Time and People, two of the nation's largest magazines, are reducing their print circulation guarantees to advertisers.
Time is cutting its circulation guarantee by 250,000 copies per issue, according to a spokesman for the magazine, from 3.25 million per issue now.
People's reduction is a small trim, dropping 50,000 copies per issue, a spokeswoman confirmed, from 3.475 million.
Magazines charge print advertisers based on the paid circulation they guarantee, which is called rate base. Starting Jan. 1, Time will promise advertisers a rate base of 3 million copies per issue, meaning it will deliver an average of 3 million copies for each issue over a six-month period. People's rate base will decline to 3,425,000 copies per issue.
Publishers traditionally chased the largest circulation they could achieve, even with steeply discounted subscription offers, trusting big audiences to attract big advertising dollars. And in general, the larger a magazine's rate base, the higher the price tag for print ads. But rising competition for ad dollars has made managing circulation in its own right more important.
Time decided to cut its rate base because of a "desire to optimize ... marketing spend and cut less profitable circulation," according to the Time spokesman.
Less profitable circulation refers to subscriptions from which magazines make little or no money but were solicited in the expectation that advertising would more than make up for it. Ad revenue continues to comprise the bulk of magazine revenue.
In October, magazine publishers received word that MediaVest, an influential media-buying agency with clients including Coca-Cola, plans to no longer count iPad and other tablet circulation toward magazines' rate base -- a move that could undermine the amount magazines charge advertisers.
Time said its rate-base reduction has nothing to do with MediaVest's demands. "It was a group decision on the Time brand level," the Time spokesman said in a follow-up email, noting that the magazine's leadership team looks at the quality of the magazine's circulation regularly. "It felt like it was time to make a cut."
Time's most recent rate-base cut was in 2007, when it went to 3.25 million from 4 million.
Both People and Time are owned by Time Inc., the nation's largest magazine company, which also publishes Sports Illustrated, Fortune, InStyle, Real Simple and others. A spokeswoman for Time Inc. said the company is constantly evaluating its subscriber base "to ensure we have the most valuable consumer base possible."
Digital surge at Time, People
Time Inc., which became a publicly traded company in June, has sought to reinvent itself as more than just a print publisher. And it has dramatically increased the number and frequency of stories posted to Time.com and People.com.
The effort has helped both sites significantly boost their digital audiences. Unique visitors to Time.com on desktop and mobile devices, for example, was 22.6 million in November, a 26% increase over the previous year, according to ComScore.
Time magazine also has the largest social following of any brand at Time Inc., with 641% growth in Facebook followers since Nancy Gibbs took over as editor in July 2013, according to a spokesman for the magazine.
Unique visitors across desktop and mobile to People.com were 37 million in November, a 99% increase over the prior year.
The surge in digital audience has helped Time Inc. attract advertisers online, a move that has offset print advertising losses at the company. Time Inc.'s third-quarter revenue was $428 million, about the same as a year prior. But the company also revised its revenue outlook downward for the year, largely because of weak print-ad sales at its weeklies.