Monday, November 26, 2007

What's a magazine worth? A little or a lot, depending on your perspective

For three generations, publishers and proprietors in the magazine industry have done themselves and the industry a serious injury by perpetuating the belief that readers won't pay what magazines are worth. So pervasive is the belief that the assumption is no longer even tested.

The late Howard Gossage defined it as taking a bite of a poisoned apple, the day that publishers decided that the cost of production of a magazine would be borne more by advertising revenue than by readers. He pointed out how bizarre is our distribution and marketing system now:
An illustration of the utter madness of publishing economics is that a...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 a store...
As a result, we have convinced the public that a 100-page magazine, with 30,000 words of carefully considered text, illustration and photography in full colour is worth no more than a high-end greeting card with four words inside. The public can be forgiven for believing that a magazine is worth, give or take, about five bucks, because we've told them it is.

Some magazines are edging their price upwards to $6.95 or even $7.95. But the general trend holds true. And, given inflation, an average magazine's cover price -- the price to the consumer -- is probably 1/10th of what it was 20 years ago. Despite our lofty words about reader engagement and loyalty and journalistic integrity, most magazines have wound up pricing themselves as disposable indulgences. We have treated what we make as a commodity that readers can buy cheaper (in terms of their personal spending power) each year.

I'm bringing this up because some few magazines are bucking this trend and charging what their product is worth. One example is Lapham's Quarterly, just out, which could be described as the retirement project of former Harper's editor Lewis Lapham. It has a bracing, but otherwise quite realistic, cover price of $16. And no ads. It doesn't apologize for its aspirations or denigrate its own value, but trumpets it. Of course it is treated as exceptional (which it undoubtedly is), rather than as a way forward (which it might be). The idea of a circulation-driven economic model rather than an advertising-driven one is considered laughable in most magazine corporate suites. And remains largely unexplored by independent publishers.

It's worth remembering other magazines that knew their own value, like Fortune magazine, launched in the depth of the depression and charging $1 a copy when most magazines sold for 5 cents. It, too, made no apologies though, in later years, it fell into the same habits of mind and marketing as the rest of the industry.

Some small literary and cultural magazines in this country wrestle with increasing their prices to $10 or $12 a copy, even though they effectively publish quarterlies that have every bit as much value as comparable paperback books that routinely charge $17.95 and up.

Of course there are those who will say that digital and web-based publishing will change all of this and that's undoubtedly true. But we should be concerned that, having convinced ourselves that what we produce has a finite value, that our main customers are advertisers not readers, will we blow the chance to give control back to the reader? Already there is strong evidence that content will be free altogether in most instances, with advertisers calling the shots. If readers are forcing this model on us, it is only because we have trained them for years that they can have something for nothing. Controlled circulation -- an excellent way of helping advertisers reach targetted audiences -- is proof of this.

We have all seen examples of where perfectly wonderful magazines, beloved of their readers, died because advertisers didn't care about them. Readers today aren't given the chance (with rare exceptions like Adbusters) to vote with their dollars. They lost their say when advertisers were given the reins by the magazine industry itself.

(Stephen Osborne, an occasional contributor to this blog and the editor of Geist magazine, has said that virtually all magazines are subsidized in some way; the only question is where the subsidy comes from. His subsidy management model says any revenue generated from sources other than consumers should be considered a subsidy, including advertising. Most consumer magazines are subsidized 60 - 70% by advertisers. Smaller literary and cultural magazine have some advertising and the rest comes from public funding and fundraising. Only very few magazines find it possible to have their readers cover the majority of their costs.)

I'd be interested to hear from magazines in this country who follow or are moving to a circulation-driven model (in print and/or online), particularly their experience with readers who actually embrace the idea of having the magazines they want by the relatively simple expedient of paying for them.

10 Comments:

Anonymous Anonymous said...

Thanks for this.

I just had a conversation with my treasurer about this very thing. She raised the question of why our readers pay so little for such a high quality magazine, and my answer to her was that this is the way it is in the magazine industry. I expressed my fear that readers wouldn't pay for the magazine is worth -- how ludicrious is it to operate like that???. I run a small circ. art magazine, and our readers expect high production quality and excellent editorial content. This stuff doesn't come for free.

I'm looking forward to hearing from those magazines who do charge what it costs to produce their magazine.

10:21 am  
Anonymous Anonymous said...

I'm afraid as long as "bottom-line" folks are running the magazines, the model won't change. I know of one company whose magazines WERE entirely subsidized by the reader...the publisher wouldn't accept advertising. The model was: It's you and me, reader...you pay for the mag and I promise you won't be bothered by ads. But the company was bought out, and all its mags now accept advertising. the problem is NOT that readers won't pay for their magazine. Asked properly, they will. The problem is that even if they were doing so, the business side wants to more money and then lots more...enough to cover costs or even pay dividends to stockholders isn't enough. You must "grow profits" year upon yea. That means we'll take very penny we can get for advertising, even if it means telling editors to create content to please advertisers instead of readers and NOT to create content that might offend advertisers. In the end, of course, even the advertisers won't buy our pages...because we'll have lost all our readers trying to please the ad folks.

