It’s the first price hike for People magazine in more than seven years, and it’s causing a lot of ripples in the celebrity magazine category.
Keith Kelly of the New York Post reports that, “Starting Friday, People, the industry leader, will hike its price nationally by $1 to $4.99.”
The move seems to reflect a shift in publishing’s business models. In the face of lower ad revenues, publishers are cutting circulation and charging a premium for their printed products.
Says Kelly, “The gamble is that even if circulation drops by 10 percent again this year, as it did in 2013, the losses will be more than offset by the 25 percent price hike.”
Other celebrity magazine publishers were quick to follow suit: OK!, Star and the National Enquirer all announced $1 cover price bumps following Time’s announcement about People’s new price.
As we reported last week, many publishers are intentionally creating premium products, and charging accordingly, rather than treating their magazines as circulation-boosting throw-aways to raise the ad rates.
Kelly quotes a spokeswoman from Time as saying: “People’s cover price reflects Time Inc.’s commitment and investment in increased paper stock and new multi-platform subscription model. Consumers and advertisers expect a premium experience from the People brand and our cover price reflects just that.”
The celebrity magazine category isn’t the only one seeing this “pay for premium” approach; Newsweek announced their reborn print publication will have a dramatically smaller circulation than previous, but expects newsstand and subscription sales to offset lower ad revenue.
As Ricardo Bilton reported last week, “Lower circulations at higher prices mean that publishers don’t need a massive readership to break even.”
As publishers embrace the new reality of their market, this kind of business model retooling makes sense. Evolution is in the air for this industry, and we are fascinated to have a front row seat.