Looks like money

The days when you could turn a tidy profit selling off the Beijing Evening News as scrap are over now that the paper, its chief rival the Mirror, and the Beijing Morning Post have doubled their cover price to 1 yuan to keep pace with the rising cost of materials.

The large-format Beijing Youth Daily also upped its price on 22 September, from 1 yuan to 1.5 yuan. The Beijing Times, currently 0.5 yuan, is expected to follow suit after the National Day holiday week.

An article from yesterday's Mirror blames the price hikes on the rising cost of newspaper scrap shipped from the US (美废, "American scrap"), particularly "#8 ONP" (special news, de-ink quality, no magazines), which accounts for as much as 80%-90% of raw materials in domestic newsprint production and now commands US$290 per metric ton, up from US$140 in 2006.

According to the article:

"The past two months the price has hovered near US$300, and who knows what things'll be like at the end of the year." A manager with a paper mill told the reporter that in the first half of 2007, the lowest price of American scrap was just US$160 per metric ton, but by January 2008 the price of #8 ONP had already reached US$250. Guo Yongxin [research director at the China Light Industry Information Center] told the reporter that beginning last year, American newspapers had reacted to Internet media by making substantial cuts in staff and newspaper, and environmental concerns had pushed ahead local paper recycling. These factors have all contributed to the rising price of American scrap.

The cost of newsprint rose from 4,300 yuan per metric ton in the beginning of 2007 to 5,200 yuan at the beginning of this year, and now sits at around 6,200 yuan. The cost to produce one copy of an average issue of a Beijing tabloid is around 1.5 yuan.

Beijing's price hikes follow similar moves in other cities earlier this year. Papers in Nanjing raised prices in March; Chengdu followed in July. Even the popular Stories magazine recently increased its cover price from 2.5 yuan to 3 yuan.

How will consumers react? Back in July, when Shanghai's papers carried out their price increases, consumer response varied. Oriental Morning Post reported no effect on sales when its price jumped from 0.5 yuan to 1 yuan per copy. But the paper also reported that newsstand sales of "a certain evening paper" dropped by half when it increased its cover price from 0.7 yuan to 1 yuan.

That evening paper was Xinmin Evening News which, like the Oriental Morning Post, is part of the Wenhui-Xinmin United Press Group. The Jiefang Daily Group's Shanghai Morning Post and Shanghai Evening Post also increased their cover price to 1 yuan.

The one consolation is that stacks of old newspapers are rising in value. Scrap dealers now offer between 1.4 and 1.7 yuan per kilogram for used newsprint, similar to what rates were before Olympic traffic and security restrictions put a damper on the scrap trade. Hoarders should be pleased: back in 2005, old newspapers were only worth 1 yuan per kg.

Everyone else has to buy the papers first, and an extra 0.5 yuan for the same old fishwrap might cause some faithful readers to balk. Standing by a pile of unsold copies of the Beijing Evening News at 8:30 last night, my local vendor said, "ordinary folks don't like the price increase."

The one winner might be The Beijing News, which so far has not revealed any plans to raise its cover price. It sells for 1 yuan, making it an option for readers who now have to choose among a number of similarly-priced papers. And it's cheaper than the Beijing Youth Daily, with which it shares an audience, so it has the potential to pick up circulation and increase the rates it is able to charge advertisers.

But according to journalist Ai Jun, that situation might not last:

Don't be too optimistic about this bit of good news, for general price increases may have hidden negative effects.

Those effects mean an overall contraction of the newspaper market. After newspapers increase their prices, a portion of the readership will change their habits. Many people read newspapers because they are cheap, but when they become more expensive, some readers will get rid of their habit of picking up a newspaper and go online or subscribe to mobile phone news instead. And changing reading habits will ultimately hurt the entire industry.