This Magazine Subscription Has No Co-Pay

Most industries have lots of creative people who focus on how to sell the companies' products and services.

But in my industry, magazine publishing, some of the most creative work goes into figuring out how to give our products away.

Many people enrolled in employer-sponsored health insurance plans run by Aetna received an offer last week that may have looked too good or too unrelated to health insurance to be true: a free one-year subscription to the print edition of Better Homes and Gardens magazine.

For magazine-industry veterans, however, the only mystery is why Meredith, the publisher, limited the offer to the first 1,500 takers. The subscriptions were quickly snapped up; Aetna enrollees who didn't act fast enough  are being offered a free digital edition of a Better Homes and Gardens cookbook.

Most consumer publishers still make more from selling ads than from selling magazines. And their ad-sales strategy typically includes a ratebase -- a guarantee that a minimum number of copies of each issue will be sold or otherwise distributed to consumers.

A magazine that misses ratebase, even for one issue, may have to issue refunds to advertisers and to counter doubts about its viability and "wantedness."

The challenge for publishers is that, though people still like magazines, they are reluctant to shell out money to buy them, saying "I'll just read the articles online." (A magazine subscriber is worth orders of magnitude more in ad revenue than is someone who visits the publisher's web site once a month.)

Long before Al Gore invented the internet, magazine publishers honed the art of meeting ratebase without actually receiving money for the magazines -- by delivering to hair salons and doctors' waiting rooms, letting people use frequent-flyer points to subscribe, and offering huge commissions to independent agents.

Competition from digital media has made print advertising less lucrative, forcing many publishers to reduce their ratebases and to eliminate such lavish schemes as negative-remit subscriptions (where the agent's commission is higher than the subscription price).

But digital media and digital editions of magazines are also opening the door to new methods of giving away our magazines in ways that will pass muster with the circulation auditors. Not to mention new methods of getting people to renew their subscriptions once the freebies expire.

Related articles:

• Is Ratebase the Magazine Industry's Crack Cocaine?: Fellow publishing pundit (and production guy) launches one of his infamous Bo-rants at a longstanding industry practice. 
• Why Has Magazine Circulation Declined? Blame Advertising 
• An Ounce of Prevention: Why a Major Magazine Will Stop Selling Ads: Rodale decided that the cost of propping up its flagship's ratebase was simply too high.