Posts Tagged ‘Readers’

Choosing reading books can be a serious undertaking. Even the choice of a novel or a detective book may not be taken lightly by readers. There are different ways in which consumers may get into choosing a book; some search and selection patterns in the decision process carried out by consumers can be observed in bookstores. It is possible to infer from observations, with some limitations, styles of shopping for books, involving certain tactics or rules utilised in the process. Book fairs especially offer an interesting and vibrant venue for book shopping with options not regularly available at stores. Such events may also provide an opportunity to detect new or distinctive patterns and styles of shopping that arise from the dynamic happening and busy environment.

The open-air Hebrew Book Fair has been taking place in a main central square in Tel-Aviv for over forty years in every June. Originally the book fair was held for a week but in recent years it has been extended by three more days due to its high popularity. It must immediately be noted that the book fair is an event reserved for publishers. It is a kind of ‘direct-sales’ event in which publishers meet face-to-face with readers to present their book collections to them for purchase on special discounts (the main bookstore chains run their own parallel competitive events with discounts in-store or near their stores). Visitors at the book fair can find Hebrew-native books and books translated to Hebrew from English and other languages; topical categories cover, for instance, prose, poetry  and novels; detective and thrillers; history, science, and other areas of knowledge; and last but not least children & youth books. Such an enormous selection of books is not available ordinarily at bookstores in the country. The larger publishing houses may occupy ten or more counters in-line.

The visitor traffic at the event, as in this year, suggests that print books are still highly desired by people. Nevertheless, to attract even more visitors, particularly families with children, the organisers added in the past few years food and drink stands and a sitting area with tables in the square’s centre. It may help to increase the convenience to visitors and festivity of the event though it could sacrifice a bit the respectability of this literary event. However, it may be a matter of necessity or priority to make the event more popular and vibrant so as to bring larger reader audiences back to books.

As suggested above, this book fair is a busy event with tens of thousands of books of numerous titles on display from different publishers and across a wide range of topics. It retains also a long tradition wherein Israeli authors attend to sign their books for visitors-buyers. Some book counters may become crowded with shoppers during certain hours through the afternoon and evening (i.e., after work and school hours) which can make it harder to access books and check them out more deeply. Hence it may require shoppers to apply tactics for choosing books of their interest and taste a little differently than they would while shopping in a bookstore. Yet visitors find their ways to browse books, sometimes more loosely, sometimes more meticulously; it seems to happen overall in an orderly manner, each visitor getting his or her place at a book counter or desk.

Visitors can be seen walking along counters of a given publisher, staying at a counter for a while to observe its books, then moving along. After selecting a few books from separate but adjacent counters of the same publisher, the visitor often returns to a previous counter to pay. However, visitors-buyers are also offered the option to keep books already selected behind the counter (a combination of convenience and security for both sellers and customers).

Three forms of browsing candidate books of interest can be primarily noticed: Firstly, eye-scanning the front covers of books from top. Secondly, lifting a book, turning it over and reading its back cover — an abstract, short review recommendations, or a brief biography of the author(s). A visitor may examine a few books from a counter this way, but being able to do so comfortably may truly depend on how many people are already at the counter. Hence, visitors who cannot find a free spot at a counter are often seen looking over a counter-top quickly, moving to the next counter, then coming back if perhaps there was a book that had caught their attention previously to check on the book more closely. But visitors generally do not have to wait too long to find a free spot at a counter. Thirdly, one gets to open a book and sample-read sections from its pages, or looking at photographs, charts or maps inside the book. Instances of reading inside books were observed much less frequently.

Examining a book’s content more deeply to form a better founded impression or opinion of it is more difficult and hence is less likely than would be seen at bookstores. Yet, if time and space at the counter allow, it is possible to find a visitor examining a book more meticulously. It appears to be particularly relevant and appropriate for ‘knowledge books’ such as in history, sciences and technology, the social sciences, economics and business. For example, a visitor in his ~70s was leaning over an open book on the history of WW2 by Max Hastings, appearing concentrated in reading and observing maps and photographs (‘Inferno/All Hell Let Loose’, translated). He seemed interested overall in history of the two world wars of the 20th century, judging from other books he browsed; after nearly ten minutes he handed three chosen books to keep, and continued searching [A].

