Why Are Magazine App Subscriptions Priced So Weird?

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Yesterday The New Yorker unveiled a new deal that allows print subscribers full access to their lovely iPad app. The oddity that caught everyone’s eye was their pricing model: for the app-only version, The New Yorker currently costs $59.99 for a one-year subscription, while the print version plus the app is a whole twenty bucks cheaper at $39.99.

That said, take a look at the playing field and you’ll find they’re hardly alone. A number of Conde Nast’s other titles (Wired, Vogue, GQ, etc.) are reportedly following suit, and we haven’t even touched on all the weird paywall stuff the New York Times is doing (with surprising success, it seems). For the record, we’re no exception at TIME.

So why is it cheaper to buy the all-inclusive print and digital packages as opposed to digital only?

The answer’s simple, really: it’s in the advertising.

Though Online ad revenue reached a record-setting $26 billion last year — overtaking newspapers and second only to TV advertising — the print advertising industry is still incredibly lucrative. While the popularity of tablets is spreading like the plague, the actual penetration of iPads in relation to the entire potential market remains relatively small. Though actual figures aren’t available yet, various reports estimate that up to 40 million iPads may ship in 2011. Sounds big on paper, but think about 40 million in relation to the much larger population of overall magazine subscribers. Tablets are expensive, and it’ll be a few more years before they’re more common than not.

Okay, I know what you’re thinking: Didn’t the overall number of magazine subscribers drop in 2010?

Yep, but consider what magazine publishers would do without them. As it stands, they’re still a primary revenue stream for publishers. The tablet market hasn’t yet hit the critical mass it’ll need to sustain itself — just look at The Daily, the iPad-only newspaper which, though a quality product, lost News Corp $10 million last year.

The point is, magazine publishers want you to buy their print products. On their end it’s a win because it helps them maintain the attractive rate-bases and circulation numbers they need to effectively sell pages to advertisers. On the reader end it’s a win because it gives them freedom of access across multiple mediums.

Perhaps not such a dumb move after all, then.

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