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Summary:

Magazine publishers will have to adopt more nuanced digital pricing strategies as tablets take off. They can look to book publishers — who are a lot further along in the digital revolution — for some help.

Tablet magazines montage

A recent Wall Street Journal article by Keach Hagey takes a look at trends in digital magazine pricing and finds a number of publishers charging more for tablet editions than print. As ad revenue declines, publishers are turning to digital magazines as a way to “become more leveraged toward consumer revenue and a little less dependent on advertising,” in the words of Hearst president David Carey. And here’s Condé Nast president Bob Sauerberg: “We’re using this new platform and the clear demand for all access to our content as a way to redefine our subscription offerings at a higher price. The industry is trying to take a step forward because we’re all trying to get more money from the consumer.”

But how long will these pricing strategies work? Digital still makes up only a tiny percentage of magazine publishers’ overall revenues: The Alliance for Audited Media (formerly the Audit Bureau of Circulations) reported in August that digital replica editions (which replicate most of a print magazine’s editorial and advertising content, and make up the vast majority of magazines’ digital versions) made up just 1.7 percent of overall circulation. The WSJ story says big magazine publishers think digital won’t hit 10 percent of circulation until 2015.

Pricing strategies that very early adopters appear to be accepting are not likely to work for a general population. Magazine publishers may need to adopt more nuanced digital pricing strategies as tablets take off. And they can look to book publishers — who are a lot further along in the digital revolution, with ebooks now making up over 20 percent of revenues at large publishing houses — for some help. Here are a few things they’ll have to think about:

Stack of magazinesThe advertising conundrum

One of the biggest differences between the magazine and book publishing industries is that magazine publishers rely on advertising for revenue while book publishers don’t and never have. Print magazine subscription prices have plummeted, Hagey writes, because “magazine publishers have guaranteed advertisers their titles will reach a minimum number of readers and, to fulfill that pledge, they have long cut prices sharply for promotional subscriptions.” That’s why you can get an annual print magazine subscription for under $10. In tablet editions, magazine publishers see a chance to charge higher rates. Hagey notes that the average annual price of a digital subscription to a Hearst magazine is $19.99, “twice that of its average introductory print-subscription price of $10.”

At least for now, though, magazines’ digital editions bring the advertising from the print edition along for the ride. So digital readers aren’t getting an ad-free product in exchange for paying a higher price — magazine publishers are just charging more for the novelty of reading on a tablet. That’s a short-sighted strategy that probably won’t work as tablet adoption becomes widespread.

O, The Oprah Magazine from Hearst MagazinesWill readers pay for enhancements?

The bells and whistles that magazine publishers are adding to digital magazines remind me of enhanced ebooks, which book publishers got very excited about a couple of years back. They hoped that by adding video and music to an ebook, they could charge more for it. Fast forward to 2013 and enhanced ebooks are widely considered a flop. So far, readers simply haven’t been interested in paying more for them. Book publishers have scaled efforts back and are no longer trying to charge higher prices for enhanced editions.

Magazines may be better suited to these enhancements than books are: E-commerce fits in well, for example, and videos and music may make more sense. But since a lot of this enhanced material is already available free online, readers may be reluctant to pay extra for it. The benefit for magazine publishers is that they can monetize those enhancements in other ways — through affiliate links to iTunes, for example, as Rolling Stone is doing. And Lucky is about to roll out a major e-commerce component that will likely rely on affiliate links as well.

Promotional pricing can work

Countless self-published authors have found that offering their books at initially very low prices is a great way to gain new readers: When the barrier to entry is low, readers are more likely to take a chance on an unknown name. This strategy is working less well as the ebook revolution progresses (and there’s a sea of self-published books out there), but magazine publishers, in the early stages of their digital era, can take advantage of it.

Magazine publishers already offer print subscribers discounts on other magazines they publish. Why not do the same thing with digital magazines? Or magazine publishers who sell print and digital editions separately could offer print readers a couple free digital issues or a discounted digital subscription for the first year. I also love the New Yorker‘s strategy of giving iPad subscribers free digital extras, like compilations of articles on a given topic and cartoon collections.

The good news for magazine publishers is that, with their digital revolution in the early stages, they can learn from those who came before them. The bad news is that many magazines are more threatened by free online content than most books are. As digital magazine reading moves from early adopters to a larger population, magazine publishers will have to find a way to give readers high-quality, no-substitute content at a reasonable price — or risk losing those readers to the internet.

Photo courtesy of Shutterstock / bernashafo

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  1. I have to agree with this article. I used to read magazines all the time before I went digital. Now all my media consumption is on either my kindle or my tablet. I tried a few magazines but I was irritated with the pricing and/or the quality. The same with newspapers. As soon as they get it right I will be back to enjoying reading them in a digitial format.

  2. Sorry, I have to disagree here. I’m an Adobe geek and if you look at difference between interactive magazines done well vs. “enhanced ebooks”, it’s day and night. Book publishers are still waiting for epub3 to solve their problem with fixed format (most arent even giving ibook author a chance because no one wants to be lock-in to selling their ebooks with Apple). Adobe’s DPS for digital magazine (one of the many solutions out there) is already here and has been maturing very quickly in the past year.