  • Please be advised that the age estimates of visitors are based on observation alone in best judgement of the author.

Comparing books on a given topic can be an even more difficult task to perform at a counter. It is hardly practical to hold two books open simultaneously for comparison, but visitors may examine books sequentially in attempt to evaluate and choose which one is more suitable to their objectives. For instance, a visitor (male, ~60) looked into a book — its introduction, inner pages, and content — on the history of the state of Israel (by Michael Bar-Zohar), but he apparently did not find what he was looking for as he asked the seller if there were books on the period preceding the establishment of the state. The seller brought him two books (concerning the Arab-Israeli conflict): he opened one of them, went through its pages, and put it aside, then browsed at greater length pages in the other book and looked at photographs. Eventually he chose the first book on the state of Israel, after looking into it again, and the third book (total time 15 minutes, [B]).

The search and examination of books sometimes involves moments of deliberation. In some cases, as above [B], the visitor may ask for advice from a seller. Alternately, as in another case observed, a seller who noticed a visitor (female, 30-35) hesitating, offered her help with recommendations. The visitor-shopper was already holding two books and the seller brought her more books the latter thought may suit the shopper accordingly in prose or novels by Israeli authors. They continued talking about the books as the shopper browsed loosely inside some of the books or read from the back cover [C].

Deliberation can take some additional forms. For example, a female visitor (~45) was considering the purchase of a book on equity investments. She was checking in particular a book purporting to be adapted and designated for women. The visitor went through some book pages, being unsure it was a good choice, and seemed recoiled upon noticing the book was from 2011 (i.e., ‘Is it still valid and relevant?’). But eventually, following a short exchange with the (female) seller, the visitor-shopper decided to take it anyway [D]. A visitor (male, 25-30) at another publisher has shown an intriguing shopping process with deliberation to the last moment: He was already holding a book when moving to another counter to look over books of prose, selected one of them, then browsed some science and knowledge books (e.g., by an Israeli scholar, lecturer and prolific writer on sciences and philosophy, Haim Shapira), but collected none. Subsequently the shopper moved to a more remote counter where he picked-up instantly a book, came back to the previous counter of science and knowledge books to purchase three books. However, after he had already paid and the books were put in a bag by the seller and handed over to him, he took out one of the books and picked-up instead a different book in front of him on biblical philosophy (by Shapira, 10 minutes, [E]).

Shopping patterns can range from exploratory, looking for opportunities with little idea pre-conceived in mind, to being pre-minded, that is, having a goal to find a particular book. Moreover, visitors-shoppers may mix styles at different levels of search, examination and choice while shopping from the same publishing house. Mixed tactics could be seen above in the shopping of visitors [E] and [C]. Following are two more examples of this kind: (1) A young visitor (female, ~17-18) was browsing prose or fiction books, going through pages and reading inside some of the books or reading from the back covers of others, then passed to looking from top at books in adjacent counters of the publisher (a more haphazard quick scan), finally returning to the first counter to buy [F]; (2) A visitor (male, ~45, at a counter of books on history and politics) took a cursory look over a biography of one of Israel’s prominent leaders of the past, kept searching and shortly after found a book on the history of Sephardic Jews (‘Marranos’, Yirmiyahu Yovel) and looked into the book more dedicately; the visitor, who seemed overall interested in Israeli and Jewish history, picked up a book at the last moment by an Israeli historian on the commanders of the Nazi concentration camps (‘Soldiers of Evil’) and purchased it with the book on Marranos [G].

  • In a curious brief episode, demonstrating an apparent pre-determined choice of book, a visitor in his mid-40s approached a counter, stood pausing or looking over the books, then instantly extended his hand to pick-up three copies of a book on the Bitcoin, which he purchased; one of the sellers seemed so impressed that she asked to take a photo of him holding the books with her mobile phone to which he smilingly agreed [H].

