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Magazines Considering Price Hikes

This story was written by David Kaplan.
With all the talk about building up content site paywalls, major magazine publishers are already taking steps to raise the original pay wall on subscriptions. NYT cites Audit Bureau of Circulations' figures that found subscribers paid roughly 47 cents per copy for Newsweek, 77 cents for BusinessWeek and 89 cents for Fortune, 87 cents for New Yorker and 58 cents for Timein the latter's case, that would get you one-eighth of a Starbucks latte.

Can't raise prices in a recession?: While that truism hangs over publishers, the reality is that they can't continue producing the same magazine as ad dollars disappear and subscriptions don't even cover the cost of mail delivery. But the concern persists, naturally, that consumers will reject higher prices for mags, since they're used to getting them so cheap. While movie tickets and sporting events have consistently raised their prices, magazine publishers have been able to rely on advertising to cover much of their costs. So there wasn't as much of a need to keep pace with other consumer spending in other areas. More after the jump.

People will pay more for celebs, finance: As in the case with newspapers, it looks like business and entertainment are the prime areas that can command higher prices without much consumer revolt. For example, Time Inc.'s People has experienced slight increases in newsstand and subscription sales even after raising the sub price 5 percent, to $104 annually, over the past four years. On the newsstand, the price has gone up 21 percent, to $4.09 on average, which includes special editions, which the mag charges more for. And The Economist, which has always been pricey, has continued to stand out from the pack. Circulation for the UK business weekly has risen significantly over the period as People's. ABC figures show that subs are up 60 percent, while newsstand sales have gone up 50 percent, over the past four years.

Consumers care about prices; advertisers shouldn't: Fitness and female-focused publisher Meredith (NYSE: MDP) has tested price hikes of just 50 cents and found that consumers become turned off at high rates in the case of some mags. Execs at Time Inc.'s Sports Illustrated say, sure they could ask readers to pay $100 a year and gone on with a much smaller circulation, but ultimately the brand could suffer. So while consumers of certain pubs do pay close attention to how much the price of a mag costs them, media consultant Rebecca McPheters tells the NYT that she stands by her four-year-old research that says changes in a pub's price doesn't change engagement. While advertisers tend to connect the price of a mag to engagementand therefore are willing to pay higher for the promise of more interest and time spent with a pubultimately, upping the newsstand and subscription prices might not have the residual affect it used to.


By David Kaplan