Friday, March 5, 2010

An Offer I Can't Refuse

In yesterday's snail mail came an extraordinary offer from a magazine I respect and admire--Inc., the journal for entrepreneurs. It was one of those subscription offers we all get from time to time. But this one offered the lowest price I have ever seen for a mainstream business magazine: $5 for a year's subscription or $10 for three full years. The latter offer provides 30 issues of the magazine for 33 cents a copy, less than the cost to mail the magazine. Add in the costs of reporting, writing, editing, design, art, printing and paper, and it's not hard to see that Inc. is losing quite a bit of money on every issue it sells. My guess is that the cost to produce a single issue of Inc. is closer to $1.50 to $1.75. So Inc., which is owned by Mansueto Ventures, my former employer at Fast Company, is willing to take a loss of well over a dollar an issue to get me as a subscriber. And this is for an exceptional magazine of very high quality, smart writing, and attractive design.

Why? Largely because it's doing what almost all magazines do: it's trying to maintain a circulation or rate base that is higher than it's natural demand. By keeping its rate base at its current level, it can charge advertisers a higher price than it otherwise could. Inc. is hardly alone in playing this game. Pretty much every U.S. magazine has the same strategy. If you're the circulation director of a publication, you have a simple choice: pay large direct mail costs to get new subscribers who really want the magazine, or lower your subscription costs to a point where you're pretty much making an offer that is hard to refuse. Although I have never paid for a subscription to Inc., I'm filling out a check for $10 right now. As a magazine junkie and a new entrepreneur, I simply cannot refuse this offer. Inc., you got me.

123 comments:

  1. The average subscription price data on ABC publisher statments must look pretty dreadful these days.

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  2. John,

    do you think they'll last long enough to send you your 30 issues? If they do I predict each one will become progressively more impoverished. Just take recent issues of your alma mater for example. I picked up a July 2008 issue of BW last week (yeah I keep back-issues) and couldn't believe its heft relative to recent under-nourished editions.

    sasamat

    ReplyDelete
  3. Sasamat,

    I certainly hope Inc. lasts through 30 issues and I fully expect it to.
    Inc. also has an entrepreneurial owner in Joe Mansueto who will stick with it and Fast Company for quite a few years.

    As for BW, it certainly is on an advertising diet like many magazines and newspapers. The heft of a July 2008 issue isn't all that impressive compared to the issues we put out in the late 1990s. The all-time high for BW? The Nov. 15, 1999, issue which contained 304 pages. That's roughly five times the size of the current issues!

    ReplyDelete
  4. I recently started my new subscription to Inc., and am fairly satisfied with what I read. They seem quite new media oriented and on top of this field. My company was mentioned in the recent issue, so I was interviewed (by a very professional reporter) and fact-checked as well. I am glad they still have a budget for fact checking!

    I agree that Koe Manseuto is likely to stick with it; he certainly has vision, and deep pockets (fed from Morningstar, which an old, very wise Forbes colleague of ours on their board, and which is not likely to have any problems in our lifetime). I have caught a glimpse of an online business site they're involved with, and it seems decent as well.

    All this said, you raise a fine question: how can they manage to sell print magazines at such a loss? I think the answer is that they have the resources to take the long view strategically: build the two magazines into the dominant print business magazines for the new economy, THEN expand and leverage online to compete with the likes of TechCrunch, bringing its advertisers with it.

    Meanwhile, other biz mags are concerned with plummeting quarterly earnings, and are cutting back on staff and fact-checking. Worse, the Bus Week, Fortunes and Forbes' of the world have an institutional need to serve all existing readers and advertisers, meaning covering the auto industry in Detroit and steel mills. Meanwhile, Inc. runs fast savvy pieces about how businesses can advertise on Facebook and test their ads for 20 bucks before committing to campaigns. Which magazines will attract new readers and advertisers in the new economy?

    were I a betting man, John, my money would be on Joe.

    ReplyDelete
  5. I've been a subscriber to Inc for probably 5 years and was concerned when I saw my renewal rate drop so low. I still enjoy the magazine but I just don't see how this model holds and as you (and other readers here) point out, it's not likely to last. Inc. has a robust website but it looks like yahoo in a world where simplicity dominates. Top business blogs like businessinsider and techcrunch offer a very different experience, where content is streamlined into one story at a time and offered across different 'spokes' or 'channels.' Given their dramatically different cost structure, what's your thought on strategy options for Inc. to survive?

    ReplyDelete
  6. Jonathan,

    Thanks for weighing in. I'd put my money on Joe, too!

    ReplyDelete
  7. Glen77,

    Ultimately, Inc. and all magazines have to get profitable revenue from subscribers and significant profit from other sources--webinars, premium services, virtual trade shows, more in-person events, etc.--as part of a new business model. The most valuable asset Inc. owns is the Inc. 500. Smartly leveraging that content and that extraordinary annual event is the brand's single best opportunity to secure its future.

    ReplyDelete
  8. Funny I went to Inc's website today and the interstitial ad to get to the article I wanted to read was a house ad for the Inc. 500, soliciting applications from businesses. They are smartly leveraging that content, all right! It is impossible to read their website without seeing that ad.

    So I agree that this is their best asset: because companies apply and sort of compete to get on it, Inc. becomes front and center in the business media aspiration of least 100 times the 500 fast growing companies they end up putting on the list. And once companies get on the list, they brag about it (and market it) a lot more than the companies that make the Forbes or Fortune 500 year after year.

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  9. Re: a partnership proposal

    John,

    How are you? OpportuniTV.com has developed a business plan for establishing online markets that provide people with new and improved ways to customize education, and to showcase and earn money from expertise.

    The first market called for in the plan is an online market for advertisement spaces. A virtual currency will be provided for use in the market (cash can be used also).

    Benefits for market participants who sell the ad space on their personal blogs, and buy ad space on other personal blogs:

    1. a better way to network professionally than using LinkedIn.com (over 60M users, adding 500k/week as of 10/19/09)
    2. a better way to attract buyers of ad spaces who pay cash (WSJ (4/21/09): "The best studies we can find say we are a nation of over 20 million bloggers, with 1.7 million profiting from the work...[75%] are college graduates"; Technorati.com's 2009 State of the Blogosphere (10/09): “More bloggers than ever [28% of survey respondents] are making money from blogs.”)

    The plan has been praised by analysts at Microsoft, Amazon.com and top venture capital firm Draper Fisher Jurvetson.

    The one-page executive summary is online at
    http://www.opportunitv.com/2010/03/10/me-live-er-via-a-recording/

    OppTV's team includes an ACM Fellow computer scientist and a longtime HBO executive.

    Ideally -- from the standpoint of folks on this end -- YourCo will introduce and manage this '1.0' market -- which is trivial to engineer -- while folks on this end become 3rd-party providers of software tools and media that complement the market.

    But we're certainly open to aligning more closely with a particular market-provider.

    Let's discuss at your earliest convenience.

    Best regards,

    Frank Ruscica
    frank@OpportuniTV.com

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  10. I live in Australia.
    How can I get the deal you got with Inc?
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