The main publishing houses presenting at the book fair offered deals of ‘3 for 100’, that is, three books for 100 shekels (~$28 in June). One publisher even offered five books for 150 shekels. These deal offers were displayed on signage boards above counters. A fourth book could be purchased for 50% of its list price, but this offer was not displayed. Visitors-shoppers who had already selected three books enquired whether there would be a discount for additional books, and were replied with the 50% offer. For instance, visitor [A] so enquired before continuing his search. Another visitor (male, ~30) who was holding four books by Ken Follett seemed unable to make up his mind which three to buy, posed the question about a fourth book discount, deliberated a little longer while shuffling the books in his hand, and finally passed all four to the seller to purchase [I]. In some cases, however, it was the seller who initiated the offer of discount on a fourth book in hope to increase the sale. Visitor [C], for example, accepted an offer as such and bought four books, probably in appreciation of, and perhaps feeling obliged to reciprocate, the advice she received from the seller. Conversely, another visitor (~30), who selected three books in history and politics on his own refused the offer by the seller when submitting his books to purchase [J].

Visitors were induced by these deals to buy more books from any single publisher. A single book could usually be bought with a 20% discount but this offer was not made public, proposed by a seller only on request of the visitor. This policy makes it simply unworthy economically for visitors to cherry-pick the books they most require or desire from different publishers (consider that many of the books cost 80-120 shekels each!). The greater problem, however, is that it may drive consumers to buy books they do not care for or do not have time to read soon. Henceforth, visitors could end up buying a pack of books, collected from several publishers, for the whole year to read. It puts quantity before quality in buying books. The ones standing to suffer from this policy are of course the book retailers who will likely see fewer shoppers at their stores in the coming months. From a publisher’s viewpoint, they may see it as only a reprisal to similar deals offered at bookstores throughout the year.

Visitors-shoppers at the book fair appear to use composite decision strategies for choosing books at the counters of a publisher: a different type of rule or method may be fitted to choose among different books (e.g., picking-up a book planned ahead to purchase, using book titles or author names as memory cues for books they have considered recently, examining inside books with greater scrutiny to evaluate them). Furthermore, the book shoppers are searching for informational cues, starting from the front cover of a book, going to the back cover, then getting inside the book. They could be extending the search for cues about a book as they feel is needed (e.g., cut the search short if sufficient information has been retrieved) or are stimulated to learn more about the book (e.g., intrigued by information on the back cover to look inside).

The difference in shopping for books at the book fair compared with bookstores seems to be not so much in the types of rules or tactics used as in the extent and frequency they are used. Book shoppers may feel at greater ease to search for a book at a store with a print of a book review cut from a newspaper (as observed in a store) than they would in the book fair (surely the same applies if one seeks guidance from his or her smartphone). One may also feel more comfortable and free to browse inside a book at a bookstore, at a quiet corner to stand or perhaps on a couch or sofa to sit and read, than at the book fair. Yet, visitors of the book fair seemed to adapt quite well to the conditions at the counters; they appear to use rules or methods similar to those that can be seen at bookstores, only adjusting them to search and choose more efficiently, particularly by restricting deeper examinations to situations where a book demands it.

  • Additional research methods can aid in identifying and verifying more accurately the book images and information viewed by visitors and the decision rules they use. Those methods include particularly eye-tracking and a real-time protocol of the shopping decision process (‘think aloud’). But executions of such methods may be inconveniently intrusive and interfere with the natural course of the shopping trip for visitors. Another method to consider with less intervention is an interview with a visitor-shopper after concluding a shopping episode.

Gaining greater insight into shopping for books and understanding the decision processes visitors-shoppers follow at a book fair can help in devising new designs of book displays (e.g., better organise books by topics or themes, easier-to-find) and improved practices to accommodate the visitors at the event. The organisers and publishing houses may also come up with a new co-operative scheme that would allow visitors to accomplish more effectively their objective in selecting and buying the books that interest them most or they desire to read.

Ron Ventura, Ph.D. (Marketing)


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One of my greater pleasures is to walk around in a bookshop and browse books in topics of personal interest, picking a book from a shelf for a short read, then choose another one, etc. If fortunate, I would find a book or two that are worth purchasing for a full read. A bookshop should be a place where one feels comfortable to examine leisurely books he or she considers buying . Even if one enters a bookshop only to purchase a book he found in an earlier visit or on the Internet, he would likely take the opportunity to look around for some other books before exiting.