1:07 pm  
Blogger Unknown said...

We just went through this for the following year. We're completely changing our pricing and taking the long road of explaining to our readers why our magazine is worth what it is.

3:15 pm  
Anonymous Anonymous said...

Most import titles are $10 or more. It's not uncommon to see computer or photo import magazines with a price tag of $20 or more. Some of the fashion titles regularly push upwards of $50. They sell. They wouldn't be imported if they didn't.

A magazine is worth whatever the market will pay for it, provided that this price level allows all the participants in the channel to make a bit of money.

3:20 pm  
Anonymous Anonymous said...

I'm not sure I buy this argument. The fact is a magazine is, physically, a disposable item. It does not age well, it tears like newspaper (well, not as easily) -- so it's extremely difficult to shell out $17.95 for a mag as opposed to a book. Plus, a magazine might have any number of articles in it a reader doesn't want to read, they may have bought it for one article featured on the cover. More than $5 is a lot for one article. Even if it's terrific and 5000 words and took as much work as a book. I just bought Skeptic for $7.95 (I think) for one article. I read one other article, but so far that's it. Not sure I'll get to the others.

Why did magazines turned to advertising -- because they could not get by on paid circulation, because magazines are disposable, a step up from newspaper, but below books?

The New Yorker, superior writing all around, but still, I doubt I could justify paying for it without its advertising subsidy, rarely do I read an entire issue, plus it comes every week. I would never read another book!

3:02 pm  
Anonymous Anonymous said...

Well, our magazines are circ only, and it can be a tough row to hoe, but then again, the same can be said of selling advertising.

As children's magazines, we certainly have a number of people tell us they are happy with us not having ads, especially if they have been exposed to certain U.S. children's publications which carry a fair amount of advertising (National Geographic Kids, for example). And there is a movement afoot to ban advertising to children (http://www.ndp.ca/page/5046), so clearly some people are keen on no advertising for kids. That said, I'm not fully convinced enough adults care whether our magazines contain advertising or not. And, a lot of people who actually buy subscriptions to our magazines (grandparents, aunts, uncles) never even see the magazine.

Our pricing is higher than the Owlkids magazines (who have a larger circ and carry advertising), but not a lot more, and since we are different editorially, I doubt many parents choose us over them simply because we don't carry ads. (Or, conversely, choose them because they are cheaper.) Mind you, this might not be the case if our price was a lot higher.

It's nice not having to worry about ads. We don't have to hire a salesperson. We don't have to generate marketing materials to sell ads. We don't have to stress that ads will come in on time. We don't have to juggle pages if an advertiser wants in at the last moment ... or drops out at the last moment.

On the other hand, there is a big problem with not carrying advertising: we are not eligible for either PAP or Support for Editorial Content. Both programs require a minimum of 5% advertising. (Though they will accept up to 70% advertising.) This, in my opinion, is total nonsense. The government will subsidize a magazine that is primarily advertising (and therefore is really subsidizing the advertiser) but will not support a magazine that contains intelligent, educational, Canadian content for children. Hogwash.

4:04 pm  
Blogger D. B. Scott said...

The move to an advertising-dominated model was made years ago when magazines were mass vehicles, the television of their day. Absolute numbers of readers was considered the only workable measure of success. Today, most magazines are vertical, niche products and live or die on renting access to specialty readerships.

As for reading only one or two articles rather than a whole issue,the product was never designed to be read cover-to-cover. There isn't a punchline at the end. As long as I read all that I wanted, even if only one article, I got my money's worth, no matter what the price.

4:20 pm  
Anonymous Anonymous said...

Some magazines are worth $10 because they're meant as works of reference or art. Most mags are worth less (note, two words, not one). No one said a magazine was designed to be read cover-to-cover. A person checking out a magazine rack might be captivated by a cover story and pay $5.95 for it -- but $11.95? I think they'll stand around and read it right there. It's just not affordable to pay $11.95 for the average mag. Hmmm, maybe that could be a good thing: fewer magazines, higher quality?

6:05 pm  
Blogger D. B. Scott said...

You state that $5.95 is about what a magazine reading experience is worth, and in this you reflect public attitudes. My point was that we have fostered the public's view of the value of the magazine reading experience. Why should a magazine that can give you a couple of hours of enjoyment not be worth at least the price of a two-hour movie?

7:56 pm  
Anonymous Anonymous said...

Our magazine increased their single copy price from 5.95 to 6.95 with no price resistance, in fact our draw is still increasing.

Next year will will be raising our subscription prices to reflect the realities of our business model - that subscribers need to carry most of the freight, ad revenues just aren't covering the growing gap caused largely by wildly unpredictable postal rate increases.

This arguement that consumers won't accept a shift in the valuation of the product doesn't wash with me... who ever thought that people would pay $5 for a cup of coffee?

3:09 pm  

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