In branding Hong Kong newspapers, there’s no such thing as a free lunch


The printed newspaper market these days is really the home of the brave and the land of the free. But in the green and pleasant land of Hong Kong, a newspaper war has erupted.

Two new mass daily Chinese language free sheets — Sky Post and Sharp Daily — were launched in September in a previously three-horse Chinese free sheet market dominated by one hugely successful title, Headline Daily.

The onslaught was met with resistance from one of the city’s biggest and most impacted paid circulation titles, which responded on the day of the launch of Sharp Daily by dropping their cover price by 20% to protect their market share. Boom. Boom. Bang.

This all happened in a city where not all that much changes on the newspaper scene. Virtually overnight, free newspaper distribution skyrocketed by 50%, from 2 million to 3 million, enough for two out of every five Hong Kong people to have their own copy. That’s on top of a strong paid Chinese newspaper market, which includes 7 major established titles. And further still, two English papers, one free and one paid, namely the South China Morning Post. In all, more than 4.5 million printed newspapers daily in a city with a population of 7 million, including those not even old enough to read yet.

What does this mean? According to a GroupM survey announced in September, it means more newspaper readers, and more newspapers read per reader. The same survey announced that Hong Kong newspaper readership is now at a 10 year high, fueled in large part by the growth of free sheets. And you don’t need to be a researcher to see the proliferation of free sheets on every street corner, with copies eagerly waved at workers whilst they weave their way through high pedestrian traffic locations in the busy streets of Hong Kong.

“While free newspapers are gaining readership at a breakneck pace,” says GroupM’s Hong Kong CEO, K.K. Tsang, “they have not yet had any significant impact on paid newspaper readership, a sign that paid titles still maintain an edge with content.”

That much seems evident. But the real impact to the industry is the fact that the advertising pie is being cut into much smaller slices to share amongst the different titles. That’s the reason the paid daily felt the need to cut their already low cover price — believing that making itself cheaper would make the newspaper seem like a better value, retain loyal readers and keep numbers up for the advertisers. The move worked, but not perhaps as intended. Instead it seemed to have had the side effect of cannibalising market share from other paid titles rather than claiming back any losses to the free sheets.

The sad fact of this all-out war is that it shows how commoditised and desperate the newspaper market has become. One paid newspaper loses a fifth of its circulation revenue, the other loses a chunk of its circulation, and everyone eats a smaller slice of advertising pie.

Should a paid newspaper have responded to such fierce competition by reducing its cover price? Surely, if readers see a true value in paying for content, then taking pennies off the over price is not going to attract new readers, nor encourage more frequency?

It’s hard to be sure in this market. Newspapers fill a hungry mind with information in the same way that food fills an empty stomach. Some will opt for quality and taste, others want quantity. Some want the best at any price, some are satisfied with cheap, quick and convenient. Hong Kong is a very price sensitive market overall. McDonald’s here offers some of the lowest priced meal deals of any McDonald’s in the world relative to GDP. That’s because in this highly volume driven overcrowded city, an increase in price often isn’t worth the relative decrease in sales.

But at some point in the equation, the value proposition matters to everyone. Is there such a thing as a free lunch? Not at McDonald’s, as far as I know, although they’re pretty affordable. But for newspapers, it seems you can fill the empty space with a free lunch, and for some that’s enough.

So perhaps the question we should be asking instead is “Do I love what I’m consuming?”

Are we creating any kind of craving — addiction — for our content? Are we creating an experience that our readers feel a deep-seated need for? If we are, then it’s not just about the price, the function, nor even the quality. It’s an elusive emotional bond we’ve created. Even a low-priced Big Mac can be something you crave far beyond a gourmet meal. It’s the emotional attachment created by the gratifying product experience that builds a brand. And that brand can command a high price when the craving occurs. How many people have you heard say they’d kill for a Big Mac?

One of the reasons sites like the Huffington Post managed to build such a loyal following was because they offered something more powerful than simply news aggregation for their hungry readers; they offered unique commentary that provoked a sense of authenticity and community. In the process, it built loyalty and passion, and readers love to consume the site.

The number of ‘readers’ in Hong Kong may be growing thanks to free sheets. But the same GroupM survey, which shows that 890,000 people read three or more free newspapers, also shows that more than 540,000 readers — about 20% — pick them up and never actually read them. For those readers, even at that price, the true value of the product is less than zero.

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