Steimatzky is a leading chain of bookshops in Israel, established as a family business in 1925. It operates more than 130 stores across the country. Like a solid rock, nothing would seem to be able to shake or break it. The chain of bookshops appeared to hold firmly even in the face of competition from a new chain (“Tzomet Sfarim”) in recent years. Steimatzky could usually brush off new independent bookshops and small chains quite easily. Therefore, when Steimatzky announced it was in dire financial difficulties last month, the news were received with surprise. Not that challenges were missing, but the chain was tackling them (e.g., renovating shops and changing the concept of its front window displays), and there were no visible indications of a fatal threat to the business.

However, another important event occured in the past decade. In 2005 the family sold its bookshop retail chain to an investment fund, Markstone Capital Group. Difficulties were building up with the rise of online shopping and changes in the behaviour patterns of younger generations for passing time, plausibly convincing the veteran owner and CEO Ari Steimatzky not only to retire personally (after 40 years in management) but also to hand over the business to new owners. The new CEO appointed came from the insurance industry, highly experienced in that field, but, like the people at Markstone, she was not familiar with the book market. Hereon, it is suspected that  the problems with the chain’s management have started, or aggravated.

Markstone and Steimatzky both contributed to the crisis in their actions. It appears that Steimatzky has had cash liquidity difficulties for quite a while and relied on cash infusions from Markstone for financing their high operational costs. It is estimated that the losses of the retail chain accumulated to 84 million shekels (~$24 million) in 2011 and 2012 together. Markstone, on its part, used to take loans and register companies it owns as beneficiaries that would share the debt; for example, Steimatzky was in debt of $20 million as part of a $65 million loan Markstone took from Deutsche Bank, on which Markstone’s executives may have not properly updated the retailer’s management(1). The difficulties were somewhat complicated following a tragic road accident in which one of Markstone’s co-owners was killed while riding his bike. Thereafter, the last cheque from Markstone bounced and the debt of the retailer was exposed.

A deal was made in April with Keter publishing house and the office supply and stationary retailer Kravitz to buy Steimatzky in equal shares (pending approval by the antitrust state regulator). Markstone reportedly bought Steimatzky for about 200m shekels (~$50-55m) whereas it is expected to receive for it around 40m shekels (~$11-12m). Negotiations with another publisher failed earlier. It may be noted that Steimatzky took part in establishing Keter in 2005 but the new management decided shortly to quit its partnership in the publisher.

The relatively young chain of bookshops, Tzomet Sfarim, was founded in 2002. It is owned by two publishing houses (Kineret-Zmora-Bitan and Modan) and its CEO (Avi Shumer). If the acquisition of Steimatzky goes ahead, it would mean that high stakes in the two major chains of bookshops in the country will be held by publishing houses. Steimatzky was known for aggressive dealing with publishers; its tactics were often viewed unfavourably. The negative experience of publishers with Steimatzky is considered a key driver for those two publishing houses to start their own chain of bookshops, as they no longer wanted to be dependent on the dominant book retailer. It soon raised, however, new concerns about the privileges Tzomet Sfarim might give books they publish on display and in advertising and promotions. A new law on the publication and trade of books introduces a measure to correct such unfairness by prohibiting a bookshop from allocating more than 45% of shelf space to books from publishers it is linked to.

Tzomet Sfarim has turned within a few years into a serious challenger. It paved its way into the market primarily through discounts it offered on books. Deals like “two for the price of one” or “3 for 2” are not strange to chains of bookshops worldwide. But Tzomet Sfarim provoked everyone when it offered for instance “four books for 100 shekels” (i.e., each book for about £4). The discount is not necessarily deeper than the 50% one gets per book in a deal of “2 for 1” yet it induces consumers to buy many books, more than they may probably have time to read, and thus boosts sales volume quickly. Steimatzky responded angrily but nevertheless reciprocated with similar deals. This readily started a vicious price war. In contrast to expectations that Steimatzky as the senior and dominant retailer and brand will win, it was at disadvantage. The board of administration of the new competitor was modest whereas that of Steimatzky was expansive, and hence expensive, eventually less fit to tolerate the loss of income from extensive discounts. The deficits and cash flow problems of Steimatzky have been attributed in the business press to the price war on the one hand and its excessive administrative and operational expenses on the other hand.

  • The pervasive discounts evoked criticism about lowering the value of literary work. They outraged authors who complained their income (royalties) from their new books was squeezed and diminished. The law on books recently legislated in response sets new limits on discounts for new books during an “introduction period” and afterwards.

