5. A newspaper publisher is recommending that the price of its paper, The Mercury,
be reduced below the price of a competing newspaper, The Bugle. This
recommendation responds to a severe decline in circulation of The Mercury during the
5-year period following the introduction of The Bugle. The publishers line of reasoning
is that lowering the price of The Mercury will increase its readership, thereby increasing
profits because a wider readership attracts more advertisers. This line of reasoning is
problematic in two critical respects.
While it is clear that increased circulation would make the paper more attractive to
potential advertisers, it is not obvious that lowering the subscription price is the most
effective way to gain new readers. The publisher assumes that price is the only factor
that caused the decline in readership. But no evidence is given to support this claim.
Moreover, given that The Mercury was the established local paper, it is unlikely that
such a mass exodus of its readers would be explained by subscription price alone.
There are many other factors that might account for a decline in The Mercurys
popularity. For instance, readers might be displeased with the extent and accuracy of its
news reporting, or the balance of local to other news coverage. Moreover, it is possible
The Mercury has recently changed editors, giving the paper a locally unpopular political
perspective. Or perhaps readers are unhappy with the papers format, the timeliness of
its feature articles, its comics or advice columns, the extent and accuracy of its local
event calendar, or its rate of errors.
In conclusion, this argument is weak because it depends on an oversimplified
assumption about the causal connection between the price of the paper and its
popularity. To strengthen the argument, the author must identify and explore relevant
factors beyond cost before concluding that lowering subscription prices will increase
circulation and, thereby, increase advertising revenues.