Star-Advertiser Wants Oahu Residents to Pay More than Mainlanders07/25/2011
The paper doesn't provide a rate sheet for its new pay wall. And you wouldn't know it from the four-page pullout section in Monday's paper introducing what the paper calls, "The Next Generation of the Honolulu Star-Advertiser."
In order to get a price for online access, you have to enter your ZIP code.
When you do, you discover that a banker in New York, an oil baron in Houston or a newspaper executive in Seattle is going to pay much, much less than somebody living on Oahu.
The price on Oahu for a digital only subscription is $9.95 per month. The price on the neighbor islands is $4.95 per month. The price on the mainland, $1.95 — one-fifth what somebody in Honolulu will have to pay.
That's an interesting approach, given that the web is usually considered something that brings the world closer together. The price for the digital edition of the New York Times is the same in Honolulu as it is in Manhattan or Munich, for example.
So why is it that the Star-Advertiser decided to go the multi-price route.
A reasonable theory is that it wants the ZIP code because it sells ads based on who its customers are. The business of the Star-Advertiser is to sell an audience to advertisers. It helps to know who's in the audience, because some people are more valuable than others. More valuable means that advertisers will pay more to reach them.
It might sound strange, but the Oahu online customer is the least valuable to the Star-Advertiser. The advertisers who want them pay the least.
As for the neighbor island customers, the paper actually probably saves money every time somebody switches from a print edition to the digital edition. That's because those subscribers aren't as valuable to the print or online advertisers, and they're expensive to reach with the print edition. (I know this from personal experience. As an executive with the Rocky Mountain News, I was part of the team that cut back our circulation area because we were losing money with every copy of the paper we sent to rural Colorado.)
Mainland customers get the best price because they're the most valuable to advertisers. An airline selling a plane ticket from Newark to Honolulu has a lot more ability to pay for a higher priced ad than does City Mill or Little Village Noodle House.
That's why people on the mainland get the best price. The paper can make more than make up the price difference in ad revenue.
When it comes to the next generation of the Star-Advertiser, not all customers are created equal.
Here's the Oahu price:
Here's the price on neighbor islands:
Here's the price on the mainland: