Today the Chicago Tribune announced that it would be introducing a premium edition of its home delivery newspaper.
According to Crain’s, the Tribune will apparently now be available in two versions: the standard home delivery paper and a premium home delivery version with expanded content and features. The new version will be more expensive. You can read the Crain’s article here:
The basic strategy seems to be fairly clear. First, reduce the quality of the core product in a bid to cut costs. Second, offer a new version that restores the quality at a higher price.
This approach can certainly work. Indeed, it is the formula that PepsiCo has followed at Frito-Lay with considerable success: gradually reduce the number of chips offered in each bag, saving money on product cost. Then, when each bag has only two or three chips, introduce a new “Big Grab” size with more chips and a higher price.
So will it work for the Tribune?
I am fairly skeptical.
I am very supportive of charging for content. Indeed, I think the only way a publication will make money these days is to have articles that people will pay to read. This is why the Financial Times is doing so well; the paper has terrific content and people happily spend to get it.
The Tribune’s approach, however, is likely to be very tough to pull off. The Chicago Tribune has a free on-line site and a free daily paper called Red Eye. Not surprisingly, fewer and fewer people have been buying the traditional print version. To solve this problem, the Tribune is introducing an enhanced version. So there will soon be an enhanced version, a standard version and a free version. This will be a nightmare to manage. The New York Times tried a similar approach with its website several years back and eventually abandoned the effort.
The likely outcome of this move: the heart of the franchise, the traditional delivered paper, will decline faster than ever. And the company’s troubles will get worse.
Of course, this might be just one step in a broader strategic shift, so there could be a very smart and savvy play developing.
At the moment, however, it looks like a company struggling to fix a fading core business by introducing new products that make things much harder to manage. And this is rarely successful.