Titles Mine Web for Subs

Magazine publishers may not have cracked the code on charging for content online. But some have turned the Web into a sophisticated tool for shoring up new subscribers—a bright spot for publishers at a time when their print ad revenue is nosediving and newsstand sales are slumping.

Hearst Magazines has put a concerted effort behind online sub growth. In 2008, the Web was its biggest source of net paid subs, with one-fourth (2.2 million) of new users coming in that way. Those subscribers aren’t just shifting from another acquisition source: 95 percent of those online subscribers are new to Hearst titles, said Chuck Cordray, vp, general manager of digital media for Hearst Magazines, adding that the renewal rates are high. “The economics on the online subs are very strong,” he said.

Hearst is getting these results using an in-house consumer marketing tool that has let it produce more than 10,000 different campaigns in the past two years. Before, it was doing 200 campaigns per year.

With ad revenue at its magazines declining sharply, Condé Nast has been spending heavily to roll out an ambitious effort to generate more subscription revenue from the Web.  The company is said to be staffing up consumer marketing to fund the initiative, which was being tested in its business group, which consists of Golf Digest and Wired. Insiders said the ramped-up sub service would use customers’ subscription history and behavioral targeting to customize offers. “We have not been super aggressive about it,” one Condé Nast publisher, who’s seen results of the testing, said of prior online efforts. “The info they have on subscribers is truly amazing.”

Overall, the industry derived roughly 10 percent of new subs from their Web sites as of 2007, but that figure has likely grown. One reason publishers have put effort into Web-based subs is that it’s cheaper than traditional methods like direct mail.

Rodale, publisher of health/fitness titles like Prevention and Men’s Health, has reduced its direct mail and other acquisition methods thanks to a new system put in place a year ago. Before, said Gregg Michaelson, Rodale’s executive vp, customer marketing, “I’d send 30 to 40 more emails than I should.”

Rodale is poised to get more than 18 percent of its net paid subs via the Web and email offers this year using the new system, which combines Rodale’s offline and online databases of 60 million-plus names. “It allows us to segment our customers into various groups based on what they’ve done with us, their demographics, how often they’ve opened a newsletter from us, [and] whether or not they’ve [ordered] a diet book,” he said.

Time Inc. has taken a different tack with the launch of Maghound, an online service that applies a Netflix-like model to magazines by letting consumers pay a monthly price for three or more titles. The service, now in beta, is expected to roll out fully by early summer with additional features.