market, it’s also more profitable to the company.”

Instead of asking people directly what they’re willing to pay for content, the pricing optimizer asks people to decide between bundles of attributes.

For example, readers may be given the option to purchase a print subscription with no access to digital products or a package that has both print and digital access.

Common mistakes

In the process of moving toward a pay model system, newspapers can often make mistakes.

One common mistake is guessing how much the readers will pay and not doing adequate research. This can result in overpricing or underpricing. This can mean losing out on possible revenue if readers are willing to pay more or losing valuable customers if prices are too high.

Esther Thorson“With the pricing optimizer, they know what the readers will pay,” said Esther Thorson, director of research at RJI. “It’s a way to let yourself predict, very accurately, which consumer is going to be attracted to which bundle of attributes and at what price.”

Another mistake newspapers can make is not creating a pay model appropriate for the particular market.

“You can’t just use another city’s results (for pay models) because your consumers are very specific to geographic regions,” said Thorson.

Another mistake is assuming that readers won’t pay for content at all, said Mantrala.

The Seattle Times

Vamsi KanuriMantrala and Thorson, assisted by Marketing PhD student Vamsi Kanuri, have taken their research into the newspaper industry to test the pricing optimizer tool in a partnership with The Seattle Times.

It’s been a learning process for both parties involved.

The initial survey of Seattle subscribers showed that people value content on seattletimes.com and are willing to pay for it. Initially, the company’s focus had been on print and other digital platform products, including mobile apps, to drive user and subscriber value.

Sarah O’Brien“What we realized was that we had skipped the more basic (website) to do something with more bells and whistles (apps) and the apps had less value to users,” said Sarah O’Brien, online research manager at The Seattle Times.

The Seattle Times’ interdepartmental team also discovered their audience valued the online “replica” or complete daily newspaper online as it appears in print.

The experiment in Seattle had two phases. During one of the phases, The Seattle Times wanted to determine if they should separately price different “vertical” sections of the newspaper including sports, news and entertainment into separate pricing bundles.

However, the Seattle team discovered this isn’t what the readers wanted — at least not at this point.

Janet Farness“It didn’t take the opportunity off the table for niche add-on products in the future but this vertical approach wasn’t going to be our starting ground strategy out of the gate,” said Janet Farness, strategic research director for The Seattle Times.

The company is moving forward with a pay model to package and price various news channels, including print, online and mobile products. Once they implement a pay model, The Seattle Times anticipates seeing changes in subscriber behavior, retention and revenues.

“Working with the University of Missouri to accomplish this pricing research has guided our move to push forward with digital subscriptions and the second round helped us to fine tune our approach to bundling and messaging,” said Farness. “Those are huge strategic drivers for the organization.”

The research team at MU has also been supportive, they note.

“The team has been incredibly responsive, accommodating and engaged,” said Farness. “We appreciate their passion for creating sustainable business models for journalism.”

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For more information about the Pricing Optimizer, contact Brian Steffens, RJI communications director, at steffensb@rjionline.org or at 573-882-8251.



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