Web's Big Boost to Magazines? Selling Print Subscriptions

Another Benefit: Easier to Mine Data from Subscribers Coming in From Online and Build Long-term Relationships

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NEW YORK (AdAge.com) -- The magazine business is getting lots of attention for its push to build digital editions for the iPad and other shiny electronic devices. But magazines' biggest digital success right now may lie in a very different arena: selling print subscriptions through the web.

Just five years ago, big magazine publishers were still struggling to wring legitimate subscription sales out of the internet, while embarrassing, unauthorized one-cent subscription offers on eBay undermined their efforts. A variety of changes, however, have now improved both the cosmetics and the substance of online-subscription sales, giving magazines another reason to look more kindly on digital.

Selling print through the web, after all, is usually cheaper than traditional tactics and can even help publishers sell ads, where the industry finds most of its profits. "The subscriptions we sell to people online generally bring in people that are more educated, make more money, are younger in age and have more of the desirable traits that a healthy advertising offering is based on," said Chris Wilkes, VP-marketing and audience development at Hearst Magazines Digital Media. Hearst Magazines, for one, increased web-generated subscriptions from just 5% of its new subscriptions in 2005 to 45% last year. Earlier this month it sold its 10 millionth new print subscription through the internet.

"The other engagement is an engagement benefit," said John Phelan, associate VP of consumer marketing at Rodale. "When someone subscribes online, we typically get their e-mail address. Then we send them e-mail newsletters, promotions for other products, so it's a much more engaged relationship we have. The lifetime value of the customer tends to be much higher if we get someone through electronic means."

Rodale titles, which include Men's Health and Prevention, now get between 15% and 25% of their new subscriptions through digital means, up from single digits a few years ago, according to Mr. Phelan. Runner's World, the company leader in this area, is getting 40% of its new subscriptions online.

Holding steady
And despite the promise of digital editions, print subscriptions will remain the core of consumer magazines for some time. Even if Apple sells 5 million iPads this year and all 5 million iPad owners start buying magazines' digital editions, that would be nothing compared with more than 278 million print subscriptions active over the second half of last year, according to the Audit Bureau of Circulations.

Print subscriptions, what's more, are holding steady. They slipped 1.1% in the second half of last year, compared with the second half of 2008, but increased in each of the three six-month periods before that. "There's been no diminishing of consumer demand," said Rodale's Mr. Phelan. "Consumers are no less interested in our magazines than they were five or even 10 years ago."

And while magazines lost one potential channel for online sales last year when eBay banned subscription sales, citing sellers' inability to start delivery within 30 days, at least the policy shift got rid of those unsightly penny subscriptions. More importantly, however, a combination of new organizational structures, technology and content partnerships with outsiders have started allowing the industry to generate many more subscriptions online.

Hearst, for example, empowered Mr. Wilkes to bring in outside expertise. "In prior years you'd take your existing traditional circulation department and have them try to apply what they were doing in direct mail to online," Mr. Wilkes said. "That was not a successful model. You had people learning on the fly."

Hearst also syndicates a lot of its content to MSN.com -- baking subscription offers into the content it sends MSN to share with web surfers. MSN's Life/Style channel, for example, recently displayed an article from Cosmopolitan, "Five Secrets to Keep From Him," below which appeared a come-on to get "more like this" by subscribing to the magazine.

Driving sales
New technology platforms are also proving beneficial by, among other things, centralizing companies' databases of consumer names and information. That helps them make the right offers, via e-mail or its own websites, to the right people.

At Condé Nast, whose titles include Vogue and GQ, a quarter of its new subscriptions come from online, up from 10% in 2005. The company is working on making impulse buys easier by enabling one-click purchasing and adding payment mechanisms such as PayPal. "These are the key things that drive sales on the web," said Robert Sauerberg, exec VP for consumer marketing at Condé Nast.

Not every online innovation, of course, is a success from the bat: Time Inc.'s Maghound service, meant to work like a Netflix for magazines, is not generating significant subscriptions after a year and a half in action. But there are more ideas on the way, too. The digital storefront that a coalition of five publishers is planning won't sell just tablet editions; it will also sell print subscriptions.

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