Your questions answered: how to price news products

Credit: Mousetrap Media / Frank Noon

Every newsroom needs to keep the lights on and make sure the bills are paid. Events, subscriptions and merchandise are just some ways to earn revenue today. But how do you decide on a price point and what challenges lie in wait?

At Newsrewired this week (27 November), we held an AMA (ask me anything) with one of the top brains in the industry, Chris Dicker, CEO of Candr Media Group. Dicker has two decades of experience in the media industry, specialising in leading and creating commercial teams and new revenue streams. More recently, he led the management buyout of Trusted Reviews from TI-Media to Candr.

Q: What goes into costing up a product?

Chris Dicker (CD): It depends on the product and who you are aiming at, and to a degree, it is worth what someone is willing to pay.

Think of the super expensive Richard Mille watches as an example. They wanted to produce a watch around the £20,000 mark. So the rumour goes that there was a bit of a marketing mess-up and someone put a decimal point in the wrong place and the watch ended up retailing for £200,000. And then someone bought one - and the brand never looked back.

There is no clear way to know how much to charge for new products. You need to get closer to your customer base and experiment with different prices to find the sweet spot.

• Read more: How The Bristol Cable raised membership revenue by 25 per cent in a year

Q: Two decades ago, news brands missed their chance to introduce paywalls and paid a massive price. Today, AI and social media companies are eating the news industry's lunch again - they are using our content to train large language models (LLMs) without paying us a penny. Are we making the same mistake?

CD: Do not do a deal with the devil. Or at least be very, very careful with who you do deals with. You have got to look at the value of the content you are producing, and if someone is not willing to part with the value that you are putting into your content, do not give it away just because someone thinks you may make some money in the future.

Q: Many news brands offer cheap subscription trials, say $1 a week for six months, to try and build habits. Can we do this in a way that does not devalue the journalism behind it? And how do we put the prices up at the end of the trial?

CD: Let's face it, we have players who are repackaging our content and giving it away for free, not even for $1.

Try to create habits with your audience in the environments that you want and that you can control. The problem we have is that our content is so spread out across so many different platforms, that we do not own those relationships with the audience.

• Read more: How The Times attracts and retains digital subscribers

Q: If publishers ‘shouldn’t do a deal with the devil’, how do they then protect themselves against AI?

CD: First, update your own terms and conditions so that AI bots are not allowed to come along and take your content. Consider getting a bot blocker in place. Yes, they have taken a load of the content already, but that does not mean we should allow them to carry on taking it.

Then there are tools like TolBit, which can identify which bots come to your site, when, how often and what content they are looking at. It can also allow you to push them into a subdomain specifically to create a paywall for bots.

From a US law perspective, this matters because there are higher damages for hacking a paywall to get around it, than copyright theft and infringement.

Q: Can AI replicate the intrinsic value of journalism, and can we charge for it?

CD: Not really, there is no original value in what AI produces. But regardless, payment should be made to a publisher if it is using its valuable journalistic content. 

Q: Are micropayments a sustainable model for regional and local news publishers, for example? 

CD: If the micropayment prompt is coming from the big tech companies, then yes, that could be a sustainable model. Because most consumers place more value on the technology than the news content. 

It is needed as disruption is coming from the rise of user agents - software which acts as a virtual identity of a user when accessing a website - because currently, there is no technology able to differentiate between user agents and genuine users. 

User agents do not click ads or buy products through affiliate links, and the minute the ad industry catches on, ad and affiliate revenue is under threat.

Q: How should small and medium-sized publishers diversify their revenue streams?

CD: If you are not looking at diversifying your revenue stream right now, you are nuts, given the pressure on businesses and the threats posed notably by AI companies.

It is a case of looking at your audience, where they are and how you can engage them.

Podcasting might not be right for you, but for a lot of your readers, it may be. Newsletters like Substack are getting some criticism, but it is a good place to start for independent publishers.

• Read more: How The Financial Times is broadening its portfolio

Q: What other opportunities are going unnoticed for independent publishers?

CD: Video is probably going to be a much safer bet than pictures and words. The curve may flatten at some point, but you have a few more years until then. Google and YouTube might be different platforms and products altogether.

• Read more: How Times Radio is building an engaged YouTube following

Q: How do we evaluate if we are charging enough for our products, and whether to charge more or less?

CD: You need to be careful about mixing up value and worth. Small changes can make a massive difference.

Volkswagen ran a discount campaign in Germany a few years ago, giving £4,000 off the price of a new car. That was about 15 to 20 per cent of the value of the car. And obviously, they shipped a lot of cars.

But then six months later, they flipped the deal, giving £4,000 for any car you traded in. They saw five times more sales, even though it is a worse deal for the customer who has to part with their car. But the perceived value (getting four grand for your old car) versus the straightforward discount meant they attracted more customers.

The point is: have a play around with the marketing and pricing of your products, rather than just settling on one price and sticking to it forever.

• Read more: How to nail your subscription pitch

Q:  Mission- and identity-driven purpose statements are often used in news to sell subscriptions, think The Guardian in the UK, The Washington Post in the US.  There are academic studies showing that the highest willingness to pay is when you tell people you are going to support independent watchdog journalism when the industry is in a crisis. Are there particular risks with this strategy?

CD: Yes, so try it with a fraction of your audience before committing to it. When was the last time you got a focus group together and asked them what they thought about your product or mission? This was part and parcel of magazine media back in the day, but fewer and fewer newsrooms seem to listen to actual humans.

Look beyond the data on a spreadsheet and float your ideas past your audience if there is a risk in how your ideas will be perceived.

Chris Dicker's responses have been edited for brevity.

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