The retail chain of Steimatzky grew mostly in the 1980s and 1990s. New bookshops often replaced independent ones, taking them in as franchisees, and by forcing them out of business. But since 2006 the number of their bookshops actually decreased from 150 to 134. The size of the chain may have created a burden of supervision and operational costs that contributed to its difficulties, requiring to close some of them, but it does not seem to be an immediate cause of the recent crisis. Meanwhile, during the same period Tzomet Sfarim expanded from 42 to 87 bookshops and became a much more significant player in the book market (annual revenue of 300m shekels vis-a-vis 380m shekels for Steimatzky). This time it was Tzomet Sfarim that through their discounts grew at the expense of independent bookshops. Now the two retailers control, about equally between them, 70%-80% of the market.

Steimatzky and Tzomet Sfarim sell books online on their websites, as well as some publishers do. The retailers may have lost some of the local market to overseas online booksellers like Amazon, but that is likely to be only for books in foreign languages, especially in English. First, Amazon and others like it have very little if any to offer in Hebrew. Second, both retailers already concentrate their business on Hebrew books, which Israelis read the most, and offer a relatively small selection of books in English (e.g., some bestsellers, history and politics, art and design). Thus, the overlap between the Israeli retailers and foreign e-tailers should be relatively small. There is a need for Steimatzky, however, to develop and enhance the linkage between its online store and physical bookshops (e.g., buy online, collect in-store; celebrating the design of bookshops with photographs on the website) in order to protect both channels locally but primarily secure traffic of customers in its physical stores.

Under its current management, Steimatky bought a music and video chain of stores (“Tzlil”). Soon after, however, the stand-alone music and video stores were eliminated and their products (mainly CDs and DVDs) were incorporated as a sub-category or department within existing bookshops, though in a small-scale and -scope of offerings. The music & video branch of retail is knowingly in trouble around the world and one may question the justification of adding these product categories to their main business. Yet, joining books with music and video and other entertainment products has become an accepted logic by retailers in different countries to compensate for loss in demand in one category or the other, and expand their variety of products under the same roof (e.g., the French retailer Fnac that offers a range of culture and entertainment products, including books, CDs & DVDs, and electronics like mobile devices and related gadgets). That move can work in favour of Steimatzky rather than against it in this era.

Joining the businesses of books and music & video within the same company can bear risks. The most remarkable story in this regard belongs to the British chain of bookshops Waterstone’s. In that case it was the music & video chain HMV that bought the bookshop chain and put its survival into great risk. The stores of these chains were kept separate but the financial difficulties of HMV in its original business inflicted on Waterstone’s, and certainly did not help it to tackle its own challenges. At first they started closing bookshops to finance some of HMV’s debt and to lower costs, but that was not enough. Eventually, and mainly in hope to save HMV, the Waterstone’s chain was sold  in May 2011 to Russian investor Alexander Mamut. Notably, the new owner appointed as its managing director the owner of a small chain of traditional Edwardian-style bookshops (James Daunt) who has been well entrenched in the book retail business. The bookshop chain appears to be doing well in its process of recuperating and is thinking forward about the design of bookshop environments for the future. It is opening these days its first new bookshop since 2008.

Steimatzky does not have today a flagship library-like bookshop as found in many Western cities. These are usually multi-storey, multi-category bookshops that occupy buildings on main streets or in central shopping districts. Even cities similar in size to Tel-Aviv have such a bookshop (e.g., Waterstone’s bookshop on Deansgate St. in Manchester). A flagship bookshop in Tel-Aviv could occupy two or three floors (e.g., 200-300sqm each) and offer a variety of book titles in Hebrew and English, and perhaps in French, along with a section for music and video (particularly classical and jazz music). The scope of book selection across categories and variety within categories is crucial to the quality of customer-reader experience and increasing the likelihood that shoppers don’t leave without purchasing or ordering books. Operating such large bookshops can be expensive, but a flagship bookshop of this type should also be viewed as an investment in the retailer’s brand equity. It demonstrates prowess of the retailer, richness and professionalism. Tzomet Sfarim recognised the importance of such an asset and opened its “Library” bookshop in the centre of Tel-Aviv, although it occupies only one level and is “hidden” in a shopping centre rather than visible on main street.

