Audience characteristics and the price of advertising in a circulation industry: evidence from US magazines

This paper investigates the impact of audience characteristics on the newsstand sales, the cover price and the price of advertising in the US magazine industry. Employing a unique data set describing 94 US magazines, a simultaneous equations model estimates the impact of various audience and magazine characteristics on the price of magazine advertising. The empirical model is guided by previous theoretical work that predicts audience characteristics may influence the price of advertising. The results indicate that average reader income, average reader age, the number of pages printed per year, and the possible number of advertising impressions enhance the price of advertising. On the other hand, a higher cover price, having local distribution, and a greater dependence on newsstand sales reduce the price publishers charge for advertising. (C) 2003 Elsevier B.V. All rights reserved.