Digital magazines: sales revenue may remain disappointing, but few are giving up just yet (and some can claim success)
The average large consumer magazine now sells about the same dollars in digital editions as one full-page ad, but that may be enough… for now
Is the glass half-empty or half-full? Reading the reports concerning the latest AAM Snapshot report for consumer magazines one might get one impression depending on the reporter, and a completely different take from another. You know what, that’s about right. It is a complicated matter.
The reason is that the growth in digital editions is slowing. Is this because iPad sales are slowing? Or because there are too many PDF-based replica editions in the digital newsstands (or as one reader claimed, there are too many native digital editions available)?
I doubt that the slowing has anything to do with the actual digital editions being produced. This may surprise some that I would take this position, but I think the answer lies in the magazine market itself – it isn’t nearly a big as some think it is.
I think most magazine readers like their print magazines – and why shouldn’t they? Print is a great medium and will outlast us all (even if it does continue to shrink). But many of the top magazines have the same rate bases they did a decade ago. Take Vogue, for instance, ten years ago its rate base was 1.2 million, the same as today. Vanity Fair’s is up 100K from a decade ago.
This might surprise those that don’t understand the magazine business. Aren’t magazine sales declining? Not really, it is just getting harder to get people to subscribe. But, honestly, it wasn’t that easy a decade ago, either. Vanity Fair, for instance, had to discount its subscriptions so much that it only netted $1.36 per issue a decade ago. Today it nets $1.80. That’s actually pretty good – except when you realize that the price of paper and postage has climbed dramatically.
But the issue has never really been about the price of the magazine as circulation directors have always had to spend marketing dollars and discount subscriptions in order to maintain the title’s readership at desirable levels.
So the goal of digital editions of consumer magazines is really not to increase readership or earn extra circulation dollars so much as to maintain that rate base.
In the latest report, Vogue now has 64K digital edition circulation. That means the magazine can print and mail 64K less copies and still maintain its circulation. What has changed in the past year is that single copy sales have declined – due, one assumes, mostly to the loss of newsstands. Single copy sales brought in more revenue per copy sold than subscriptions, but waste could be a huge factor. (Again, this can be a complicated subject.)
For Vogue, and many other consumer magazines, the revenue currently being generated by their digital editions has yet to even equal that of one full-page ad (assuming it is sold at rate card rates). If one had asked publishers four years ago if they would be satisfied with that level of sales for their digital editions they would have said “No”.
But some, a few, magazines seem to have reached a level of success – both in print and digital – that is making a difference. Wired, for instance, now has a circulation of over 900K and is printing as many copies as ever – and has over 100K digital readers. That is impressive as they have hit the mark I thought was the minimum necessary to declare victory: 10 percent (that is, 10 percent of readers now read via digital editions).
The dirty little secret of digital editions of magazines, versus that of books, is that digital editions cost readers more than print. That seems crazy, but it is true when looked at over the entire readership. It may cost you $5 to buy a copy of Vogue at the airport newsstand, but the average reader is paying $1.49. The annual subscription price for the digital edition is $19.99, or $1.67 per issue.
As depressed as many publishers are about their digital edition sales, the condition of the Apple Newsstand, and the extra work it takes to create compelling digital editions, most publishers would not want to dump their digital publishing efforts. They just want them to enjoy more success and get more readers using their digital devices to read periodicals.
This will be difficult. The rise of digital publishing has it made it easier for self-publishers and others to launch digital magazines. They, along with thousands of foreign language titles, crowd the digital newsstands. This is also what we see with eBooks inside Amazon.com. This is leading to a more fragmented market and lower prices. $0.99 is a common issue price now for a new digital magazine issue, just as $2.99 is not an uncommon price for a self-published eBook.
More and more, the digital newsstands are like the web, with endless choice (and declining quality). It may be that the future for digital edition is free – and if advertisers tolerated this it could work.
In B2B publishing, where trade magazines are mailed to qualified readers free of charge, there is little to no circulation revenue that would be sacrificed and why digital editions make so much sense (if only there was a better, workable qualification process). A typical B2B magazine with, say 70K in circulation, could save at least $50K to $70K a year in postage and printing if they could attain the 10 percent level with a digital edition. That doesn’t sound like much but that is just printing and postage. And how much does even the most expensive native digital publishing platform cost?