magazine cover gifts

Overview of Cover Gifts in Magazines

  • Magazines often include free gifts on their covers (e.g., CDs, scented candles, DVDs) to attract readership.

  • Originally intended to boost readership, these gifts are now seen as problematic by some industry professionals.

  • Simon Kippin (Publishing Director, Good Housekeeping) suggests that the gift strategy has led to significant costs for publishers.

  • Ian Rockett (Business Director, MindShare) describes the practice as a defensive action to avoid losing market share.

  • Noleen Wyatt-Jones (Group Manager, Zenith Media) warns against cover mounting, stating it’s hard to revert once started.

Cost Distribution Across Industry Segments

  • The financial burden of cover gifts differs among various magazine types:

    • Women's Magazines: Publishers generally absorb a large portion of the gift costs; gifts are used to enhance brand perception (e.g., Elle offering a metal key chain).

    • Music/Video Games/Computer Magazines: Suppliers typically cover the cost, paying publishers to place their products in magazines to reach targeted audiences.

      • Example: Andy Harris (Sales Executive, PC Plus Magazine) notes, "We give them the space; they give us the product."

Geographic Differences

  • prevalence of cover gifts varies by region:

    • UK: More common to include gifts on magazine covers.

    • US: Less frequent use of gifts compared to UK magazines.

Questions for Analysis

  • (a) Elements of Competition and Cooperation:

    • Competition: Need to attract readership can drive magazines to offer gifts to stand out.

    • Cooperation: Publishers may rely on partnerships with suppliers, who fund gifts.

  • (b) Nature of the 'Cover Gifts' War:

    • Is it a win-win game or a prisoner’s dilemma?

    • Analyzing how each magazine's decision impacts market dynamics and collective outcomes.

  • (c) Market Segment Differences:

    • Assessment of how competition and cooperation elements shift across different magazine segments.

  • (d) Refraining from Cover Gifts:

    • Consideration of potential benefits for the magazine industry if all publishers agreed to discontinue gifts.

Context

  • Case inspired by the article "When a gift is a cover-up" by Astrid Wendlandt, Financial Times, March 24, 2000.

  • Quotes sourced from the same article.

  • Developed by David Backus and Luís Cabral for class discussion purposes.

  • © 2001 David Backus and Luís Cabral, Firms and Markets Mini-Case.