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Pricing Digital Editions: Finding the Sweet Spot

How publishers are pricing their digital editions without scaring off readers.



By Vanessa Voltolina
08/27/2009

“Experience shows that consumers expect to pay less for digital editions,” wrote LCM Digital Media director Matt Hunter on Folio:’s mediaPRO message board. “As far as they're concerned, there's no print cost, no distribution charges and no retail margins to cover, so it should be cheaper.”

While Hunter may aptly describe the mindset of some digital edition readers, many publishers are finding that the right mix of exclusive content and just plain good editorial are coaxing readers to purchase digital editions—be it back issues, annual subscriptions, or commemorative issues. But since every digital publication offers something different, is it possible for publishers to ballpark a price tag that will help the publication and be agreeable to current or potential readers?

Setting the Price Tag

An annual print subscription to Playboy costs $15.96  ($12 plus $3.96 delivery), and remains $12, sans the $3.96 delivery charge, in its digital format. To determine what digital readers should pay, Phyllis Rotunno, president of Rotunno Circulation Management LLC, which handles Playboy’s digital editions said: “I take a look at how the overall men's magazine category prices their digital editions and my goal is to stay competitive. The consumer receives an added value with the digital edition…it includes enhanced features such as video and music clips, as well as extra, unpublished photographs. We are able to give our readers a great price deal while staying competitive in the marketplace.” A single print issue of Playboy, she says, runs around $5.99 (sometimes $6.99), with its digital single copy sold at $4.99, $1 less.

In order to create an appealing digital newsstand, Playboy.com has banners and buttons throughout the site that promote both the digital subscription and single copy sales on the Zinio newsstand, says Rotunno. She said that during the initial launch, 40 percent of Playboy’s sales came from the Zinio newsstand.

O’Reilly Media’s Make: offers three delivery and pricing options for its new subscribers: print only, print and digital, and digital only. Since it launched in 2005, the magazine has offered print only or print and digital subscriptions for $34.95 each. For readers who opt for digital only, it’s a $26.95 subscription—around 25 percent less.

“Pricing for every magazine and every format is set based on what subscribers want and are willing to support, and what advertisers want and are willing to support,” said Make:’s circulation director Heather Harmon. “Make: is a circulation-driven magazine, so we care most about what our readers want and what they're willing to purchase; that's why we offer the digital edition primarily as a subscriber benefit.”

Because print subscriptions cover Make:’s manufacturing costs, the publisher opts to offer the digital edition as a bonus, particularly so when loyal print readers actually sit down to do one of the magazine’s many projects, they have the option to find a project online and print it out so they don't get solder or glue on their magazine. “As a stand-alone product, we currently offer it for subscription only, but are considering some digital single copy options,” she added.

A Digital Edition Value-Add

The bimonthly, 350,000-circ digital-only magazine VIVmag charges $36 for an annual subscription, and recently, reconsidered this pricing model. While it “will remain at $36,” said VIVmag CMO Jeanniey Mullen, the digital edition subscription will now include a membership package. “Given that digital reading is so new, we wanted to make sure that the value proposition wasn’t something readers had to figure out (‘If Elle is only $12 subscription and this is $36…’); we didn’t want cost to come up in people’s minds as the main consideration,” she added. VIVmag’s membership model will include reader invitations to exclusive advertiser and partner events and e-mail access to the magazine’s editors.

A Growing Revenue Source: Back Issues and One-Offs

Music magazine Spin may not charge for its single digital issues, but it recently produced a one-off custom publishing project in conjunction with its July issue. The digital-only retrospective on artist Prince included all content that the magazine has published about him over the past 25 years, and access to a tribute album. “Since it was a special issue with a big interactive feature (the album), we priced it slightly higher,” said Nick Pandolfi, Spin’s digital edition manager. Listed at $4.99, it was Spin’s “first go” at paid digital editions, said Pandolfi. With its lack of digital edition customer base online, “we gave a 20 percent discount incentive,” he added.
 
Make: allows access to its entire digital archive to subscribers who sign up for the Premier Maker program, which includes auto-renewal. “Since a few of our hottest back issues are sold out in print, this helps drive sales and encourage renewals,” said Harmon.

Playboy has also found a way to capitalize on back issues, pricing single digital issues at $4.99, a single digital copy of a Special Editions at $7.99, and a digital special edition back issue at $9.99. Based on how sought-after and exclusive the content (particularly if it’s no longer in print), publishers have found real value in upping these prices. Several years ago, Rontunno priced Playboy’s 50th anniversary issue at $25, successfully selling nearly 2,000 digital editions.

“Digital editions have definitely added to the bottom line,” she said. “The manufacturing and postage cost savings are significant. Since we started offer the digital edition in 2005, we've distributed more than one million digital copies of Playboy and Playboy Special Editions. We even offer calendars digitally.”

 

By Vanessa Voltolina
08/27/2009







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