    You can outsource epub conversions to Asia and not care about QA (have you read an epub with 5 column table squeeze into a 7″ reading screen with 2-3 word per row? seriously?! It’s all good right? text reflows, who cares?) but you can’t do that with interactive magazines. You skip QA with digital magazines, you might as well give up on tablet readership right now. From a pure technical perspective, this require better planning, know-how and even developing the digital content along with print at the same time. I do think many magazines are learning this the hard way with 1-star ratings reviews that basically points out how many fails to QA properly.

    If anything, book publishers will have a lot to learn from magazines very soon. I contribute the higher ebook readership to early ereader adaption. IMHO, interactive magazines can catch up very quickly but only if magazines changes their business model of relying heavily on advertising as main source of revenue. Also digital version should not be the same exact replica of print…you can’t charge people more money for the same content. some magazines are absolutely shooting themselves in the foot with this one.

    One more thing, magazines have established brands. Where as most ebooks dont even get discover in the digital space. So far the key for ebook success has been cheaper pricing and be in fiction category. I think magazines are in the process of solving the complex problem epub3 promises but wont get here anything soon.

    1. Laura Hazard Owen Ben Monday, January 28, 2013

      Those are some good points about platforms and brands, Ben….do you worry about the fragmentation of tablet brands at all? Do you think magazine publishers will spread themselves too thin trying to develop for different platforms, or do you think they should focus on iPad for now?

  3. Lindsworth Deer Saturday, January 26, 2013

    IHS iSuppli reveals e-Readers are poised for explosive growth in the Developing World.

    http://bit.ly/VlIi75

    This thanks mainly to Female Readers love for Reading Glossy magazines and the as-yet to be fully tapped market for e-readers for colleges students and High School Students both in the Developing and Developed World.

    Tablets are NOT going to kill off e-readers; they’ll survive as they’re specifically designed for reading in natural light, as opposed to LCD or AMOLED Tablets.

  4. Also, at least on the Kindle store, eMagazines have a lot more restrictions than eBooks. They can only be downloaded to a single device, and you can only redownload the last six issues, and it quietly deletes your old issues to make space.

    So, if you have had a subscription for a year or so, and want to look something up, or read an old article or story (a recipe, perhaps, or the nebula award nominees were just announced and you’re not sure you read one of the stories), you’re out of luck, and the fact that you don’t own what you bought is made very very clear.

    I’ve switched from tablet to paper for my magazines because of this.

    1. One comment to you below…

  5. This article picks up some key insights, specifically the simpler revenue model for books which do not rely on a corresponding sales related ad revenue component. This may make it simpler, but at the same time, traditional publishers have had the problem of a high value item ($10-15) being undercut by self-published writing and aggressive etailer pricing. if you have a magazine at $4, there is not that much lower to go.

    Most publishers by now have found that ‘enhanced’ ebooks that are digital versions of highly illustrated/designed books sell really poorly. Partly it may be the rendering experience – lack of a double page spread, but we also think it has to do with gifting – cookery books are a prime example of this. They sell dreadfully in digital format because there primary function is actually to be a physical gift, not a recipe manual!

    The big difference between magazines and books is the customer experience model – in magazines you want, at all cost, to create a subscriber, whereas in books you use pricing to entice a reader into a love affair with an author or series and then monetise the back catalogue. The publisher who gets their digital pricing strategy right will gain a competitive advantage over their rivals.

    1. @PeskyWeasel and @Angus Swan, have either of you looked at Next Issue Media — which is a joint venture between magazine publishers to provide “all you can eat” magazine subscriptions on iPad and Android for a set monthly price. I think it’s a really interesting model, but I am not sure how much readers value having access to a large number of magazines on tablet for $15 a month.

  6. “Fast forward to 2013 and enhanced ebooks are widely considered a flop”. the reason is that although ePub 3 file allows you to embed video and audio there not many e-readers which will run the video.

    Amazon charge quite a hefty price for their Kindle Fire yet it still cannot read a video in an eBook. Having exchanged many e-mails with Amazon’s tech department they are in no rush to change that.

    Only Apple are currently supporting enhanced eBooks, Kobo are looking to do the same.

    I agree with Ben that “most arent even giving iBook author a chance because no one wants to be lock-in to selling their ebooks with Apple…..”

    I am launching a digital magazine this week. We would have had video and audio but that would have seriously affected the potential reach.

    As for magazines charging the more for the same content people are mad if they pay for it. Digital is far easier and cheaper to produce than print. Do’t let them tell you anything else.

    _______________________

  7. Sorry for the typo …

  8. Remember the introduction of CDs? The ‘novelty’ pricing / premium on ‘new technology’ brought the price of an album from somewhere around $10-12 to $16 – $19. Strangely, that became the new normal as the technology took off and the prices never came down. Until iTunes came along, ‘saved’ them from file sharing & they got a taste of the pricing they should have been giving all along.

  9. There are magazines that are making an impact. Scientific American, VIV, and National Geographic are great examples.

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