The combination of a weak economy and the digital age makes selling newspapers increasingly difficult; however, innovative solutions can leverage the situation. Magazines and newspapers are using social discounting websites such as Groupon and Crowdity to rein in new subscriptions.
The principles of the discount sites are simple. Newspapers offer their subscriptions at a largely discounted price, but the deal only goes through if a minimum number of people subscribe. Last month when the Chicago Tribune used Groupon, they offered their one-year subscription for US$13, a 75% discount from the full price of $51. They required that 200 people subscribe to offer the deal. The final number of subscriptions was 7,494. Groupon, however, does take a 50% cut of the profit from the subscriptions.
For getting new subscribers, Groupon provides a method that supports sound economics. In the current crisis people are enthusiastic to purchase newspaper subscriptions if they think they are getting a good deal. The chief executive of the UK based Crowdity said "The downturn is perfect for us because people are willing to put in more work to get a bargain." Newspapers also have little to lose, as the baseline number of subscriptions insures a profit and the new readers pay upfront.
Ideally the Groupon site is useful for seeking new readers and with any luck they will renew the subscription at full price the following year. The social discounting tool is also helpful for recruiting a younger demographic, as most of Groupon's members are between the ages of 29 - 33. The group discount trend is relatively new, so magazines and newspapers will have to wait until the following year to see if the retention rate will pay off. Dan Crutcher from the Louisville Magazine explained "If all we get is a one-time subscription, it wouldn't be that great a deal for us. It wouldn't be a deal at all."
The key to success from Groupon and Crowdity stems from getting a good, local deal. National titles do not fair as well, with Newsweek not having much luck for their discount in Seattle. According to New York Magazine's Sheldon, the "je ne sais quoi" of Groupon is its local appeal as he claims "If you pick any random Time Inc. title, it doesn't feel like it's a special city promotion."
Social discounting websites offer an innovative solution for the current state of the newspaper industry. Offering a sale gets people excited to purchase, and both parties feel rewarded at the end of the day. In theory this concept could work toward getting new customers behind paywalls, as the allure of a bargain will dim the negative feelings of paying for an online service. Newspapers, especially those that are turning towards hyper-local trends, have little to lose by offering group discounts.