Circulation's Biggest Problem Is so Simple a Kid Could Figure It Out

Student Insights About Legacy Magazine-Publishing Practices

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Out of the mouths of babes. Or at least grad students.

This was at Northwestern University, where several of us had traveled to hear two days of presentations from Medill journalism school students. Ad Age had sponsored a marketing-class project that included a deep dive into our audience and circulation files, and we were there to hear and judge final presentations.
The dirty secret: The circulation practices of the magazine industry are based on a ridiculously outdated model designed not to enhance the audience relationship but to inflate rate bases in order to maximize advertising revenue. | ALSO: Comment on this column in the 'Your Opinion' box below.
The dirty secret: The circulation practices of the magazine industry are based on a ridiculously outdated model designed not to enhance the audience relationship but to inflate rate bases in order to maximize advertising revenue. | ALSO: Comment on this column in the 'Your Opinion' box below.

Outside observations
It's never easy listening to outside observations about a product you work passionately to produce, which is probably why focus-group observers are supplied large bowls of M&Ms; coated candies soothe the impact of blows from the other side of the one-way glass. There's a tendency to dismiss any criticisms as simplistic, or -- in the case of students -- lacking a grasp of life in the "real" world.

But if you overcome that initial defensiveness (the boxes of cookies carried in and placed on a table without comment by one group helped), there's value in the insights. I particularly recommend being forced to hear how bright, ambitious 20-somethings view your brand and its place in a world they are preparing to enter. Their seeming naivete is exactly what's needed at a time when "that's how we've always done it" is the lamest justification anyone can offer to defend a legacy business practice.

As I sat in the classroom, I began to list the common threads running through the presentations. There was much talk of digital extensions, and the need to allow more content customization. China and India were mentioned. Then there was a thread that I've been tangled in for years, a topic that has bugged me since I was a beat reporter covering the business of publishing.

Loyalty programs?
One after another, the student groups questioned why there wasn't more simplicity and consistency in our subscription pricing. Several asked why we didn't have loyalty programs to reward our best customers -- if not with the cheapest rates, then at least with VIP event access or exclusive content.

Justifications? Any circulator can rattle them off in seconds.

But here's the dirty secret: The circulation practices of the magazine industry are based on a ridiculously outdated model designed not to enhance the audience relationship but to inflate rate bases in order to maximize advertising revenue.

More-is-better mentality
While there's plenty of self-examination going on here, this is much truer of consumer publishing than it is of business-to-business; most trade advertisers care more about who they reach than about how many of them there are. But consumer magazines still are largely forced to compete on a mass-market, more-is-better mentality that dates back to when Life and Look were battling broadcast's Big Three. And they can't figure a way out because they fear the transition will be too painful.

These days, media executives toss around the word "brand" as casually as Al Gore mentions melting icecaps. But when it comes to consumer marketing, few of them know the first thing about brand-management techniques. Or their own audiences, for that matter.

Best customers punished
One magazine chief recently complained that his consumer-marketing (read: circulation) executives are more focused on relationships with wholesalers and retailers than they are with readers. Bizarrely, these folks haven't even been held responsible for maximizing circulation profitability; their job is to manage rate base to meet advertiser guarantees. So they sell their products cheaply, except to their best customers, whose loyalty is punished with the highest subscription rates.

Everyone in publishing knows it doesn't make sense, but that's how they've always done it. So they keep doing it, and wonder why it no longer works. Any college kid could give you the answer.
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