Dead Tree Edition seems to have a handle on the question “Why Has Magazine Circulation Declined?”
And lack of readership is not the culprit, they say.
“It’s safe to say that daily newspaper circulation has declined dramatically in recent years because consumers are finding other ways to get their news. But the picture is murkier for magazines.”
Magazines make money from advertising revenue. High circulation is good, but only up to the point that the publisher meets its “ratebase,” the minimum circulation guaranteed to the advertisers. Once they hit that number, any additional circulation could actually be considered “waste” — it doesn’t improve ad revenue and adds to production and distribution costs. And the cover price is generally not enough to justify the additional expense.
In short, the article suggests, many magazine publishers are cutting their own circulation.
Skeptical? The article points out a perfect illustration:
“The pundits made much of Newsweek’s precipitous U.S. circulation drop – from more than 3 million five years ago to barely 1 million when it stopped printing last year. But the real story was the 60% drop in ad pages during the last decade. Sapped by the loss of its ad-revenue lifeblood, Newsweek purposely amputated all but its highest-paying subscribers and most efficient newsstand locations in a desperate attempt to survive.”
It didn’t work for Newsweek, but the battle to keep circulation at or only slightly above ratebase may in fact be gutting the industry’s recovery.
Still, this analysis makes the recent news from Elle’s September issue all the more encouraging. With record-setting page volumes, the advertisers are back. Now let’s see how that affects ratebase.