Friday, February 25, 2005

We did this to ourselves

A response to a recent column in Masthead magazine (Hooked on controlled), in which a veteran circulation manager says controlled circulation is the devil's work:

Like Scott Bullock, I am partial to the traditional paid circulation model, but unlike him I don’t see it as more virtuous or worthy than controlled. Most magazines are in the business of selling readership to advertisers. The central issue for most publishers is identifying and capturing a good audience and being able to prove its existence to the satisfaction of the advertisers. In this, controlled can work every bit as well as paid, sometimes better (after all, a paid audience is self-selecting).
Controlled circulation was the inevitable, and elegant answer, to the question: how do we reach and deliver an audience that our best customers, the advertisers, want to pay for?

Publishers, after all, long ago took the fateful step of charging readers less than it cost to produce their magazines. That advertisers call the tune is our doing. If there is any fault it lies with owners, publishers and their circulation directors who kept up the numbers by devaluing the product. Yes, we have the problem in the marketplace of American books artificially holding down the price that Canadian magazines can charge on the newsstand. But nobody forces us to sell our subs for $1 or less a copy. We do it principally to get audience. It is a strategic decision.

We have spent several generations convincing the public that they can get magazines for free, or nearly so. Yes, controlled circulation is free. But most paid magazines are all-but free; consider the per-copy price for which a venerable magazine such as Chatelaine sells a subscription (C$1.66 a copy). That’s much less than it costs to buy a greeting card and less than it costs to publish the magazine. As the late, great, Howard Gossage said: “An illustration of the utter madness of publishing economics [is] that a newspaper or magazine is the only consumer product, from bubble gum to bras, where the selling price has no relation to the actual cost of production. It costs less, for instance, to have a magazine delivered at home than it does to buy it in the store; try that with milk.”

What makes it virtuous for one magazine to charge a pittance to get readership yet somehow distasteful for another to go to the logical extreme and deliver their magazine free to a select, targeted audience? In neither case is the end user carrying the load. We’ve convinced readers that someone else will pay. We have done such a good job of this that the paid circulation model is under serious threat. To echo Mr. Bullock’s view: why would any sensible person pay for something they can get for free? Why indeed?

(Newspapers are now facing up to this issue and serious people are speculating about the possible death of paid newspapers in multi-paper markets like Toronto, where free papers like Metro are making serious inroads.)

In a world where the divide between free information and high ticket data and information services is becoming the norm, the era of the traditionally published and circulated magazine may be coming to an end. But that doesn’t mean renting audiences to advertisers will go away. If anything, the pursuit of advertisers is becoming so frenetic that pretty soon even the precision and efficiency of controlled circulation won’t be enough to satisfy them.

Might there then even be room for some readers to choose to pay all or the largest part of the cost of some publications? This would essentially amputate the advertising tail that now wags most of the magazine marketing dogs. But remember – we did this to ourselves.

Scott Bullock apparently laments that so many magazines get by without professional circulators and their bag of tricks. I would suggest that controlled circulation is just another trick, a proven way of getting real readers, which is what most magazines sell.

D. B. Scott

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