The final issue addresses the new form of electronic books (e-books) that can be read on e-reader devices. It has been predicted that the future of reading lies there, and thereof it poses a major threat to physical books. Steimatzky has invested and participated in the launch of an e-reader that specially supports also the display of books in Hebrew (called “e-vrit”) but left the venture in just a year. Book retailers in other countries offer their own-branded e-reader: Barnes & Noble (Nook), Fnac (Kobo), as well as e-tailer Amazon (Kindle).

Tim Waterstone, founder of the British bookshop chain, recently criticised and even ridiculed the projections about the expected death of physical books; he supported his claim that physical books are here to stay on figures that suggest that e-books may be reaching saturation and his confident belief that people in the UK who love reading will continue to prefer books in print. He noted that consumers in Britain spent in 2013 £300m on 80m e-books but £2.2bn on 320m physical books (2). Managing director Daunt agrees and relies on a report by Enders Analysis and Bain & Co. which predicts that the share of e-books out of total book sales will reach 35% in two years but will grow “very slowly” after that. Daunt comments: “An equilibrium has been reached. The place of e-reader within people reading patterns has been established. That figure leaves us perfectly able to survive with the 65%.” He further expressed his belief that the physical book is more pleasurable to hold and read (3).  Steimatzky’s decision to quit its engagement with a Hebrew-support e-reader may have been pre-mature but it is plausible that they won’t need it. Still, they should re-examine their approach to e-readers because e-books will continue to hold a substantial stake in consumer reading.   

The conduct of top executives at Steimatzky and Markstone in the past eight years exhibits a mixture of complacency, over-confidence, and nonetheless confusion. They took upon themselves to improve and develop a business in a domain in which none had deep familiarity and experience. The CEO wanted to make changes in the company, and show the way to the whole market, without the endorsement of a credible and respected figure in the field and industry. Consequently, it was easier to attack and dismiss her as an outsider. Steimatzky under her leadership initiated strategic moves, and then abandoned them after a relaively short period. It also appears that she has set the wrong priorities for the company to deal with. The actions of Markstone at the same time suggest that they treated Steimatzky as a “financial asset” in their portfolio with disregard to the substance of the business in which they invested.

The future of Steimatzky would not be guaranteed without confronting a crucial question: What should the bookshop of the future look like in order to be inviting and attractive to book readers to hang around? Steimatzky may concentrate on books and reading or take the broader view that spans culture, education and entertainment. Three routes to enhancing shopper experience should be examined: (1) a space that makes patrons feel comfortable to stay and explore the shop; (2) a place to meet and socialize (incl. an in-store coffee shop); (3) connecting physical and digital products and services in a larger space: physical (bookshop) and virtual (Internet and mobile).

Ron Ventura, Ph.D. (Marketing) 

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This is a story about a daily newspaper that dared to challenge the veteran and established national newspapers by introducing itself to readers free-of-pay. Furthermore, the newcomer broke the line from the incumbents in its way of reporting and commentating on current political issues and events. Taking the two developments together, it seems to have driven the greatly upset publishers out of their minds.

It is a conflict complicated by entangling business with politics: rather than having a discussion on pricing and distribution as factors of competition, one is drawn into argument about political differences. Any debate on the quality of news information has become subject to differences in political position. Thus, the competitive struggle is too often diverted from business considerations to political concerns. Consequently, the news-media industry has become ever more politicized and tensions between the competitors reach new heights.

The free newspaper “Israel HaYom” (“Israel Today”) was founded by the American-Jewish billionaire Sheldon Adelson in mid-2007. From its inception, the newsmedia, mostly leaning from centre to the left, attacked the newspaper for its backing of then opposition leader Benjamin Netanyahu head of the Likud party, giving him a stage to voice his opinions and creating good publicity for him in the run-up to the next election (February 2009). Israel HaYom as well as advocates for Netanyahu denied that Adelson was acting on behalf of the Likud’s leader, yet they claimed that a different approach was needed to counter the unfair treatment and continuous bashing of Netanyahu in news reports. But beyond that, Israel HaYom pertains to provide news readers a different perspective on current affairs in Israel and worldwide, and “to be fair and balanced” as proclaimed in one of their five guiding principles.

