Your Celeb-Weekly Habit Just Got More Expensive

In Touch, Life & Style Up Prices 50%; Star Sees Opportunity

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NEW YORK (AdAge.com) -- In the latest newsstand test for magazines, celebrity weekly readers are being asked to swallow an unusually steep price hike if they want to keep buying In Touch or Life & Style.
One rival believes Bauer's decision to raise cover prices 'is going to be a detriment to single-copy sales.'
One rival believes Bauer's decision to raise cover prices 'is going to be a detriment to single-copy sales.'

The question
For their publisher, Bauer, the 50% increase to $2.99 from $1.99 answers distributors' complaints over low margins on such cheaply priced titles. But for its competitors and the industry as a whole, the increase also poses a question: Can magazines, even in the industry's hottest category, keep growing quickly despite such a sharp hike?

After years of flat or declining newsstand sales, success here would mean a lot to magazine publishers. A notable and lasting hit to sales, on the other hand, would suggest the business has found its newest limit.

Magazines typically can get away with 25% or 30% increases every two or three years without changing their trajectories on newsstands, but very few have tried to jump 50% at once, said John Harrington, publisher of The New Single Copy, a newsletter about publishing and distribution. "The Bauer price increases are substantial," he said.

"Everybody's looking at that, at what is going to happen with it. Nobody wants to see a decline because most of the people involved in the industry view the newsstand prosperity as a win-win. When one prospers, they all do."

'Detriment to single-copy sales'
That's the thousand-foot-high view, of course; rival celebrity weeklies, most of which have also increased cover prices in the last year, have some more parochial reasons to care about the outcome. In Touch's first $2.99 issue earlier this month is likely to sell either 15% or 29% less than last November's newsstand average of 1.1 million, depending on which preliminary industry projection you listen to.

"A 50% price increase -- I don't care who you are -- is going to be a detriment to single-copy sales," said Dave Leckey, exec VP-consumer marketing at American Media, which publishes Star magazine.

Star will continue retailing for $3.49 while American Media waits to see what happens. "Right now, with People and Us Weekly up to $3.99 and the Bauer titles coming up to $2.99, we're just obviously interested in reading the marketplace as best we can, to get an idea what our position would be going into next year."

Successful hikes
"As you can imagine, this gives us something to consider as we move forward," Mr. Leckey added. "We've got both eyes on all the competitive magazines."

Us Weekly has not seen any noticeable impact from its more modest 14% cover-price increase last month, a company spokesman said.

And OK magazine has survived a big price hike of its own, according to its publisher, just not by luck. It spent a lot of money securing checkout-lane pockets. "We raised our cover price 50%, and yet we are selling 14% more copies," said Tom Morrissy, its publisher.

Bauer itself was reluctant to discuss the price hike's implications, partly because it's too soon to tell how it will play out. "Our view is we've got to look at this over a two-month period," said Ian Scott, Bauer's president-ad sales. "By early next year we'll have a clear indication of what the price [increase] has had."

People magazine, the unchallenged category champion, doesn't expect to feel any direct impact from the others' price maneuvers, according to Paul Caine, president of the Time Inc. Entertainment Group.

Intensifying fight
But the fight for newsstand sales is getting more intense as media options keep proliferating, he said. Without budget pricing as a selling point, both Bauer and its competitors will need to win with compelling covers.

"Over time it's going to be an issue, as differentiation and relevance in a very crowded space become more important, as the consumer becomes a little more discerning in their choices," Mr. Caine said. "Right now, people will put two, three, four celebrity weeklies in their bags."
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