New business model should treat magazines as the luxury items they are

Consultant Stephen Frye says that the North American magazine industry may have to come to terms with the fact that our magazines are luxury items and should be priced accordingly. In an article in Publishing Executive magazine, Frye says of our creaky newsstand system:

These magazines have a self-imposed average expiration date of 30 days (with the month of "relevance" printed right there on the cover), and thereafter are destroyed. We then rate their success on how many we sell, which currently averages around only 30 percent to 35 percent.

This is a huge waste of resources. And it always bothers me that once the next issue comes out, the current one is perceived as worthless. In most cases, however, that editorial and advertising is still relevant and has value. With sold copies it's called "pass-along" readership. Yet, unsold copies are deemed worthless and destroyed.

Frye looks at several possible models, such as China, which has 0% returns on the newsstand.

How do the Chinese sell every magazine placed on their racks? It is simple, really. When the January issue (for example) expires and the February issue comes out, any unsold January copies are discounted in price. If, by chance, there are still January copies in March, they are further reduced until every copy is gone.

The Chinese understand that even though the issue is one day, one week or even one month old, it still has value. Magazines are a luxury item in China and are sold as such. Maybe it's time we think of magazines as a luxury item, too.

Frye, who has built his reputation as a production expert, makes a strong case about the wastefulness of our traditional distribution methods and suggests we should actually be charging a premium for newsstand copies and an even bigger premium for the convenience of having magazines delivered to the home.

A longish article, but thought-provoking and worth the trouble. It reminds me of a quote from Howard Gossage that I may have reprinted here before:

An illustration of the utter madness of publishing economics [is] that a newspaper or magazine is the only consumer product, from bubble gum to bras, where the selling price has no relation to the actual cost of production. It costs less, for instance, to have a magazine delivered at home than it does to buy it in the store; try that with milk.

Related posts:

• Let's explore the "day old bread" approach to selling single copies
• The day old bread discount and other variable pricing