Sunday, February 7, 2010

Magazines Can't Cut Prices to Retain Customers

It will take more than a price cut to keep many magazine readers from defecting (AdAge):
Nearly two-thirds of 344 magazines analyzed dropped their per-copy subscription prices between 2002 and the first half of 2009, but nearly 75% of those price-choppers also saw individually paid subscriptions decline anyway, according to an analysis of Audit Bureau of Circulations reports by Jack Hanrahan, the media-agency veteran who's now an industry consultant and publisher of the CircMatters newsletter.
While the purchase price of most magazines is trivial for most Americans, the opportunity costs of reading a magazine in print have never been higher. There is a much wider variety of free reading material available instantly to anyone with an Internet connection, not to mention how the information is more up to date.

There is also a growing choice of competing activities. The world has a lot more to offer now than it did 100 years ago, so reading a magazine means giving up many fruitful uses of one's time. The main cost of a magazine isn't the money; it's the time one spends reading it.

For most people, 30 cents an issue is essentially free. Yet many people, including myself, will not pick up free newspapers, even when someone hands them out every morning right outside various Metro stations.

A technical note: the article's lead implied that these cuts were futile, because subscriptions dropped anyway. However, it's possible that had the prior prices been preserved, subscriptions may have dropped even further, resulting in even less revenue.