Excerpted from New York Times, “In Switch, Magazines Think About Raising Prices”, by Stephanie Clifford, April 13, 2009
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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.
“We’re realizing that the product is undervalued,” said 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.
It is a “model where magazines essentially try to gain as many subscribers as they can and allow advertising to pay the bills.”
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“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.
Even though The Economist is relatively expensive, its circulation has increased sharply in the last four years. Subscriptions are up 60 percent since 2004, and newsstand sales have risen 50 percent, according to the audit bureau.
“We get more money out of our readers than advertisers, and that’s a very different model,” said senior vice president for marketing in the Americas at the Economist Group. “We’ll never discount the kind of content we have.”
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The Economist’s readers, it could be argued, are professionals who can afford price increases. But one of the most popular and expensive mass magazines, People, has also been raising its prices without losing readers.
The subscription price for People has risen about 5 percent, to $104 a year, in the last four years. The cover price has risen 21 percent, to an average of $4.09 . In that time, People’s subscription and newsstand sales have both increased slightly.
“Our strategy right now is to maintain a premium price on both sides of the equation,” said the president and group publisher of Time Inc.’s (People’s) style and entertainment group.
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Interestingly, whether consumers pay $5 or $50 for a subscription does not affect their perception of the magazine, according to a study conducted four years ago by the media consultant Rebecca McPheters.
Given those findings, the price a consumer pays should not matter to advertisers, since it does not affect the reader’s attitude toward the magazine–“the fact is, the pricing comes as a result of what the consumer is willing to pay.”
Given the economy, it may not be “a propitious moment to launch this,” said Victor S. Navasky, chairman of The Columbia Journalism Review, but “to the extent that the publication is aimed at a segment of the population that can afford it, why not?”
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Full article:
http://www.nytimes.com/2009/04/13/business/media/13circ.html?ref=media&pagewanted=print
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