Why You'll Pay More to See Magazines on IPad - Advertising Age - MediaWorks
by Nat Ives
Published: May 31, 2010
NEW YORK (AdAge.com) -- Magazines are poised to start offering subscriptions to their iPad editions no later than early June, when Bonnier plans to introduce subscription sales for the iPad iteration of Popular Science. IPad editions and subscription offers for Bonnier siblings Popular Photography and Sound & Vision will arrive later in June, followed by TransWorld Skateboarding and Islands in August.
But consumers who think iPad editions should cost no more than print editions and perhaps should cost less -- given all the money publishers save on paper, printing and distribution -- are going to be disappointed. IPad subscriptions to Popular Science, Popular Photography and Sound & Vision will cost at least twice as much as they do in print.
Consumers who think iPad editions should cost no more than print editions are going to be disappointed.
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A year's worth of Popular Science in print, for example, runs you $12 if you order through the magazine's website and $10 if you find it on Amazon. A year on the iPad, however, will cost you $29.95. That's 83¢ a print issue through Amazon, but $2.50 an iPad issue.
Bonnier's subscriptions and pricing strategy will have company fairly shortly. Time Inc. CEO Anne Moore said last week that Time magazine iPad subscriptions are "coming soon." And she didn't sound any more interested in discount pricing than Bonnier. "It's becoming increasingly clear customers will pay for trusted, quality content," she said in remarks at a Time Warner investors day.
Maxim magazine's iPhone app set the tone in February, too, when it arrived at the App Store offering subscriptions priced higher than print subscriptions (although Maxim later dropped the subscription offer "following an Apple directive," a spokeswoman said). "The question is what the app subscription costs against buying the app 12 times," Maxim Editor in Chief Joe Levy said.
Readers won't see it that way, but they'll need to adjust their expectations, said Andrew Degenholtz, president at ValueMags, a magazine-subscription marketer. "They're thinking, 'We're not knocking down any trees, there's no ink being used, and there's no truck being used to deliver it,'" he said. "But there are significant editorial costs, creative costs and research-and-development and production costs," he said. "It's understandable that magazine publishers are going to charge a higher price for the subscription early. You can always lower the price, but you can't raise the price at a later date."
Reader relationships
Adding subscription sales is important to magazines' bid to sell digital versions on iPads and eventually other tablets, because they make the proposition easier and cheaper for readers. Subscriptions also offer a way for magazines to establish relationships with their iPad consumers, relationships which Apple hogs as long as iTunes is the only login required. Bonnier's iPad editions will sell subscriptions as in-app purchases, requiring customers to create accounts with their names and e-mail addresses.
Publishers might be offering more aggressive iPad subscription discounts if it weren't for factors like the recent recession, said Terry Snow, CEO of Bonnier. "If this were 2005, you might find everyone a little more aggressive on single-copy prices and subscription prices," he said. "It's like, 'Let's be careful on our new venture not to price ourselves too low to have a business model.'"
Print subscriptions are only so cheap, as a matter of fact, because advertising has provided the bulk of most magazines' profits for so long. Magazines attracted readers with dirt-cheap subscriptions and used the resulting audiences to pull the real money out of advertisers. The ad implosion made everyone wish their subscribers were paying more, but it was too late to hike prices without losing readers.
Bonnier is also encouraged by single-copy sales on the iPad, where it says it's sold 22,000 copies across the April, May and June issues.
And publishers couldn't chase huge audiences yet if they wanted to. "If Apple does really well this year and they sell 7 [million] to 10 million iPads, it's still a relatively small market in the United States," Mr. Snow said. "It's going to be difficult in the near term to get million-plus circulations [for] any paid publication."
Real pricing pressure will come when more people own tablet computers and especially as cheaper models attract consumers with more modest means than today's early adopters.
Zinio already offers subscriptions to the digital editions that consumers can view on its iPad app, priced more like print: 12 issues of Esquire's Zinio edition cost $8, the same as a one-year print subscription ordered through Esquire's website. But as more publishers build their own iPad editions, more are going to offer iPad subscriptions directly.
Rodale expects to offer iPad subscriptions by late this summer or early this fall, according to a spokeswoman. Condé Nast, which introduced a Wired iPad app last week, is considering a variety of pricing and distribution options, a spokeswoman said.
