Straits Times Interactive

The Straits Times Interactive used to be a free service, allowing anyone to access its content without charge. Then readers were required to register for free in order to continue reading the news articles, following a site redesign in 2004. Now STI has just announced that it will become a subscription website from 15 March.

I should have seen this coming. Perhaps the idea that I could still access STI for free thrilled me so much that I allowed my excitement to cloud my judgment. Initially I assumed that the registration is just a ploy for SPH to get hold on my email address in order spamming me with thousands of emails advertising useless stuff. But the free registration was a trial run for the eventual conversion to a subscription website. Not only does the registration process allow the website administrators to test the subscription software, it also gives the marketing department a rough estimation on the number of potential subscribers.

I wouldn’t go as far as claiming this will deepen the class division in Singapore. A monthly subscription of $12 is indeed higher than what most other online content providers charge. But given that STI provides the same content as the Straits Times print edition, which costs $0.70 per copy, its subscription rate seems reasonable.

Furthermore, $12 means nothing to most Singaporeans. Most low-income individuals who have trouble saving $0.40 a day probably don’t even visit STI, and depend primarily on television or radio for news updates; this is simply due to the fact that they are struggling to make ends meet, let alone paying for broadband internet and spend hours surfing the web to understand current affairs.

That said, I still don’t think SPH should start charging for the use of STI. It is a form of discrimination; but it is price discrimination rather than class discrimination. A company with absolute monopolistic power in the market will charge different customers up to their maximum reserve prices — for the same service or product. This allows the company to extract all available consumer surpluses from the market and earn abnormal profits — profits that exceed what the company will earn in a competitive market. It goes without saying that the monopolist is made better off by making everyone else worse off.

We have an excellent case study on monopolistic power here. SPH is the publisher of the only English newspaper in Singapore. Knowing full well of its dominant position, it charges its online users — mostly educated white-collar workers who are probably current subscribers to the ST print edition at home, while reading STI online at their workstations during office hours — additional fees to glean more money off its well-to-do customers.

What irks me more is the fact that SPH doesn’t even bother giving standard corporate excuses such as rising costs to justify the subscription fee; it simply proclaims that STI will become a subscription website from 15 March. To quote Mr Patrick Daniel, the managing editor of English and Malay Newspapers Division at SPH:

We believe that we have a good and valuable product that users will be prepared to pay for. It’s also not a tenable business model to charge for the print edition, and not for the online edition.

STI went online in 1995 and has been free since — for ten long years. Then one day some corporate gooks at SPH wake up in the morning and suddenly realise it is bad business to charge for the print edition, while the online edition remains free. Either they have been sleeping on the job and ought to be fired, or they finally come up with a subscription scheme to rip more money off loyal customers after a decade of brainstorming — which still means they’re incompetent and ought to be fired.

There are better business models that SPH can follow. STI can allow continued free access while increasing its revenue through online advertisements. STI can even request for permission during registration that allows it to send targeted advertisements through emails to its readers; it can then sell its massive membership database to online marketers for a hefty sum. No one likes spam, but this is a small inconvenience most people are willing to tolerate in return for free access to STI.

And if SPH still believes that the best way forward for STI is to become a subscription website, it can offer current subscribers to the ST print edition a discounted rate. This makes good business sense. It is very likely many customers will take up this bundled offer and subscribe to both the online and print editions, which will increase revenues.

But of course, it makes even more sense for a monopolist like SPH to charge a flat fee for the subscription. STI already has more than 280,000 registered readers after implementing the mandatory registration three months ago. Even if only 20% of the registered readers were to sign up for the subscription, this still translates to about $700,000 in monthly revenue — a whopping $8 million annually.

It never fails to amaze me that Singapore is consistently ranked as one of the most competitive economies in the world when all these dominant local corporations continue to wield their market power without restraint.

I guess profit-maximising behaviour of monopolists can hardly be considered anti-competitive when there are no competitors at all.

25 February 2005 · Media, Money

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