Following the 2009 election Netanyahu became Prime Minister (PM), and yet the free newspaper of Israel HaYom continued to be published and even thrive — during 2009 and 2010 reader exposure to the newspaper nearly doubled (from a little above 20% to almost 40% on weekdays [*]). It became so popular that in the end of 2009 it also started to publish a weekend issue. The fact that Israel HaYom maintained its course after the election weakened somewhat the arguments of its opponents and gave rise to other explanations, mainly that Adelson aims to establish a different kind of newspaper in the country and thereof change the nature of competition in the newsmedia market. There could be genuine marketing reasons to justify the introduction of a free newspaper at that time: (a) eliminating the monetary cost of the newspaper to consumers was essential to invade the solid national market as quickly as possible while grabbing a notable penetration share of readers to set-in its roots , and (b) when news are abundant free of charge on the Web readers have much less motivation to give a chance to another paid newspaper. Especially to win the younger readers it was necessary to take the Internet playground into consideration. Israel HaYom’s income model relies on advertising, but as this source is suspected not to be sufficient, it also needs funding from the owner. Hereby, the newspaper has an essential resource, particularly for late entrants into a market: the financial backing of Adelson.

  • About 45% of the area in a weekday issue of Israel Hayom is occupied by commercial ads + 10%  dedicated to public announcements and classified ads.

Needless to say that the prevalence of Israel HaYom was much to the dismay of the veteran newspapers that intensified their fight. Generally, they have tried to raise as many doubts as possible about the motives of Adelson and Israel HaYom so as to delegitimize the newspaper:  it serves as a newspaper of the government and of the PM in particular which manipulates news stories; it cannot survive as a serious newspaper only on advertising; and funding a losing newspaper by Adelson proves that he has political rather than business objectives. They claimed as well as that its business practices are unfair. On the opposite side, Israel HaYom can make the valid argument that its competitors are raising political claims because their actions in the marketplace are failing to defeat it, that they need to conceal their lack of a competitive edge. The free newspaper also has a true case that publishers of at least two of its adversaries, Yediot Aharonot and HaAretz, have strong connections and influence in business and political circles alike and are using their media vehicles to advance their interests.

  • The main confrontation is with centre-left leaning Yediot Aharonot (YA) whose position as the leading (most ubiquitous) newspaper for three decades is being threatened by Israel HaYom — according to TGI surveys of media exposure Israel HaYom surpassed YA on weekdays two years ago and in the second half of 2012 was leading by a small margin: 39.9% versus 37.3%, respectively (on weekends YA [41.7%] still has a clear lead over Israel HaYom [32.8%]). YA is the most vigorous opponent of the free newspaper and champion of the campaign against it, particularly the political-oriented one.
  • The newspaper that had most to lose, however, was Ma’ariv because the free newspaper was aiming at its position in the centre-right. Nevertheless, Ma’ariv has had troubles long time before Israel HaYom arrived, and although it tried to put much of the blame for its fall on the newcomer, the latter’s arrival just accelerated the decline of an already weak newspaper. Ma’ariv, at a level of 10% exposure and after a repeated turbulence, is now under new ownership and leaning more to the right.
  • HaAretz is a clear left-wing newspaper, associated with the New-York Times and the Guardian (UK). It is a high-profile newspaper even though its exposure rate is just about 6-7%. HaAretz has been relatively less vocal, supposedly because it provides printing services to Israel HaYom.

But now comes a time to re-assess the efficacy of the free-of-pay model for Israel HaYom. After the recent election in January the newspaper is way past its challenge to gain the acceptance and approval of large stakes of the public — it has already proven that it has a place in the Israel newsmedia arena. It will be more difficult now to defend itself from suspicions and doubts about its income model and funding from Adelson, which may be legal but not reasonable in the public eye for the longer term. Furthermore, the newspaper has to consider the negative effect that an absence of price may have on its  brand image.

Israel HaYom has characteristics that are not typical of free newspapers. While most of the free newspapers worldwide are local-urban, this one is national. Israel HaYom gives extensive coverage of political events and current issues (e.g., security, economics and business, social affairs, crime) as well as international affairs, topics that free newspapers regularly report only briefly. It includes news items, commentaries, and opinion columns from prominent journalists as well as guest experts and ex-politicians. If fact, the newspaper recruited from the veteran newspapers some of their leading senior journalists. This profile makes it resemble more a traditional paid newspaper rather than a free newspaper. Furthermore, free newspapers are normally intended for light and brief reading that can be completed while commuting on public transport within 15-20 minutes —  a description that does not agree well with Israel HaYom.

