Straits Times Interactive Redux

Straits Times Interactive has just announced that current subscribers to the ST print edition will enjoy a 50% discount when they subscribe to STI. I doubt SG Watch is so influential as to make the management change their mind about charging a flat rate after reading my previous post, but it doesn’t hurt to dream a little sometimes.

STI explained that the abrupt change in subscription rates was due to the overwhelming response from readers. I guess this is a way STI tries to show that it takes feedback and suggestions from readers seriously.

However, I don’t really view the discount in a positive light. No company in the world — at least those in the right mind — will start a loss-making business. And a 50% cut in subscription rate within days of announcing its imminent conversion into a subscription website just goes to show how much profits STI will be raking in.

Furthermore, this shows that STI doesn’t have a sound business plan to begin with. Any company which announces its IPO subscription price and then reduces the price within days of the initial announcement will no doubt make the financial markets lose confidence in the company and subsequently result in a drastic drop in its share prices. Apparently the same rule that applies to competitive firms doesn’t necessarily apply to huge conglomerates in Singapore.

Cost-conscious readers are unlikely to subscribe to STI since it doesn’t offer any extra content; it simply charges readers a significant premium for the convenience of being able to read the ST print edition online. However, I can already foresee that this move to turn STI into a subscription website is going to be a huge success, in terms of increased revenues and profits for SPH.

It will be relatively easy to convince Singapore schools to subscribe STI for their students, as a way of promoting the use of information technology in education. Instead of reading printed newspapers off gigantic metal binders in school libraries, students can now access the latest news online in the comfort of their own homes. This will also help in the effort to increase the awareness about current affairs among students.

Assuming MOE decides to provide online subscriptions for all the secondary school students in Singapore, STI will gain more than 200,000 subscribers instantly. Even if STI charges MOE only $3 a month, which is half the discounted rate, for every student, it’ll still receive more than $7 million in revenues annually — on top of what it’ll be getting from regular subscribers.

Perhaps it’s a good idea to buy some SPH shares now to hedge against the rising newspaper subscription costs.

03 March 2005 · Media, Money

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