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.

Invasion of the Bookazines, Featuring the Return of the Living Dead

Blame it on the mooks and their zombie buddies.

Because of all the doom and gloom about the U.S. newsstand system (you know it’s bad when an industry consultant’s blog is called From the Foredeck of the Titanic), Dead Tree Edition decided to launch an in-depth investigation. Which means I ventured out to the magazine sections of three stores.

I was trying to figure out why, as MediaPost reported recently, the combined retail sales of 68 major magazines are barely half of what they were a decade ago. It wasn’t hard to spot one of the culprits.

At first, all seemed OK when I eyed the prominently placed magazine section in a big discount store. There were lots of familiar titles – National Geographic, TIME, Us, Readers Digest, and Better Homes & Gardens. But a closer look showed they were impostors.

The well-known magazine logos weren’t on magazines at all but on mooks – AKA bookazines, SIPs (single interest publications), one-shots, or specials. By whatever name you call them, they are sold in the magazine section of stores but have no specific issue date, can’t be obtained as part of a subscription, and tend to hone in on a single topic that’s in keeping with the magazine’s brand --like Christmas Cooking from Better Homes & Gardens, Us: Stars of 2011, or TIME’s Beyond 9/11: Portraits of Resilience.

Mook sales are usually excluded from the industry statistics reported by the trade press.

The intruders mostly have the same characteristics – little or no advertising, glossy high-quality paper, perfect binding, relatively high cover prices, and on-sale periods of about three months instead of the one month or less typical of real magazines.

The Zombies
Much of the retail space once dedicated to prominent weekly and monthly magazines has been given over instead to these magazine spinoffs. Also taking oxygen away from the sales of real magazines are SIPs published by such non-magazine brands as Pillsbury, the Mayo Clinic, USA Today -- and Life.

Three times Time Inc. has killed Life magazine, only to resurrect it for such bookazines as 100 Photographs That Changed the World and El Papa de Juan Pablo. No wonder they call it Life: This zombie just won’t stay dead!

Also enjoying living-dead status is U.S. News & World Report, which closed down its only print magazine late last year but in one bookstore had four different mooks – Best Colleges, Best Graduate Schools, Best Hospitals, and Amazing Animals. (Wait, shouldn’t that last one be Best Animals? Or maybe Best Veterinary Hospitals? How about Best Obedience Schools?)

The "Best" books all deviate from the usual bookazine model by running ads -- lots of ads in the case of Best Hospitals, way more than the real magazine used to have. My contact at U.S. News says the new 344-page Best Colleges book is the company’s largest “issue” in at least two decades, and maybe ever. It sounds as if the magazine business is looking pretty good for U.S. News now that it’s out of the magazine business.

One-shots used to be the province of enthusiast magazines testing out ideas for a new title: Sportscar Convertible is doing well, so let’s try a SIP called Corvette Convertible. If the response is good enough, we’ll solicit subscriptions and start publishing bimonthly.

But that door is closed. The beleaguered newsstand distribution system no longer has the patience to give untested niche titles a shot.

Favorable Economics
Bookazines from well-respected brands are another matter, and the big publishers are happy to play along even if that diverts attention from their periodical issues. Consider the economics, as exemplified by Better Homes & Gardens: The 232-page October issue is priced at $3.99, but its 144-page SIP siblings – I saw three in one store – sell for $9.99 each.

Here’s my analysis: As consumers have gained greater ability to find exactly the information they want or need, the traditional mass-market magazine with its mishmash of loosely related articles is looking increasingly irrelevant to them. (The October issue of National Geographic has articles on the teen brain, surviving cancer, whale sharks, and Ansel Adams. Who's the target audience?)

But in an age of link-baiting and belly-fat ads, consumers still trust respected magazine brands. When those brands offer content -- whether a mook or an app -- that’s laser-targeted to their needs or interests, suddenly the wallets come out. (A National Geo mook called Wildlife: The Greatest Photographs? Let me see that.)

I was one of those who snickered last year when the Magazine Publishers of America changed its name to The Association of Magazine Media. Now the name is actually starting to make sense.

Just don’t ask me to define “magazine media.”

If you actually made it to the end of this article, you might enjoy suffering through these other Dead Tree Edition analyses of the U.S. magazine industry:

• Is Apple's 30-Percent Solution Really So Bad?
• Stuck at the Borders: Magazine Publishers Have Failed to Explore the Amazon 
• App-oplexy: Magazines on the iPad
• The Yellowing of National Geographic: Will Today's Copies Age Faster Than That Stack in Your Gramma's Attic?
• Viagra to the Rescue? Postal Regulations Are Taking the Life Out of Tabloid Magazines