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Amazon’s subscription system is screwy

I’ve written a couple posts recently on the iPad and Kindle Editions of the National Geographic Magazine. While working on the Kindle post I wrote out a complaint about the pricing. (It seemed rather high.) But as I worked my way into the issue I began to get the impression that there is more to the story. The pricing issue complaint got long enough that it outgrew the rest of the post, so I pulled it out and posted it here.

Is it just me or is Amazon’s monthly subscription charge subtly screwing the customer?

The cost of the Kindle Edition of NGM is $1.99 a month (~$24 a year). It’s more than the paper subscription ($15) or Zinio subscription ($15). This particular price quandary started me thinking about Kindle subscriptions. Why are the subscriptions charged by the month? Processing that fee every month kinda goes against the whole idea of subscriptions.

I understand why the monthly charge is priced $1.99 (it’s a penny less than $2). But why is it charged by the month? Most magazine subscriptions charge by the year.

Amazon’s method is inefficient and it drives the cost up. If it bothers you that a Kindle subscriptions costs more than the other subscriptions for a particular title, blame Amazon. If Amazon would allow for charging a 1 year subscription (instead of the monthly fee), the cost would go down. NGM would likely offer a Kindle subscriptions for the same as Zinio ($15).

The strange part is that (in this case) Amazon will sell you a single issue of NGM for $3.99. But if you sign up for a subscription, Amazon will effectively sell you a single issue for $1.99. How does that make any sense?

I think Amazon created the monthly fee deliberately. It gives them a (constant) monthly income, and it gives them more money than if they allowed yearly subscriptions. I also think the customer is paying more this way, which I interpret as getting screwed.

What do you think? I’d like to here from you.

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Doug Lance June 12, 2011 um 8:50 pm

The price is high because Amazon’s costs for Whispernet are high. They price their magazines in accordance to estimated data costs. They only make 60 cents from each issue of NatGeo issued to a subscriber. They need to recoup the data costs and make a profit. There isn’t much wiggle room there. They are charging a very reasonable price for the service they offer.

As a magazine owner, I prefer the system they have now. People can try out the magazine without being committed to a year-long subscription and they can cancel at any time. It encourages people to subscribe.

Nate Hoffelder June 12, 2011 um 9:08 pm

Actually, no. I just double checked and Amazon charge the publisher for delivery of magazines and newspapers, just like book publishers are charged. It changed a while back.

Edit: And even when Amazon did cover the delivery cost, didn’t they get 70% of the price? I would think that would be enough to cover delivery.

karen wester newton June 12, 2011 um 8:57 pm

I think part of the reason is that subscriptions require an actual Kindle. If you lose or break your Kindle, you cannot transfer the subscription to a Kindle for xx app.

Andrys June 12, 2011 um 9:53 pm

Amazon covers the data cost in advance, but Lord Have Mercy, may actually want to recoup some of those costs by charging it back to the publisher.

Yes, at some point it was 70% to Amazon, 30% to publisher — but an "insider report" at a conference involving Qualcomm (and where did my missing comment go re Qualcomm and the mirasol 'ereader'?) said that the actual split was about 33%-Amazon, 33% publisher, 33%-wireless provider.

Nowadays their split is different. A lot is done via WiFi now, lowering data costs. At any rate, it’s more like 70% publisher now and 30% Amazon.

You have to be pushing to consider a monthly charge, 'screwing the customer.' I always prefer a monthly so I can easily get out of it even after a 'free trial period' and I often do.

And though everyone’s thing these days is color and images (I like them too), you might use text subscriptions as an example too. They are like data and *searchable* unlike the $5/mo. image-based magazines that are "not screwing" customers (because they’re not selling well).

Nate Hoffelder June 12, 2011 um 10:08 pm

I haven’t removed any of your comments. Some might have disappeared from the blog, yes, but I didn’t do it.

Andrys June 12, 2011 um 10:15 pm

Nate, what goes on? That doesn’t happen with at least (but they have certainly been having their own probs since the 'cloud' changes). It was the only one gone and made me wonder just what I might have said.

