The value of advertising in a magazine bundle

Abstract

Existing analyses of circulation industries have often postulated that consumers consider advertising to be a “bad,” thereby requiring publishers to subsidize cover price (and thus circulation revenue) with advertising revenues. This paper uses data describing 117 U.S. magazines for the years 1996–1998 to determine the value of advertising in a magazine bundle. For four of five magazine genres, advertising is found to increase average newsstand circulation and newsstand price. These results indicate that advertising is a shift parameter in the newsstand demand for magazines, as opposed to the alternative hypothesis that advertising is a bad that subsidizes cover price.

Citation

Depken, C.A. and Wilson, D.P. (2001), "The value of advertising in a magazine bundle", Baye, M.R. and Nelson, J.P. (Ed.) Advertising and Differentiated Products (Advances in Applied Microeconomics, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 109-128. https://doi.org/10.1016/S0278-0984(01)10006-4