Mags Face Decline in Renewals

A surge in subscription marketing programs that don’t require subscribers to pay up front is having an unanticipated consequence on magazine publishers.

These readers are more difficult to renew.

“The challenge is to get buyers who didn’t pay to get the subscription, to renew,” said Mary S. Rynecki, senior vice president of circulation for Newsweek, speaking at the Direct Media Inc. 2002 Mailer’s Conference & Co-op in White Plains, NY. “We can meet the rate base guarantee but renewal rates are plummeting. We want repeat buyers.”

Adding to the problem is the fact that many magazines, including Newsweek, now offer most, if not all, of their content online for free.

“Once you’ve given people something for free, it’s difficult to then go back and start charging,” Rynecki said.

Overall renewal performance was down in 2001, according to the CircTrack 2002 study.

When survey recipients were asked, “How is your overall 2001 renewal performance compared with that of 2000?” 47% reported “worse,” the highest percentage recorded in the five straight years of asking that question. Thirty-two percent indicated a better response and 21% said performance was about the same.

The falloff in performance is “evident in that all these new sources that circulators are using are not renewing as well as traditional old direct mail, which is what they used to use,” said Dan Capell of Capell and Associates, which published CircTrack.

Rynecki added that renewal is also difficult for bulk subscriptions sent to public places like doctor’s offices, hotels and other waiting rooms.

“Because a lot of publishers are putting a lot of copies out for free for people to read, in some ways that can cannibalize our opportunity to sell to these people directly or sell to the doctor himself,” she said.

Another program — exchanging of frequent flyer miles for subscriptions — delivers a good demographic for Newsweek but renewal rates are 40% to 50% lower when compared with those of subscribers obtained through Publishers Clearing House, Rynecki said.

Falling renewal rates coupled with tumbling ad revenues have prompted some publishers to consider lowering their rate base.

“It would be smart for all of us to take a look at rate base,” Rynecki said.

For magazines like Newsweek and Time, which found an abundance of readers in the wake of Sept. 11, the rush to make rate base was not as urgent as it was to some other publications.

Last year Newsweek posted the highest profit margins in its history in circulation because of the intense interest in Sept. 11 news coverage.

And for the first half of this year, Newsweek had to cut 100,000 subscriptions from its marketing plan to bring its rate base back to an acceptable level. Rynecki expects that interest to soften at some point.

A separate problem facing the industry is at newsstands.

A scan-based trading initiative being considered by some of the major retail chains could cause huge financial losses for publishers, Rynecki said.

Retailers want to pay publishers only for the magazines that are scanned at the register, a change that shifts the financial absorption of shrinkage away from retailers to publishers. “The retailers would take no responsibility for inventory, only copies sold,” Rynecki continued. Negotiations are ongoing.