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Who Wants You When You're Old and Poor? Exploring the Economics of Media Pricing

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  • Martin Koschat
  • William Putsis

Abstract

This article explores the underlying causes and implications of the relationship between the demographics of a magazine's readership base and its advertising rates. The analysis generates three central insights. First, not unexpectedly, magazines with a disproportionate fraction of readers who are young or affluent or both command a significant premium over other magazines of comparable size. Second, the magnitude of the premium paid for magazines with a disproportionate fraction of young or affluent or both readers is so large that it cannot solely be explained by standard economic explanations of media valuation. Third, if the size and demographic composition of a magazine's readership has a significant impact on a magazine's revenue stream, then there is an economic incentive to skew editorial content to readers that are more "valuable" to advertisers. This article provides some empirical evidence of the strength of these influences.

Suggested Citation

  • Martin Koschat & William Putsis, 2000. "Who Wants You When You're Old and Poor? Exploring the Economics of Media Pricing," Journal of Media Economics, Taylor & Francis Journals, vol. 13(4), pages 215-232.
    • Handle: RePEc:taf:jmedec:v:13:y:2000:i:4:p:215-232
    DOI: 10.1207/S15327736ME1304_2
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    Cited by:

    1. Ambarish Chandra & Ulrich Kaiser, 2014. "Targeted Advertising in Magazine Markets and the Advent of the Internet," Management Science, INFORMS, vol. 60(7), pages 1829-1843, July.
    2. Martin A. Koschat & Glorian L. Berk & Jeffrey A. Blatt & Nancy M. Kunz & Michael H. LePore & Sam Blyakher, 2003. "Newsvendors Tackle the Newsvendor Problem," Interfaces, INFORMS, vol. 33(3), pages 72-84, June.
    3. Koschat, Martin A., 2008. "Store inventory can affect demand: Empirical evidence from magazine retailing," Journal of Retailing, Elsevier, vol. 84(2), pages 165-179.
    4. Ambarish Chandra, 2009. "Targeted Advertising: The Role Of Subscriber Characteristics In Media Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 57(1), pages 58-84, March.
    5. Susanne Kremhelmer & Hans Zenger, 2004. "Advertising and the Media," Industrial Organization 0403003, University Library of Munich, Germany.

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