A truly shocking notion: If your numbers are shrinking from one of your two revenue sources, raise prices for the other revenue source.
Not so shocking perhaps, but we’re talking about the magazine industry. A lot of magazines have been charging subscribers far less per issue than a Starbucks anything, and lowering that price in the hope of getting more subscribers and thus, in theory, higher advertising revenues.
Fast forward: Depression → Ads go poof. So what to do?
They’re suddenly paying attention to … us. As this piece says,
The Economist is leading the charge on expensive subscriptions, and its success is one reason publishers are rethinking their approaches. It is a news magazine with an extraordinarily high cover price – raised to $6.99 late last year – and subscription price, about $100 a year on average. Even though The Economist is relatively expensive, its circulation has increased sharply in the last four years. Subscriptions are up 60 percent since 2004, and newsstand sales have risen 50 percent, according to the audit bureau.
Will it work for others?
Let me tell you how I buy wines.
In normal circumstances, economists talk about something called the price elasticity of demand, because when something gets more expensive, people tend to buy less of of it. But there is a quirky exception. The demand for certain things has an inverse price elasticity. As the price goes up, you buy more of it.
This explains why I, occasionally capable of rationality, have nonetheless found myself reaching for the more expensive of two otherwise indistinguishable bottles of Napa Cabernet Sauvignon. It must be …. better. How do I know? I don’t. The price led (fooled?) me into thinking it.
But: For this to work, the product must be something that is not fungible and that I value intrinsically. Having bad wine at my age is worse than no wine. Ditto my reading time: Reading crap is worse than not reading at all. By contrast, I would not reach for the more expensive of two otherwise indistinguishable rolls of toilet paper.
We may soon find out how the reading public views its news magazines.