17 Comments

Summary:

It used to be an article of faith that a print subscription would give you access to a publication’s online offerings. That assumption is being tested by one magazine’s decision to “unbundle” its digital privileges.

Economist iPad edition

For a 170-year-old magazine, The Economist has been surprisingly nimble in navigating the digital age. That’s why it’s worth noting the venerable UK publication’s latest business move — charging a premium to new print subscribers who want digital access to the magazine.

“We’ve got three choices now. There’s a print-only, a digital-only and then a bundle,” Michael Brunt, VP of circulation, told AdAge, explaining that “people think it’s reasonable to pay a little more for both.” The mark-up means that new print subscribers will pay the existing $127, but will have to pay $160 if they want digital access too.

Brunt said one quarter of new subscribers are choosing print or digital only, while half are choosing to buy the bundle.

With this three-tier pricing, The Economist appears to have hit on a shrewd strategy to reinforce the value of its digital content, which includes everything from apps to audio readings, without alienating potential customers. The move also comes at a time when major newspapers are trying more sophisticated pricing tactics.

The New York Times, for instance, is using pricing quirks like a $35/month fee for all-digital access (including tablets) but charging only $15/month for those who want the NYT on the web and smartphone. Meanwhile, the paper is charging only $31/month for Friday-Sunday home delivery (with full digital access) in some areas. The strategy here appears to be aimed at wringing maximum dollars out of print paper ads while training people to value — and pay for — online content.

Update: My colleagues, Laura Owen and Robert Andrews, have pointed out that Hearst publications and The Times in the UK have tried out similar pricing schemes.

  1. Tom Woodsworth Monday, December 3, 2012

    So does this mean they’re grandfathering current subscribers to the previous tiers?

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  2. Looking at US subscription rates it’s $127 for digital only and $160 for print & digital.

    You can’t select a print only subscription.

    Which changes the overall premise of this piece.

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    1. Thanks for the comments.

      Tom: yes, I believe current subscribers get to be grandfathered to existing tiers.

      Bo Jones: I’m not sure why this is the case; the information is from the horse’s mouth as it were (the Economist VP). I’ll update if I learn more

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      1. Jeff, Bo: Looking at the piece, you can select a print-only option, which is the same price as a digital-only subscription (mentioned in the AdAge interview linked from this article). You basically have a print-only option and a digital-only option, which are $127, or a print & digital bundle for $160.

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  3. Luis Barcenilla Tuesday, December 4, 2012

    Anyone could tell the increase of users they are spec ting to gain with this move. In Spain we are facing big problems implementing digital publications from print. Print or print’s web is the game for users therefore advertisers.

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  4. I did this at the Medienhaus Südhessen in Darmstadt. It works an ebales the media company to gain new “readers” and to enlarge the target groups. It works.
    Heike Findeis

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    1. Guido Klausbruckner Wednesday, December 5, 2012

      Hi Heike,
      could you elaborate this a bit please ? Does it mean it worked for MS digital users on web or tablets/ Smartphones ? Paid contents or free web/ online contents in combination with Print ? Right now majority of local magazine publishers offer free digital subscriptions, guessing they are trying to grow the digital audience quickly in order to monetize via advertising ???
      Your feedback, insights and expertise are very welcome.

      Thank you.

      Guido Klausbruckner

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  5. Do you know whether this has anything to do with the UK’s rather bizarre VAT situation where VAT is applicable on online subscriptions but not print subscriptions? Unbundling in this way means that the Economist could argue that VAT is only applicable to the 33 dollar difference between the packages rather than the entire 160 dollar offering…

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  6. We operate a similar pricing tier at The Week. Digital only is £79.99, print £89.99 and a bundle for both is £95.99. Existing print subscribers get six free issues to trial the electronic version, and then they are upgraded.

    Kerin O’Connor, The Week UK

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    1. Guido Klausbruckner Friday, December 7, 2012

      That’s a good plan, reasonably, smart looking. Like that. The six free issues to rial the free digital version should work effectively. Although less than 10% on top of print for print-digiital combo is still low for a very nice service, added features, more interactivity, sharing, social media, interactive ads, easier buying via ads, no storage or environmental problems with digital etc. Do you think you might increase the bundle during 2013 ?

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  7. As Dan Ariely points out in Predictably Irrational, the old combination where the print edition and the bundled edition were both priced at $125 had the effect of making the bundle appear to be a much better value than the digital-only edition priced at $59 (in fact it created the illusion that the digital component was free when you bought the print edition), and so subscribers chose the bundled edition the majority of the time. Once you add a third option priced in relation to the value it provides, subscribers tend to migrate to the low cost option. Let’s hope The Economist has run the numbers as is making the highest profit per subscriber on that low cost digital edition.

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  8. It would appear that they continue their sensible approach and to test various options as this price structure looks like US only for now. UK remains same for bundle or digital only, while EUR countries are a mere EUR3 higher for bundles as opposed to digital only. There are 3 or 4 leaders in this area (Ft, Econ, The Week, Spectator) who dont have the answers but do have the approach to keep trying and testing and that’s the solution for now.

    B2b also surely behaves v different from b2c, as do certain markets/customers vs other markets/customers.

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  9. Printed media is like fois gras: delicious but cruel, obsolete, must be taken out of reach of children in order to prepare a new generation 100% environment friend.

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  10. Ashley Nelson Friday, December 7, 2012

    Though it’s a different industry, I’m surprised no one has commented on the similar move Netflix made.

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