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Sambhar Mafia - Cooked To Kill!

Friday, October 21, 2005

Making Sense of Magazine Subscription Economics

When Outlook was launched in 1995, I took up a subscription for 5 years. The cover price was Rs. 10/- and the 5 years subscription was priced at Rs. 1600/- (you can usually find the words “Best Offer” and Discount % written next to longest tenure of the subscription). This advertising pattern is fairly standard across all Indian and International magazines.

The free gift I got was a Kodak no-frills camera (worth about Rs. 800?). The camera was suitably nicknamed ‘soap-box’ camera by my sis. The fact that the magazine negotiates bulk discounts with companies like Kodak enables the magazine to procure such gifts at a throwaway price. Even assuming that the camera is worth Rs. 500, it makes lot of sense to subscribe using these offers. The magazines are home delivered using a low cost courier, which might cost them atleast Re. 1 per issue. I always keep wondering how the magazine ends up making money on this sort of a pricing plan.

The magazine locks in the subscriber by collecting the money upfront and hence they save on the commissions / margins which they need to pay to the vendors and the newsstands (There is only one ‘cost of sale’). The magazine can use the subscription money (virtually interest free loan) to fund investment plans as well. If more and more people take up subscriptions, the magazine gets a clear idea of the weekly demand.

The gifts offered by most of the current affairs magazines are mostly targetted at the male population. Popular gifts include pen sets, wallets, digital diary (few years ago), torchlight, radio cum alarm clock. I noticed that this trend has changed little bit. The current subscription promotion of Outlook offers some books as subscription gifts.

The subscribers will normally fall under one of the following categories :-

1. The first set consists of the ones who are genuinely interested in the magazine and want to subscribe (the free gift might be an additional reason but not the primary reason for subscription).

2. The second set consists of people who don’t like the gift, but would still like to subscribe to the magazine because of the content. This group would actually prefer a monetary discount rather than a gift.

3. The third set consists of people who subscribe primarily for the free gift.

Which set do you belong to?

18 Comments:

  • hi kaps,
    this is no different form what tamil murasu or kumkumam does.
    but the real difference is the standard of outlook and dat of kumkumam and tamil murasu

    By Blogger Nallavan, at 6:17 PM  

  • the cover prices are sky high, india today costs 20 bucks,

    these mags want to discourage ppl frm news stand and go in for subscriptions,

    id rather have a monetary discount rather than a free gift which is utterly useless

    By Blogger ada-paavi!!!!, at 6:52 PM  

  • Defintely I won't consider the gifts as a primary decision making tool.. for me the content and presentation would come on the top.

    By Blogger Ram.C, at 7:43 PM  

  • def no. 2. I hate random crap so wont care too much abt the gift, would rather have the cash discount (but perhaps the companies wouldnt want to drop the price too low incase they are looked at as an inferior good?).

    Same with the mag - I would only subscribe if I really loved it. 5 years is a long time - heck marriages dont last that long!

    By Blogger J'Adore, at 8:05 PM  

  • I prefer to buy mags from the news-stand as I can buy based on the issue / content. Inspite, I had once taken a 3 year subscription to India Today which offered a walk-man (local make) which I thought was a good bargain. That walkman was the longest lasting of the ones I ever had.

    By Blogger SLN, at 8:06 PM  

  • u forgot a very important set called:
    beg, borrow or steal!!!!

    :D

    By Blogger monu, at 9:07 PM  

  • i belong to (1) but i'm getting disillusioned with the subscription deliveries. i get my mags well after they've hit the news-stands, and are being sold by the roadside vendors. complaints haven't had any effect. that totally sucks!

    ano

    By Blogger yet another1, at 10:03 PM  

  • me on monu's side of the world.

    No subscriptions !

    By Blogger keerthi, at 12:20 AM  

  • you can have all my cameras for free as long as tarun tejpal and vinod mehta write a piece for each other.

    By Blogger mocha_1, at 1:29 AM  

  • I prefer the lending libraries. Being a packrat, I wouldn't want to throw away books and it will only add to the junk.

    Reader's Digest's subscription discounts make me wonder if they will even recover the making costs!

    By Blogger Me too, at 4:30 AM  

  • I think I'd fit into Group 2.

    Nice Analysis. Do you really like Outlook Magazine??

    By Blogger Narayanan Venkitu, at 7:48 AM  

  • #2....once upon a time is subscribed to magazines...then lost the habit...nowadays i dont read any magazines....just online stuff...

    By Blogger Me, at 9:33 AM  

  • Athu seri, Which type are you??? :-)

    By Blogger Chez, at 9:56 AM  

  • well, till date, i've not managed to understand how 'advertisements' per se work.

    Yes you can pay 1 lakh rs. per. second during a cricket match - but how many people decide to buy based on that ? how do you assign value ? etc....

    soap-box camera ? - for a second i thought you were referring to TV :P

    By Blogger Arvind, at 10:39 AM  

  • back in the jungle after a break
    :-). Yours is the first blog,I am visiting. Anyways, I subscribe for the magazine... other things does not matter

    By Blogger Venky Krishnamoorthy, at 10:48 AM  

  • None!!
    I read the mag @ office!!! Evil!!

    By Anonymous ashwin, at 12:08 PM  

  • @Nallavan,
    i would not compare vernacular magazines / newspapers with English ones

    @Vatsan,
    Rs. 20 is outrageous. Rs. 10 or Rs. 15 should be ideal. Even a high quality mag like Biz Today is priced at Rs. 10

    @Ram,
    your choice makes sense Ram

    @J'adore,
    since 5 years subscription offers the best deal, lot of people tend to go for it. companies don't prefer to offer monetary discount instead of the gift.

    @Slakhs,
    Now I know why magazines bring out stories like "What men know about XXX" etc. there are quite a few buyers whose decision is dependent on the kind of cover story

    @Monu,
    I was trying to limit my discussion to paid readers :-)

    @Ano,
    I hv faced this problem a lot

    @Keerthi,
    If there are too many people like you, the magazines will no have choice other than to increase the cover price in order to recover the cost

    @Mocha,
    that's a tough ask

    @Me too,
    libraries are good for novels. the problems with mags is that it becomes too late by the time one can lay his/her hands on the magazine in the library.

    @Narayanan,
    I have been a reader of Outlook ever since it started operations in 1995. i defintely prefer it over India Today and The Week.

    @Me,
    welcome to the online club

    @Magnus Astrum,
    I think I will be in the first set. I have a weakness for free gifts

    @Arvind,
    don't worry.....u have lot of 'company'

    @Venky,
    I'm honoured. guess u would fall under the 2nd set

    @Ashwin,
    i'm jealous. not many get such opportunities.

    By Blogger Kaps, at 1:25 AM  

  • I haven't really subscribed to weeklies, once did think about subscribing to Readers Digest (The cover price was Rs.37 and the subscription was 200 something). But finally dropped it, as I was'nt so regular at reading. If at all I subscribe some magazine, defenitely wud'nt do it for freebies, its more or less translates to 'yaanai vangina erumbu free' :P

    By Blogger narayanan, at 9:07 PM  

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