Anyway, I’ve found The New Yorker and Slate subscriptions really worthwhile on the Kindle. The NYTimes Latest News Headlines offering updates 5-6 times a day, with full text of those, and that’s $1.99/mo. Best deal in subscriptions (just my view).

Otherwise, I just use RSS feeds but I like the format for those two.

The WSJ and NYTimes full monthly Kindle subscriptions are too expensive (and still the NYTimes has not found a way apparently to "confirm" that someone is a Kindle subscriber and therefore eligible for unlimited web access).

As it turns out, all the loopholes for NYT stories linked via blogs & social media and going to them via ANY search machine (up to 5 a day each) has kept me below the 20/mo. limit at NYTimes-web).

Steven Lyle Jordan June 12, 2011 um 9:59 pm

I’ve noted the higher monthly charge as well, and not just from Amazon… Barnes & Noble does the same with their magazine subscriptions. Some of the charges are more competitive with print subscriptions than others, but it varies.

One of the things that I would like to see would be an actual discount for purchasing a year’s subscription… a one-time charge that was less than buying each month’s mag, one at a time. Amazon and B&N act as if there’s something about this process that they can’t figure out, but I suspect it’s simply laziness on their part.

Richard Adin June 13, 2011 um 4:50 am

Nate, you asked: "Is it just me or is Amazon’s monthly subscription charge subtly screwing the customer?"

It must be you because I have been told repeatedly by Amazon fans that Jeff Bezos and Amazon are my friends and we all know that friends don’t screw friends. I have repeatedly been told that I need not worry about Bezos and Amazon’s monopolistic desires because when they monopolize eBook World, it will be for my benefit and assure me low, non-screwing prices.

So, Nate, it must be you.

Mike Cane June 13, 2011 um 5:41 am

Nate shouldn’t bring up any Apple issues. Then he’d REALLY know how much it was "just him." LMAO.

jorgen June 13, 2011 um 9:49 am

So, e-mag: $24
Paper-mag: $15

Nat Geo are running the same scam as many ebook publishers: set the price for the (typically also DRM-infested) ebook higher than a paperbook. Sounds normal to me.

Kelly Mosier June 13, 2011 um 1:36 pm

Barnes and Noble does the same thing, which has kept me from subscribing to Nat Geo on the Nook Color even though it looks gorgeous (albeit not as cool as the iPad app).

I agree that it is laziness and the hope of screwing the customer. It’s much harder to cancel a reoccurring charge (psychologically as well as the actual process of canceling) than you would think. Plus, there’s no need for annual re-subscribing. Essentially, they’re hoping they lock someone into a magazine subscription that they would eventually forget about, or be to lazy to ever cancel.

It’s classic screwing the customer.

AnnS November 12, 2011 um 10:35 am

Man, I am so glad to find your article. Why is no one talking about this on the web? I know your article and comments are a few months old but I hope you plan to further the discussion.

I just pre-ordered two of the new Nook Tablets from B&N (xmas, for hubby and I) and found that they too are only allowing for monthly charged subscriptions rather than annual. I even called them to verify this and to enquire if they even plan for an annual option. This irritates me and I know instinctively that the only reason they did this has to be tied to some increase in profit for the distributers (Amazon, B&N…). I have never liked having anyone poking around in my bank account monthly and have always opted for a one-time payment of whatever. With banks recently "testing the waters" for instating high monthly debit card fees regardless whether you use your card a little or a lot, is the perfect set up for Banks, ePubishers and distributers to "clean up" at the subscribers expense. I even called up one of the 1-800 numbers for a specific magazine I was interested in to get their take and they apologized saying that B&N has control and the only other option they could offer was the regular print edition. This is ridiculous, how did the distributors gain control over the publisher? Unfortunately, as much as I was exited to get monthly issues of my favorite mags on my device I for one will not use this service. I will opt out of the so-called convenience of timely downloads of my favorite issues. Convenience = higher cost and more debits to keep track of monthly!

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