In a recent post I wrote about how I had no intention of paying the high fees that media companies were charging for the online versions of their magazines and newspapers. Don’t mistake that position for thinking that I believe all content should be free – far from it. I am ready to embrace micro-payments, when the model becomes widespread and standardized, as a means to purchase unique, valuable content a la carte.
But the idea that I would pay more for the online version of a magazine or newspaper, or even the same price as the newsstand price, is absolutely crazy. Time magazine sells there magazine for $4.99 per issue, the same as the newsstand price, while an entire year’s worth of Time’s print edition costs only $20. Fortune magazine wrote about this yesterday – I found out about their article from Gizmodo.
(As a side note, I have a paper subscription to Fortune, but this article was published by Fortune online (for free) and I found it from a site (Gizmodo) that traditional media companies try to blame for their problems. Go figure.)
Some people like the “brazenness” of Time’s strategy. Others hate it, including me. Here are my reasons why:
- I know their distribution costs are lower since they aren’t printing and delivering anything.
- I expect them to be able to provide more targeted advertising compared to the print version, so their per-unit ad revenues should be higher. (I guess depending on the electronic format there may be less ad space, but if that is the case that is their own fault. I’d gladly take as many ads the print version has for a lower unit price.)
- The newsstand prices are for the casual non-committed reader, who browses for something interesting to buy. The committed subscription reader is rewarded with a much lower per-issue cost. If I download Time’s iPad app, I am not a casual non-committed reader – so why are they treating me like one?
- The iPad is not my only means of consuming media – I have computers, phones, and televisions. Time is following Apple’s music strategy of selling me content that is locked on one device. And as I’ve already written, it is a device shared within my family and not something that I will use every day. Even more incentive not to buy.
Overall I’m surprised by the pricing strategy that these magazines are taking – I would have taken the opposite approach, embracing this new medium to tap into a bigger audience not familiar with my content to eventually turn them into paying customers, instead of trying to milk the early adopters with artificially high prices that these companies are already acknowledging won’t last forever.
Another bass-ackwards media strategy IMHO.
Rocco Tarasi was an accountant, investment banker, and CFO before becoming a technology entrepreneur.