Monday, August 1, 2011

Morning Brief: The new anti-business coalition; is avoiding the App Store the right move for newspaper publishers?

Let's start the morning with a little story . . .
A number of years ago I was the publisher of a B2B magazine in the transportation construction industry. As publisher I joined the big, important trade associations, serving on committees such as the legislative committee where we set policy for the trade association's lobbyists. Members of this committee were generally the CEOs of large and mid-sized equipment manufacturers – I was fortunate to be part of the committee because these guys represented our biggest advertisers.

I remember one lunch that was held shortly after the 1996 election that saw Bill Clinton reelected. The mood around the table was rather strange, people were in generally a good mood considering that I knew that this was a pretty conservative group of executives.

I asked those sitting their munching on sandwiches about the election, most voted for the other guy, right? Right. But yet Clinton promised more spending for their sector, while Dole was against a rise in the transportation budget. So why vote for Dole? Taxes, of course, was the answer. So, I said, you personally vote against the interests of your own company and for your personal interest? One CEO of a midwestern firm laughed and said "yeah, don't tell our board", and the others laughed in agreement.

I can imagine this same group of CEOs sitting around the same table his morning after the news that the President and the Republicans had agreed to a debt ceiling bill. The group would thrilled that the Republicans took it to the President once again. But when asked about what this would mean for their businesses they would probably answer with "tough times ahead".

If political philosophy will sometimes dictate supporting policies that you know are actually against the best interest of your company might that same behavior be behind the actions of some newspaper publishers who insist on avoiding Apple's in-app purchase policies?
This continues to be my only explanation for why publishers would create a replica app for their newspaper than make it impossible for a reader to easily buy a subscription. Since the publisher can set their prices the fee that Apple gets ends up being far less than the percentage publishers pay out through their circulation departments.

Although tech writers never mention this, mainly because they've never worked at a newspaper, but the circulation department is not a profit center at the vast majority of newspapers. The goal, at best, is to come as close as possible to break even as they can. So if a publisher is willing to lose money to get a paid subscriber their newspaper, why is losing only 30 percent consider a nonstarter?

I think about this question every time I see a new reader app launched in the App Store. Today, the newspaper is the The Tribune, a McClatchy paper