How Much of the Newsstand Slide is Related to Pricing?

Can average cover prices continue to creep up as subscription prices bottom out?

By Linda Ruth
09/18/2012 -02:27 PM

Have you seen that Lucky subscription offer? It seems to be expired now, but it’s been all over the place online. You could buy a two-year subscription of this roughly $3.00-per-copy monthly magazine for the low, low price of $5.99.

As in just under $6.00. As in a quarter per copy.

Lucky, of course, isn’t the only publication doing this kind of thing. An online search can yield pages of results of magazines that are deeply discounted when compared to their newsstand prices.

A number of years ago, audited publications couldn’t do this kind of thing. The ABC had guidelines preventing publishers from cutting subscription prices to only a fraction of the retail price.

Audience marketers have since been experimenting with different approaches to building subscription sales, and low introductory prices are very naturally among them. I wonder, though, what the relationship is between these low prices and the loss of sales at the newsstand?

Because, of course, as subscription prices have been going down, newsstand prices have been going up. They have to—publishers need to continue to make money as their sales and efficiencies erode and their costs escalate. So these past few years we’ve seen average cover prices creeping up at the same time subscription prices have been bottoming out.

It used to be that a newsstand cover price of $5.00 was considered an “avalanche point”—a point which, if prices were raised any higher, sales would plummet enough to counteract the revenue gains per copy sold. Today many special interest publications are entering the newsstand at over $5.00. Beyond that, you have the “bookazines”—special interest publications priced at $9.99, $12.99, $14.99—or above.

Yet, for many publishers, their bookazines are doing very well. Why is that? High quality production values, lots of pages, practical and vertical interest editorial all surely play a role. And it’s possibly something else, too. The bookazines are newsstand-only, so they don’t offer deeply discounted subscriptions for pennies on the dollar.

I don’t know about you, but when I get a free copy of a magazine, say in a free rack at a shuttle terminal, that spoils it for me. I can’t buy that magazine anymore—I just can’t. And when I buy a subscription for, essentially, nothing, I’m ruined at the newsstand for that publication. How can I pay that price for one issue when I could spend the same amount for an entire year worth of issues of the magazine?

So when I cannot keep up with the monthly reading, I simply stop buying.

I think that I’m not the only person who responds to pricing in this way. David Algire, EVP of Source Interlink Media, makes the point that the increase in newsstand pricing makes us over-dependent on the economy. When the economy is bad, we just can’t afford that luxury.

Yet, according to a multi-title publisher I spoke to this week, it’s a mistake for a publisher to shift focus away from newsstand. At this publisher’s company, the circulation mix is 80/20 in favor of subscriptions, but fully half the circulation revenue comes from newsstand.

Lean times notwithstanding, that’s a statistic that deserves some attention.

Linda Ruth is Principal of Publisher Single Copy Sales Services. Her book of case studies, "How to Market Your Magazine on the Newsstand," is available at BookDojo.com and at Amazon.