The secret meeting your publisher might be attending today

More fodder, from Freedom Newspapers (and sent to me via PM):

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Freedom Newspapers to launch smarter and simpler subscription-pricing model

Call it newspapers’ version of sticker shock: a casual, non-committal reader agrees to a very attractive subscription offer, only to receive an eyebrow-raising bill offering a much higher rate shortly thereafter. The reader does not renew her subscription.

It’s a vicious cycle – and one of the primary motivators in creating a more intuitive subscription-pricing model across 23 of Freedom’s daily newspapers. Implementation of the new model begins June 1 at the Daily News-Sun newspaper in Sun City, Ariz.

The News Herald in Panama City, Fla., the Northwest Florida Daily News in Fort Walton Beach, The Lima News in Ohio, the Victorville (Calif.) Daily Press and the Desert Dispatch in Barstow, Calif. will also adopt the model in June, with other Freedom properties to follow suit over the subsequent two months.

The pricing strategy and resulting new model are based on the fact that U.S. newspapers significantly undervalue subscribers compared to newspapers in other countries, according to Lee Knapp, Vice President of Operations at Freedom. The new strategy will eliminate deep discounting and increase home delivery subscription rates, while at the same time simplifying rate structures and reducing subscriber churn.

“There’s a tremendous opportunity to standardize our approach and better monetize our circulation,” Knapp said. “Our new model provides some consistency in how we can sensibly raise rates and maintain customers.”

Freedom hired an industry consultant to review its current practices and create the new model. Subscriber pricing is based on demographic information specific to three tenure segments – new starts, long-term and loyals – and frequency of delivery preferences.

Prices for each tenure segment are set as a percentage of household income, and vary by frequency and subscription length.

Below are specific details about the three tenure segments:

New starts: A new start is defined as a customer who has subscribed for one year or less. To address high churn rates among new starts, the new Freedom model guarantees a subscriber will receive the initial low rate for two years. Rates for each property obviously vary, but duration does not. Locking in a low rate for a longer term is essential to become familiar with and see the value in the product, Knapp said.

Long-term: Defined as someone who has subscribed for more than one year but fewer than eight years. These are subscribers who appreciate the value of a newspaper subscription but who balance that value carefully against various other options in their daily lives. This requires a careful balance between price and perceived value.

Loyals: Defined as those who have subscribed for eight years or more, loyals find greater value in a newspaper subscription, have a higher tendency to read on a more frequent basis, and are willing to pay a higher rate. Rates are structured as such.

While there are risks in raising rates – especially in a down economy, it reinforces the value newspapers can deliver to advertisers looking to reach a quality subscriber base. Added pricing incentives (such as prepaying by credit card) are built in to the model to prevent stops if a subscriber requests a cancellation.

Conversations about the new model began in February. Freedom hosted six, two- or three-day regional meetings with circulation directors and publishers to discuss the updates. The sessions provided ample time to discuss local market pricing and other questions specific to individual newspapers.

The current rollout phase involves training customer service teams on how to advise subscribers on the new pricing and frequency of delivery programs.