Digital magazine publishing changes from week to week, but last week, at our quarterly Digital Publishing & Marketing Intensive in Boston, we discussed digital magazine publishing opportunities in depth. The publishers we had the honor of sharing a room with – from niche consumer magazines to extremely niche B2B magazines – hailed from all over the country.
In the form of video, we’ve captured some of their most interesting takeaways from the conference and will roll them out in the Daily throughout the week. Here are a few attendees talking about their best digital magazine publishing takeaways:
We also captured some of their most pressing questions, many about how to price their digital products.
1. Why do you suggest bundled pricing?
Bundles allow us to maximize revenues in many different ways. While some mega-publishers like TIME Inc. still employ the universal price strategy, The Economist, like some forward-thinking publishers, has moved on to our new favorite pricing model, contrast pricing – also known, less politely, as decoy pricing.
Contrast pricing takes advantage of the psychological phenomenon in which human beings, when asked to make a choice, tend to rely on the relative value of things compared and contrasted to other similar things. As long as we have something to contrast a purchase with, we’ll choose the one that seems most valuable by contrast.
Dan Ariely, Professor of Psychology and Behavioral Economics at Duke University most famously examined The Economist a few years back, before digital magazines, when it made this offer:
- $59 – Subscription to the website
- $125 – Subscription to the print edition
- $125 – Subscription to the website and the print edition
The decoy price was the middle one: $125 for the print edition alone, when you could have the print edition and the website for the same price, was undesirable, and only served to establish the higher value of the last offer. Eighty-four percent of subscribers chose the website and print edition. When the middle choice was removed, only thirty-two percent chose the higher priced option.
To make the middle price a genuine decoy price, lower the combo price at the top to make it a smaller financial leap for the consumer. This strategy sends revenues through the roof:
- $20 – Magazine: 20%
- $30 – Website: 10%
- $35 – Combo: 70%
The one thing that successful magazine publishers like The Economist, The New Yorker, Biblical Archaeology Society and others who use this strategy have in common is that they offer a subscription website with digital content. You might wonder where tablet editions come into play. They do, but they don’t replace a web edition. The web edition, filled with archived content is key to building the value of a bundle.
2. Should I charge more for a tablet edition?
Yes, but going back to bundled pricing, we tend to charge the least for a tablet edition and the most for the web edition. The reason is because the tablet edition is the cheapest to deliver and the web archive is where most of your content is, making it the most valuable. The value of print is somewhere in between.
This is why we price them as bundles, and we price them closely together. We want people to order to total bundled price, not each product individually. McDonalds and Starbucks have mastered this pricing strategy for years by offering a small, medium and large. When you get a medium they ask, “do you want a large for ten cents more?” and often the answer is “yes.”
What’s important is that the customer understands that the three options are different, and that they’re getting a significant discount by buying the bundle. It’s the most consumer-centric offer out there and has minimally to do with what you’re charging and more to do with how you’re charging.
Everybody thinks a tablet edition is cheap because it’s digital. If you want to make money selling subscriptions, give the consumer something they can grasp and compare. They want the magazine, the tablet, the website and the print edition, and they’ll take the best package that offers everything when it’s only slightly higher priced. It’s the “anti-choice” offer because taking it means they don’t have to choose.
3. Is having a digital replica magazine enough?
If we’re being frank, you won’t be creating an app that anyone loves if you’re building a digital replica of your magazine. However, it really depends on your marketplace. Look at Bonnier, who appears to be handpicking it’s children, deciding who gets a replica and who gets a budget for a replica-plus or for something more.
If you’re in a non-competitive market, you might get away with a replica … for now. As soon as someone in your market starts loading their tablet edition with video, has a gorgeous layout with scrolling text, slideshows and links going back to the parent website, then they’re going to toast you. And if you’re already in a niche with competitors that have dynamic reflow editions, then the demand for yours will be tepid at best.
4. How do you convert existing print subscribers into digital subscribers?
The poster child for this is Forbes. They’re using a digital-only offer and they’re using it as a renewal incentive. When renewals come up, the only option for the early bird pricing is either the digital issue or the print/digital bundle.
Do you have any pressing digital magazine publishing questions you need answered? Ask me a question in the comments!