A Magazine’s Saving Grace: How the Newsstand-to-Subscription Ratio Can Keep Titles Afloat
"It’s an important barometer of reader acceptability," Davis says of that ratio. "Newsstand sales are becoming increasingly important to advertisers. They zero in on not only how you’re doing not only on the newsstand, but also how you’re doing in comparison to your competitors and your previous benchmarks."
What the newsstand also offers is a more pure magazine buying environment. Davis says newsstand sales are less "manipulated," therefore buyers make their choices based on preference and product. "Newsstand copies are sold almost always at full price," he says. "And they’re sold along with their competitors, so you know people have a choice. That environment is for someone who has a real interest in the product."
Given the newsstand environment, Davis says a certain type of reader materializes. He hypothesizes the newsstand consumer as "younger, maybe making less money, but certainly passionate about the subject in a magazine." The more youthful newsstand shoppers, Davis then says, "Are probably likely to spend more time reading the magazine than the comparable subscriber." And this is music to the advertisers’ ears. While the newsstand, according to Davis, can make or break a magazines bottom line, he warns that you have to take into consideration just where a particular title is coming from in order to gage its success.
"What you have to be careful about is that you look at the newsstand sales of competitive titles," Davis explains. "Outdoor can’t be compared to Cosmopolitan. Outdoor is good to look at in relation to other titles in the outdoor field. When you’re competing for advertising, you’re competing within a category. Magazines are not homogeneous."
For Davis, most titles don’t match up to Cosmopolitan. He pegs Cosmopolitan’s "an example of a wonderful, wonderful circulation," in its market. According to Cosmopolitans June 2005 Audit Report by the Audit Bureau of Circulations, the magazine has a total paid circulation of 2,960,265. Of that, 954,262 are subscriptions, and single copies sales number 2,006,003, making Cosmopolitan’s newsstand-to-subscription ratio more than 2-to-1.
People, Davis says, is another good example of a "good" ratio. In the last ABC Audit Report (June 2004), People’s total paid circulation stood at 3,680,791. Subscriptions accounted for 2,214,199 of the total circulation, while single copy sales numbered 1,466,592.
"They have a very powerful newsstand-to-subscription ratio, which means a couple of things," says Davis. "They can charge higher prices for their subscriptions, and they do, relatively speaking. They have higher quality readers — readers that are more likely to be engaged."
"They have also restricted the amount of subscriptions so they can charge more vise-a-vie their competitors,"he adds. On the other hand, there are those magazines with "bad" ratios. A case in point is Maxim, says Davis. According to Davis, Maxim increased its circulation to an excessive level, creating what he calls a "falling ratio." The June 2005 ABC Audit Report of Maxim tallied the magazine’s number of subscriptions at 1,929,359. Conversely, the single copy sales were 585,616. In comparison, the June 2004 Audit Report stated that Maxim’s subscriptions numbered 1,802,224, and single copy sales 681,198.
While the magazine’s total paid circulation increased between 2004 and 2005, from 2,483,422 to 2,514,975, Maxim’s falling ratio is troubling. It reduced single copy sales by 95,582, and increased subscriptions by 127,125, exactly the opposite of what Davis recommends a magazine do. There are magazines, though, that do make the cut in circulation levels to create a good ratio. One such example, according to Davis, is TV Guide. Between the second half of 2004 and the second half of 2005, TV Guide reduced its total circulation by 18.5 percent. That translated to a cut of 5,684,000. For the same time period, the number of subscriptions fell from 8,617,000 to 7,005,000, and single copy sales from 399,000 to 345,000. (ABC and BPA International) "They were up near 10 million a few years ago, and now they are down by about three million," Davis says of TV Guide. "No one has ever made a circulation cut of this size before. It will be a guide for others as to how they go about reducing circulation."
While TV Guide is not alone in its quest to reduce circulation (Davis said 26 titles reduced their circulation by more than 50,000 last year), over-circulation remains a problem for the magazine industry. "Most mature publications have got their circulation levels pegged too high to reasonable demand," he says. "To keep it at a high level, you generally compromise on pricing and reader quality."
Aside from the woes of over-circulation, Davis says the devolution of newsstand-to-subscription ratios is also problematic. In 2000, Davis says the newsstand circulation ratio stood at 20.8. In the second half of 2005, that ratio dipped to 17.8 percent, an all-time low.
"Publishers keep forcing circulation levels up," says Davis. "They feel lowering levels signals a form of weakness to advertisers. Publishers and circulators can increase circulation levels by various means, but that doesn’t mean they are producing the kind of readers the advertiser covets. It’s all interconnected."