Subscriptions vs. Ads
Kansas publisher launches tri-weekly newspaper with revenue business model centered on subscriptions
By Angela Kurtz
Associate Marketing Manager
Ben Franklin’s Theory of Operation.
For the record, I should state that Benjamin Franklin neither promoted any real theory of operations nor endorsed one, at least not that I am aware. However, Larry Hiatt, owner and publisher of Columbus News Report in Columbus, Kan., uses this descriptive term to explain the business model under which he set about building and growing his community newspaper.
Located in the southeast corner of the state, less than 30 miles from Joplin, Mo., the Hiatts publish the Columbus News Report three times a week serving a population of just over 3,200 residents with roughly 4,500 in their trade territory.
He and his wife and business partner, Sharon, took an atypical approach to starting their community paper, initially pursuing a subscription-based revenue stream in lieu of advertising dollars to create the financial foundation of Columbus News Report.
So, what’s the link to Benjamin Franklin?
According to Larry, during the colonial times of newspaper printing, there was no large advertising base of grocery stores and auto dealerships to sustain the printing and delivery costs of community papers. There was simply news; news uniquely relevant to the individuals of that local community and not provided elsewhere.
Larry and Sharon firmly believe offering a quality newspaper, filled with information and stories and photos that community residents want to read, is not only worth the price of the paper but is sufficient to sustain a publication. This nontraditional approach to revenue growth guided the Hiatts through the early stages of growing their business by focusing on earning subscriptions and not advertising dollars.
The Hiatts had returned home to Columbus to enjoy retirement, but not long after their arrival, Larry said that the daily paper that had been serving multiple locations decided to close its Columbus office and merged with another paper in the area. Larry attributes the move to the diminishing advertising base in Columbus.
As the former daily both merged and changed frequency in October 2010, Larry and Sharon published their first paper that same month. Having been in the industry for more than 50 years, the Hiatts fully understood the commitment and the level of risk they were undertaking by starting their business in their retirement years, and during tough, economic times. But because of their experience and industry knowledge, they were quickly able to identify their costs and calculate how many subscribers were needed to sustain the publication in the absence of large amounts of advertising dollars.
Knowing their breakeven point, they targeted city and rural residences, and individuals in surrounding communities by mailing six issues to each of these groups over several weeks’ time. Larry quickly points out that he and Sharon knew they were taking a financial risk by not aggressively seeking advertising dollars and that earning revenue purely on subscriptions “is definitely not the easy way to do it!”
However, their dedication to providing a quality paper filled with local information including sports, school lunch menus, city council and school board meetings drove Larry and Sharon to successfully obtain several hundred subscriptions within the first few months of operation. Within a year’s time, at a 3-month subscription rate of $10 per month for 13 issues, subscriptions rose to over 1,000 for their community of about 3,200 residents.
Columbus News Report typically runs eight pages Mondays and Wednesdays with Friday’s paper usually running 10 pages. The Hiatts also publish special editions about four times a year highlighting seasonal activities and local events for the community such as Columbus Days and a Christmas edition. These editions are usually 14 to 20 pages.
Now, I would be remiss to advance the theory that the Hiatts completely ignored advertising dollars as a source of revenue. That is certainly not the case.
Larry and Sharon understood the importance of those dollars, but their focus continued to be on producing a quality publication community residents would happily purchase to get the local information that mattered to them. With the success of growing their subscriptions, advertisers came to the Columbus News Report, and now advertising dollars makes up about half the total revenue for the publication.
Larry and Sharon have seen their share of challenges these past two and a half years, not the least of which is starting a new business in an industry that many outsiders believe is quickly fading.
The Hiatt’s experience, however, is the antithesis to this doomsday belief, and Larry considers their commitment to producing and delivering a quality product to the consumer is what sustains them and has brought them success. This notion of delivering value to the consumer is certainly not exclusive to the newspaper industry, and as Larry believes, the newspaper industry has lost sight of this.
Perhaps the future success of the community newspaper lies in the dedication to deliver quality, local news, at a value determined by the consumer, every time you deliver the paper.
It’s working for Larry and Sharon.
“I try to put the same things Ben Franklin would have put in his paper. What we’re trying to do here is recreate the identity of our local community,” Larry said.