Wednesday, September 27, 2006

Real Life Supply and Demand Example

For many years there was one little newspaper sold by subscription that featured the news of my home town. This little newspaper gave great coverage of town events and it surpassed the information in the city newspaper. Actually I say it was little but over time it got longer, had two sections and really covered news in town well. Town election coverage was extensive and helped voters figure out who they wanted in office. The Letters to the Editor section was quite long and town government news was discussed in detail. The combination of that with the town government meetings being run on the cable access channel really helped inform the citizens of what was going on with the town government, school budget issues and taxes.

A few years ago a new, shorter newspaper cropped up, also tailored to news in that town, plus it featured a little about the next two towns up the shore. This was a free paper that arrived by direct mail, to every household in the town. I think the target was more on entertainment and the arts and general stuff, rather than town government and town sports. But over time this paper grew and the page length seems to me to be longer now.

Yesterday I was very surprised to see that now the old, original town newspaper is received free to all subscribers of the city newspaper. Due to this the subscription newspaper has lost money from subscriptions, I can only assume. However by giving the newspaper free to all city newspaper subscribers (as an insert) the circulation numbers are raised so that the advertisers are more likely to buy ads.

My husband said that last year he read an article in a magazine, Forbes, I think it was. The article said that one of the top 10 businesses to get into for large fast profits was the free town newspaper business. The article stated that the money made from the advertisements more than paid for the expenses for staff and to print and to distribute the paper. The paper did not need any money from subscriptions and the owners would profit highly from this venture, they claimed. Lastly the advertisers were happy to know that their ads would be in every home in the town so they were happy to advertise in the little free town newspaper.

It was interesting for me to discover this little tidbit when I visited my parents yesterday. Now that is a real life example of economics in action. It is an example of how competition in the market can drive prices down. Sometimes easy and clear examples of that are not always easy to find, but there you have one.

It does seem odd though, that something that was to be paid for, for something like 40 years now is given away for free. My father never subscribed to it, being too cheap to pay for that town newspaper. He did and does subscribe to the city newspaper, figuring more news for the price, and coverage spanning worldwide, not just town-wide. I used to have to read my grandparent’s copies of the paper in order to see what was going on. So to see that paper at my parents house yesterday was surprising, but when I found out it was free, it fit right in with the norm for my father!

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1 comment:

Henry Cate said...

I am amazed at how much free stuff is available on the internet. Search engines like Google and Yahoo! are great services. Plenty of companies provide free email.

The Gutenberg project:

http://www.gutenberg.org/wiki/Main_Page

provides 17,000 free books.

It is an amazing world.