On the one hand, consumers who are pleased with the approach and style of Israel HaYom will find it hard to refuse a free offer. On the other hand, questions are bound to pop-up in consumers’ minds over time, namely: How is it possible to produce a newspaper like Israel HaYom without revenue from consumers? How is it actually financed (advertising, Adelson)? And how long this operation can go on like that? What consumers would be specifically concerned about is whether they should trust the reliability and accuracy of news stories it reports.

Israel HaYom should be able to answer two questions:

  • First, do news consumers prefer reading Israel HaYom because they approve and like what the newspaper essentially provides — the way it reports news, its analyses, format and style — or is it only because they don’t have to pay for it (i.e., the formal budget constraint is waived)? If it is found that consumers do not have substantial preference for the newspaper, then the publisher better continue the free model, but it will probably not enjoy a long future. If however the preference for the newspaper is real and well-founded, then the free model should be re-considered because it is not appropriate for supporting and establishing its stature in the long run.
  • The second question is henceforth, what price should Israel HaYom charge from consumers? The price should be low enough to keep the offering appealing against the competition but not too low for consumers might dismiss it as of dubious quality (in that sense, no charge is qualitatively better than a too low price). It should be a price that positions the newspaper as popular yet valuable. If consumers are asked directly about their lowest price limit, they would probably set it at zero because they have been taught that lots of news can be accessed free online. But consumers may have a misconception that the cost of a newspaper is mainly the paper and print and ignore the cost of creating the news stories and articles — this issue is already debated in the last two years regarding the Internet.

The free model also has distribution implications. Israel HaYom is handed-0ut in many public places like train and central bus stations, large institutes like hospitals, shopping centres and on main street; it is also available in coffee shops. There is also a limited service of delivery at home at minimum charge. However, as the newspaper becomes more accepted and desirable, especially the weekend edition on Friday mornings, the inability to obtain it even at a price in points-of-sale can be annoying to consumers. A strong popular brand requires as wide availability as possible, not exclusivity or hard-to-reach stance. The distribution method of the free newspaper, particularly on weekends, may curtail its potential of reader exposure (e.g., versus Yediot Aharonot). But a lower performance on weekends may also occur because Israelis expect more in reliability and depth from their weekend newspaper and a free newspaper seems less adequate to that end.

  • Israel HaYom distributes 275,000 copies on weekdays and 325,000-375,000 copies on weekends that have to serve readers at public venues or for taking away.

Israel HaYom may start addressing the future of their model of free newspaper by distinguishing weekends from weekdays. On weekdays it may indeed not justify confronting the price question because the range for manoeuvering is relatively narrow (i.e., zero to 5 shekels = 1 euro) and the current income model may suffice. Discriminating price points in the range is likely to remain ambiguous (e.g., YA distributes promotional weekday issues for 2 shekels on the street). The weekend edition is another matter because it is perceived as a different product, a more comprehensive source of news information to summarise and digest the week’s events, and paid newspapers charge more than twice the weekday price. Moreover, Israel HaYom provides two supplements on the weekend. A price assigns an overt value to the newspaper and endows it with greater legitimacy as an economic product, especially when it relates to information. A price on weekends can also reflect positively on the newspaper’s image on weekdays.

News organizations are re-considering their policy of publishing news free of charge on the Internet. Income from online advertising is declining and print advertising remains after all more lucrative. Consequently, publishing free news online is getting less economic while continuing to diminish the perceived value of news information they provide on the Internet. Leading news publishers like Financial Times, The Times of London, Wall Street Journal and New-York Times have launched in recent months a model of paywall — view a number of articles free (e.g., 5 to 15 a month) but beyond that one has to make a paid subscription to read more content. It is going to be a long process of change but is important to follow: it may increase the attractiveness of the free Israel HaYom but it may also further hurt its credence as a source of news information. Nevertheless, a website with a paywall may serve Israel HaYom well as a future source of income and to establish itself as an invested and sound news source.

Ron Ventura, Ph.D. (Marketing)

(*) Statistics on reader exposure to media are based on Target Group Index (TGI) semiannual surveys.

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