Online distribution hits magazine prices

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Electronic distribution is impacting magazine prices. Below is a table of prices for a sample of popular magazines. Data were obtained for printed magazines delivered to your doorstep from magshop.com.au and compared to prices from Zinio, which sells electronic magazines viewable on your  computer, ipad or other device. Annual subscription prices were normalized by dividing by the number of issues per year included in the subscription.

You can download the spreadsheet here.

The Dead Tree Premium

It generally costs much more per issue to subscribe to printed magazines than to the electronic version of the same magazine. For example, a printed issue of Macworld Australia costs AUD7.33, which is 1.6 times more expensive than the electronic version costing AUD4.47. This “dead tree” premium ranges from a low of 1.3 for National Geographic to an astronomical 44.8 for Elle. A single printed issue of Elle costs the same as 3.7 years worth of electronic issues! Moreover the electronic subscription arrives immediately while the printed version may take days or weeks to be delivered, especially for overseas magazines.

Printed magazines may continue to sell as an “impulse purchase” at supermarket checkouts and news stands, or to collectors. However, I cannot imagine that the annual subscription model is sustainable at such high premiums for the general public.

US versus Australian Electronic Pricing

An interesting pattern arises when comparing the prices of electronic magazines in the Australian Zinio store with that of the same company’s US store. Some online retailers have been known to discriminate on pricing for their Australian stores. However, for the most part magazine prices are the same whether you buy them from the US or Australian Zinio store. For those of us Down Under, there has never been a better time to consume such media.

Notable exceptions are New Scientist, The Economist and National Geographic, which cost 1.85 times, 2.23 times  and 2.36 times more in the Australian online store than in the US store, respectively.

National Geographic and The Economist

National Geographic and The Economist are both attempting to price discriminate. They are asking the highest amount for an Australian electronic subscription relative to the US one (AUD44.25 versus USD19.99 per year for National Geographic, and AUD266 versus USD126.99 per year for The Economist). Both are still cheaper than the printed versions, but not by very much (AUD 59 for the Geographic and USD365 for The Economist).

I wonder if they will continue to be able to extract additional surplus from Australian consumers. In both cases, the magazines are relatively unique, so perhaps there subscribers are less likely to switch to something else. Or perhaps their high pricing is temporary… there are lots of inexpensive magazines to read and a ton of websites and blogs to visit that offer interesting free content. One difficulty both firms will face is that their audience is relatively sophisticated and will become increasingly annoyed when they click the “renew” button to find that their subscription does not qualify for the much cheaper US price (sample screenshot). It was easier to justify higher Australian prices for printed magazines as being due to transportation and distribution costs. But in this case, they are distributing exactly the same electronic file, and via the same distributor. Too much of a gap between the US and Australian prices will lead to a temptation to find workarounds, as has been the case with other online retailers.

 

5 Responses to "Online distribution hits magazine prices"
  1. Hmm, looks like I need to do my Economist online subscription through a proxy when renewal time comes …

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