Magazines looking to raise prices to offset ad loses. Could this be the next publishing model? Beats free downloads books
Written by Free Audio Books - Free audiobooks on April 14, 2009 – 7:11 am -Most big magazines’ subscriptions cost on average little more than a dollar an issue. But now, as they consider the decline in advertising and the success of magazines that have increased prices recently, some publishers are wondering whether they can raise their prices without losing subscribers to free downloads books
“We’re realizing that the product is undervalued,” said Michael A. Clinton, the chief marketing officer of Hearst Magazines, which raised cover prices on more than half of its magazines last year and plans to raise subscription prices this year.
Publishers have long set low subscription prices and have even lost money doing so, assuming that the real money came from ads. Subscription revenue was gravy.
In the last six months of 2008, subscribers paid an average of 47 cents an issue for Newsweek, 77 cents an issue for BusinessWeek and 89 cents an issue for Fortune, according to an analysis of their filings with the Audit Bureau of Circulations.
Even Condé Nast’s magazines, filled with luxury ads and dispatches from far-flung locations, are cheap: 87 cents an issue for The New Yorker, 89 cents for Allure and just over a dollar each for Condé Nast Traveler and Bon Appétit.
“Obviously, you can hardly even mail that particular issue for 80 cents, but what makes up the difference is the advertising,” said John Fennell, an associate professor of magazine journalism at the Missouri School of Journalism. It is a “model where magazines essentially try to gain as many subscribers as they can and allow advertising to pay the bills.”
Most major magazines have cut prices recently as part of an effort to increase subscriptions. A New York Times analysis of circulation data for the 50 largest and most expensive magazines showed that in the last four years, as overall prices rose 14 percent, subscription prices dropped an average of 9 percent.
(Lower subscription prices do not necessarily mean less revenue for the publisher, however. When publishers reduce their reliance on subscriptions sold through agents, the subscription prices can fall, but the publisher earns more because it is no longer sharing the subscription revenue.)
Decreases at individual magazines were more substantial: Parents magazine’s price dropped 51 percent, Elle’s 41 percent and Fortune and Fitness’s 34 percent.
“Think about the cost of a movie ticket. Think about the cost of your subscription for cable television. Think about the cost of going to a sporting event,” Mr. Clinton, the Hearst marketing chief, said. Those industries, he said, “have kept pace in passing on more of the cost to the consumer, and the consumer’s willing to pay for it.”
The Economist is leading the charge on expensive subscriptions, and its success is one reason publishers are rethinking their approaches. It is a news magazine with an extraordinarily high cover price — raised to $6.99 late last year — and subscription price, about $100 a year on average. NY Times
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By Mark on Apr 14, 2009 | Reply
I am a bit surprised that it is someone from Hearst Magazines who proposes the price jump as a solution. Hearst Digital can be a model for other magazines how to use the Internet to increase the readership. Hearst Digital does very well in this crisis.
Or perhaps the Marketing Guys at Hearst do not talk to the Digital Guys. It seems that one big reason why newspapers and magazines sub-perform lately is that a lot of them are run by marketing and ad people rather than by journalists and content creators. The Internet eats up magazine ads and ad-revenues not the magazines. The Internet needs the content. It is time that the magazine executives finally understand it.