The Pricing of Subscriptions

I’ve been seeing all of the Read & Trust members link to their new monthly magazine this week, and I made the following comment on App.net about it:

I don’t like the Read and Trust magazine pricing $6 for a single issue, but $5 a month for a subscription. To me that’s says “we want you to subscribe because we know you’ll forget to unsubscribe later” Sends the wrong message.

I still firmly stand behind that statement, but before I get into it I want to make a couple of disclosures:

  1. I used to be a member of Read & Trust (I think I was one of the first, but I can’t recall) and recently left the network. There’s no big scandal, Read & Trust required me to put a link and/or logo on my homepage linking to them and I was not willing to do that — so I left. I honestly have no ill-will about it. 1
  2. Most of the writers on Read & Trust are people that I would consider pals. However, every writer on Read & Trust is someone that I respect.

Having said that, I am critical of the pricing model of their new magazine, but my criticism is far deeper reaching than just the Read & Trust Magazine — as was pointed out to me on App.net it’s a common pricing practice in the magazine industry, but it is a practice that I really don’t like. So my criticism isn’t directed squarely at Read & Trust, they are just what sparked the thought and for simplicity what I will use as the example in this post.

I do think, that for $6 or $5, the Read & Trust Magazine is likely worth it (I haven’t read a copy) just judging by the writing talent alone.

OK, here’s my argument as clearly as I can state it:

Pricing a single issue at a higher price than the subscription price (a subscription that would also get you the same issue) is a practice that I do not like for a couple reasons:

  • To me it feels like I am being pushed into a subscription, otherwise I am being a fool for paying more for just one issue.
  • Because of that I am left asking what the motivation is for pushing me to the subscription, and there is only one reason that I see: there’s a benefit to having subscribers over single-issue buyers.

The benefit for traditional magazines and newspapers to having more subscribers has been increased circulation numbers, which would mean that they could sell the ad slots in the magazines/newspapers for a higher rate.

Circulation is akin to page views in today’s web parlance — meaning cheaper subscriptions were used to entice more page views to up ad rates across the board. With a digital, non-ad laden, goods like the Read & Trust magazine, there isn’t a motivation to pump page views. Therefore the only (business) motivation is to sell as many issues as they can. Again I don’t have any insider knowledge, but this is my best guess as to their motivation.

So if your motivation is selling as many magazines to readers as you can, why price the single item higher?

My thinking is that it is simply, as I said at the beginning, in hopes that people forget to cancel their subscription at some point. I see how that sounds vilifying to Read & Trust, but to be clear: people forget to cancel things, I know people probably forget to cancel their membership to my site all the time — I wish there was a better way to alert people, but that’s why I made this site work after you cancel a membership (you can sign up, cancel, and keep viewing until you would have had to renew next). My point is not to say anyone is a “bad” guy, just that this type of pricing sends the wrong message to me.

Ideally I would think it would be most beneficial to price single issues and subscriptions at the same price. This leaves the only reason for subscribing to be a convenience factor for readers: you buy once and get all the new issues and don’t have to worry about paying each time.

This is why I don’t like single items being priced higher than subscriptions: I am leery to subscribe if I am not sure I will like it, and eat I feel punished for not subscribing. 2

So what’s the other side of the argument?

The arguments that I heard on App.net are:

  • It’s industry standard practice. Which as I said above is not really an argument here and moreover it’s a poor excuse if you ask me. This borders on lazy thinking: it’s what everyone does, so too shall I.
  • How’s this different than charging less for an annual subscription, than you would for a monthly subscription? That’s a great question, and in my mind they are two very different things. First the annual subscription is actually a pre-payment for goods or services, therefore the time value of money argument is in play. Basically, you can afford to discount a pre-payment because of the value you get from gaining the cash up front and not having to wait for it. But charging more for a single issue, verses a monthly payment, isn’t charging less for a pre-payment — you still deliver the same good at the same time, just for different prices. If I am missing a point here, let me know.
  • The very best argument I heard was related to bulk goods discounts, and I will present it to you as Matt Flaschen presented it to me on App.net:

@benbrooks how is that different from a bulk discount when you really think about it?

After I responded with an economies of scale rebuttal he stated:

@benbrooks yes, it’s more obvious on physical goods. But it applies otherwise too. If a magazine knows they have subscription income, they can be more comfortable offering a writer a six-month contract. If they have one bad issue, there’s still income.

I honestly hadn’t thought of that, which is why I love stirring this up from time to time — great thoughts come from the chaos. Perhaps this is what Read & Trust is doing, I don’t know, so if it is what they are doing then I can see the reason for the push towards a subscription, I still don’t like it, but the reason makes complete sense.

However, if this isn’t the case with Read & Trust then I just don’t get why the price of a single issue is higher than the monthly subscription. If it was for two months, makes sense, because then you have pre-payments, but for the same month/issue — that’s hard for me to make sense of.

Not only do I think consumers are better off with equal pricing, but I think Read & Trust would be too and that applies to any company selling goods without advertising in play.

Update (September 10, 2012): A few people have told that this sounds overly pointed at Read & Trust, and makes too many assumptions. I did not reach out to Aaron Mahnke the founder of Read & trust before publishing this, and have not reached out to him now. I welcome any thoughts on this and have made updates to the post in-line above to clarify a few areas.

  1. I doubt that stops people from writing this off as my being disgruntled, upset, or otherwise. Truthfully neither Read & Trust, or I gained anything from my membership.
  2. And yes, I know you can twist this to me punishing non-members — but it’s too different to make the same argument. The argument I would have to make is that I’ve devalued the paid membership by making the paid content free after 7 days — which I have. I’m sure there’s more arguments to be made, I’d love to hear them — honestly.
Originally posted for members on: September 7, 2012
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