An inside look at the economics of magazine publishing

After 40 years running car magazines, you would think I’d know everything about the business. Trust me, I don’t.

Once something gets figured out, it quickly changes and then you’re handed a new set of rules and circumstances. 

Let me explain.

For years, at least in this country, the goal was to price subscriptions as low as possible to get as many as subscribers as possible. With higher print runs, your per-copy printing cost would drop. A growing subscription file would then increase advertising revenue, making up for losses on the subscription side of the business.

In Europe, the model has been much different. There they charge a fair price for a subscription (in the car magazine world, roughly $100 per year) and then charge very reasonable prices for advertising. In other words, most of the burden of keeping the magazine afloat is on the people who read it, not the people who advertise to reach those readers.

As an example, Octane, the English car magazine, just sent a note asking us to promote our driving tours with them. They claimed a worldwide audience of a little more than 30,000 (way lower than ours) and wanted about $900 for a full-page ad. Their annual subscription price is about $110.

Our subscription price has been $20 for years, and we finally had to raise it to $30 last year. Our ad rates are a bit more than twice their asking price.

The initial reason for raising our subscription price was the crazy pandemic-related increases on everything, including postage, shipping, paper and health care costs. (And yes, we provide every one of our employees, and their families, healthcare at no cost. This feels like the right way to treat our employees.) Thankfully, all these costs and supply issues have now stabilized, and the economy has remained strong.

As you well know, the world has changed for everyone, especially magazine publishing companies. Thankfully, with a digital audience of some 6 to 7 million, our younger, second-generation leadership has capitalized on this emerging audience, and unlike a lot of now-shuttered publishers, we have strong content here as well. 

Smart publishing companies have also diversified into the event side of the business to cope with the changing realities put in front of them. We too have embraced this side of the business with our Kickoff events at Amelia and Monterey as well as our classic sports car tours. Our sister magazine, Grassroots Motorsports, also runs a series of events.

So, you might be wondering, will this all be on the test? 

Again, while I don’t have all the answers on this subject, I do see the future pretty clearly.

Magazines will become the premium product in a media company’s stable. They will be low-circulation, targeted, halo-type products for those who want them. Those magazines that survive will follow the European model and will get more expensive. Readers who want them will have to pay a bit more.

Advertisers–and thankfully we have many who stick with us year after year–will most likely not have to pay more as circulation gets more targeted. The smart advertisers won’t worry as much about the size of the audience, but will instead see the passion and the true engagement that print magazines have with their audience.

From our standpoint, the price increase we initiated last year has allowed us to hire a couple of new staffers and writers. You have hopefully noticed better graphics, and soon you will notice some new columnists. We’re looking at moving to even better paper and perhaps a larger size format. Bottom line, with every investment you make in us, we are going to make a similar investment in the product. 

As the big guys–including Autoweek, Hot Rod, Sports Illustrated and other departed titles–have sadly learned, the days of $8 subscription prices, ever-increasing ad rates, questionable content and crappy paper are gone.

Hopefully, this helps you understand a little more about how things have changed and how we plan to continue to grow and prosper. I also hope you choose to grow with us as we see this through and continue to constantly make improvements.

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David S. Wallens
David S. Wallens Editorial Director
4/24/24 9:29 a.m.

I actually majored in magazines. How the business has changed since. Although the fundamentals haven’t, I guess: put the audience first and stay profitable. 

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