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At what point does a magazine publisher damage their brand with subscription discounts?

delicious magazine is the latest magazine title to be promoted nationally using the livingsocial deals service. The price offered, $32 for a year of issues mailed, is 50.7% lower than the retail cover price.

While I will defend the right of any magazine publisher to offer and promote subscriptions as part of their marketing and supply mix, promoting such a steep discount and in a mass market way can only harm sales through the retail channel.

Maybe I am missing something.  Maybe the people behind this title inside News Limited have a plan which will result in more subscriptions for them and no impact on sales in newsagencies and other retail outlets. Ah, if only this were so.

Magazine publishers need to work harder at engaging with newsagents to drive incremental business. By engaging I mean being creative to today’s marketplace.  There are titles delivering growth by doing this. yes, it’s hard work and sometimes it does not pay off. But when it does you can bank on better margin dollars than a drop-your-pants subscription offer.

I am not going to retaliate against delicious. There is no point. If the actions of the publisher result in fewer retail sales this will ultimately hurt them.

Steep discounting at places such as livingsocial damage a brand in my view. They show the lengths a supplier will go to in order to shift stock. It says to me that the product manufacturer does not think the ticket price for an item is justified. Maybe my view is too narrow.  Time will tell how it plays out for companies using this type of service.

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  1. wally

    Surely this also goes to the distribution model. If we were able to purchase the magazine (our order only) and at 50% discount less costs of account keeping and postage to magazine in other words about a third of the sell price we would be better off and the magazine publisher would still receive the price he is prepared to put out as a a subscription

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  2. h

    Gives me a clue taht the mag may be on the way out. I am selling more and more of Feast.

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  3. June

    A bit off topic but nonetheless about magazines. I usually get 3 x copies
    of newsweek – today 18 with ABSOLUTELY NO SALES TO SUBSTANTIATE IT AS I HAVE ALWAYS HAD RETURNS OF AT LEAST 1 COPY SO MY SALES ARE MAXIMUM 2. It is a double issue but the supply is 600%
    more than usual.
    I am sick to death of being a cashcow for
    GG for them to send me such amounts when they have access to my sales figures
    through edixchangeit.
    To add insult to injury they threaten to cut
    my supplies if they don’t receive my a/c
    payment (paid yesterday).
    I am sure I am not the only newsagent who considers this to be unconscionable conduct.
    I have a 53% returns ratio (and you will
    all have the same) when they tell us that
    they work on 30% (still far too high).
    It is the most stressful company with whom I deal.
    There are some people within GG who ring
    me and do their utmost to help with the
    oversupply issue (mainly when they read this blog and hear me bleating about it)
    but it only works for a few weeks and then
    it is out of control again.
    THIS SHOULD NOT HAPPEN.
    We are being used to stop-gap the companies that have gone to the wall like
    A & R and Borders who were receiving the
    GG product.

    It is a heinous way to conduct business.

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  4. Ben

    In my experience with discount promotions the vast majority of customers that buy a product at a discount will not then buy it later at full price…..

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  5. Jim

    Down the bottom of the row

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  6. Mark Fletcher

    h, yeah, Feast – it’s strong for me too. A different type of food title.

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  7. Brendan

    June, I went to great lengths to return as much oversupply as possible month. I set Tower to flag titles with less than a 45% sell through and returned some titles that were grossly oversupplied for the end of financial year. I also adjusted supply of these titles for future editions. Some new titles were arrived at high retail so each title has had 1 copy placed on the shelves and the rest returned, I doubt these are sellers for us but they must be given a chance to prove me wrong. My return ratio bounces around 50% which has deteriorated from 30% 12 months or so ago so this shows the oversupply issue that is getting worse. One often mentioned distributor in particular needs to lift its game. Who would that be now?

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  8. peter stewart

    I am the same with a returns rate of 50%.

    i do a huge return at the end of the month. it leaves my shelves with low stock levels, but it is necessary.

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  9. Michael

    We are in the same boat with our return rates. We are constantly supplied 16k from both gotch and network each month and returns around 8k per month to each.
    How this is sustainable is beyond me and the amount of time we put into this practice is far too much for the money we make.
    We have a rather large store and huge holdings (not for much longer) of magazines. We put all stock out when it arrives and on the last week of every month we do a cull of the magazines,scanning every title into the computer to analyse sales averages. We then take off items we dont think will sell. This takes a whole week of my time and is a huge process to undertake just to keep our cashflow strong.

    However few months ago we did complete a supply listing from GG. With the reductions only this month has our supplier billing for gotch come down to 13k. We will see how long this lasts for.

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