More Publishers Raise Prices. But Success Rates Are Less Encouraging

Cover Prices: First Half 2008
More Publishers Raise Prices. But Success Rates Are Less Encouraging
By John Harrington
http://www.nscopy.com/

Significantly more publishers increased their cover prices during the first half of the year than has been the trend of recent years (see chart below). On the other hand, the results were less encouraging. Those are the findings of a special analysis of recently released semi-annual circulation figures of audited magazines conducted by Harrington Associates, publisher of The New Single Copy.

The 25% rate of titles whose unit sales rose during the same six-month period in which they also increased their newsstand cover price is not only the lowest figure in the past three years, it is the lowest figure since Harrington began measuring the performance in 1998. Likewise, the percentage of magazines whose dollar sales rose at all, and whose dollars rose by more than the inflation rate was also the lowest during either period. For 355 titles not raising their cover price, 109 of them experienced unit increases, a performance in line with past experiences. As has generally been the case, few magazines lowered their price (only 12), and seven of them had unit jumps, but only two large enough to increase retail dollar sales.

Until this measuring period, we have maintained that the newsstand is generally friendly to cover price increases. As we stated in reviewing the overall sales in an earlier issue (8/11/08), one six-month period does not indicate a trend, but the soft numbers are certain to influence future publisher decisions.

In any discussion about pricing, it is noteworthy that four major newsstand titles - Bauer Publishing's Woman's World, First for Women, In Touch, and Life & Style - all instituted major price hikes during the period. Each of them were previously priced under $2.00, a level nearly all other publishers had pushed past quite some time ago. A factor that made newsstand price-increase-friendly has been the low key approach most magazine publishers have generally taken to marketing price. Few publishers make price easily identifiable for consumers. It might be hidden in the barcode, camouflaged in small print on a corner, or tucked away on the spine. The only place these publishers drew any attention to their newsstand price was on subscription insert cards buried in the pages. Bauer was the leading exception to this practice, promoting their low prices in starbursts or balloons on the cover (some competitive titles followed suit). Hence, when Bauer raised their prices (the two celebrity weeklies, In Touch and Life & Style went up 50% to $2.99; Women's World and First were less aggressive), potential buyers were much more likely to recognize the magazines now cost substantially more. The results, particularly for the celebrity weeklies, which had both been on growth curves, were dramatic. In Touch units were down 28.7% and Life & Style's fell 30.2%, although retail dollars rose for each, 7.2% and 4.8% respectively.

Women's World and First, whose increases were gentler, experienced unit fall-offs, 10.5% and 4.7%, but their dollar growth figures were more comforting: plus 7.5% for Women's World and an impressive 19.2% for First. Some observers have noted that since most Bauer titles are newsstand-revenue driven, with limited advertising pages, the overall performance was at least tolerable for the publisher.

A few performances worth noting. Large newsstand magazines combining price hikes with unit sales increases included People, price up 12.9%, units up 5.2%; Cooking Light, price up 8.5%, units up 3.8%; and Men's Health, price up 10.9%, units up 2.0%. Among larger newsstand titles not raising their costs, some had strong unit growth, and they might be considering price hikes: Popstar!, units up 29.4%; Twist, units up 27.0%; Fitness, units up 20.0%; and OK!, units up 19.4%.

A major publisher on pricing: In an interview in Circman.com (9/17/08), the email newsletter of Circulation Management, Paul Caine, president of the Entertainment Group at Time Inc., offered the following: "Our pricing approach has always been to price appropriately for the market based on what we believe the consumer is willing to pay, and the value we are providing to them...For those reasons we exceeded $4.00 for the first time on our average newsstand price [for People]."