People Mag Prepares New Subscription Model

Chasing additional consumer revenue

Time Inc. cash cow People is preparing to unveil a new pricing model designed to transform the way people think about subscriptions, according to people familiar with the publisher’s plans. Other titles in the company are expected to follow suit.

With advertising sagging—PricewaterhouseCoopers estimated that consumer magazine ad revenue will decline 7.3 percent from 2012 to 2017, to $15.2 billion—Time Inc. isn’t alone in turning to consumers for new revenue. Hearst Magazines priced its tablet editions higher than its print editions, betting that people will pay more for an enhanced version. Casting its net for more print subscribers, Condé Nast recently announced a deal with Amazon to let people manage their orders on the e-commerce site.

These initiatives are a departure from the decades-old practice whereby publishers heavily discounted subs, which enabled them to guarantee high circulation levels to advertisers but inadvertently trained consumers to expect more for less. Now, facing financial pressure, and with subscription-based models like Netflix and Hulu’s growing up around them, publishers are looking to broaden the definition of subscriber to include other benefits.

The timing is especially poignant at Time Inc., which will face intensified financial scrutiny after it spins off from Time Warner early next year. Time Inc. CEO Laura Lang, who will hand the reins to incoming CEO Joe Ripp next week, identified a new subscription model as a pillar of Time Inc.’s growth strategy for 2013. Although the company has been without a corporate consumer marketing head since Steve Sachs left in March 2012, each of the company’s three brand groups has teams working on subscription models for its respective titles. The tricky part will be to identify services or products that will excite readers and enhance the value of the individual brands.

Focusing on People, though, can give Time Inc. the biggest bang for its buck. People has one of the highest subscription prices in the industry—charging an average price of more than $100 for a yearly subscription—and is the biggest revenue contributor to the company. People, whose plan has been in the works for a couple of years, has been looking at benefits such as new products and exclusive access to content and communities that might keep consumers renewing their subscriptions or entice them to pay more. (People and Time Inc. reps haven't responded to requests for comment.)

Time Inc. has already taken steps to enhance the value of its subscriptions. As part of its all-access plan, Time Inc. has made its digital editions free to print subscribers, rather than charge separately for them as other publishers have done. In December, People launched an app, CelebWatch, that was free to print and digital subscribers (while also being sold separately, for 99 cents a month).