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 Time magazine, in a move 
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to reduce the costs of wooing new subscribers, 
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is lowering its circulation guarantee to advertisers for the second consecutive year, 
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increasing its subscription rates
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 and cutting back on merchandise giveaways.
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 In an announcement to its staff last week, executives at Time Warner Inc. 's weekly magazine said 
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Time will dramatically de-emphasize its use of electronic giveaways such as telephones in television subscription drives; 
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cut the circulation 
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it guarantees advertisers 
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by 300,000, to four million; 
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and increase the cost of its annual subscription rate by about $4 to $55.
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 In a related development, the news-weekly, for the fourth year in a row, said 
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it won't increase its advertising rates in 1990;
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 a full, four-color page in the magazine costs about $120,000. 
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However,
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 because the guaranteed circulation base is being lowered,
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 ad rates will be effectively 7.5% higher per subscriber,
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 according to Richard Heinemann, Time associate publisher.
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 Time is following the course of some other mass-circulation magazines 
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that in recent years have challenged the publishing myth 
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that maintaining artificially high, and expensive, circulations is the way 
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to draw advertisers.
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 In recent years, Reader's Digest, New York Times Co. 's McCall's, and most recently News Corp. 's TV Guide, have cut their massive circulation rate bases 
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to eliminate marginal circulation
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 and hold down rates for advertisers.
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 Deep discounts in subscriptions and offers of free clock radios and watches have become accepted forms 
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of attracting new subscribers in the hyper-competitive world of magazine news-weeklies.
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 But Time, as part of the more cost-conscious Time Warner, wants to wean itself away from expensive gimmicks.
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 Besides, Time executives think 
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selling a news magazine with a clock radio is tacky.
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 Giveaways just give people the wrong image,
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 said Mr. Heinemann.
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 That perception takes the focus off the magazine.
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 Time magazine executives predictably paint the circulation cut as a show of strength and actually a benefit to advertisers.
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 What we are doing is screening out the readers 
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who are only casually related to the magazine 
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and don't really read it, 
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said Mr. Heinemann.
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 We are trying to create quality and involvement.
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 However, Time executives used the same explanation 
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when in October 1988 the magazine cut its guaranteed circulation from 4.6 million to 4.3 million.
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 And Time's paid circulation, 
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according to Audit Bureau of Circulations, 
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dropped 7.3% to 4,393,237 in the six months 
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ended June 30, 1989.
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 Still, Time's move is being received well, once again.
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 It's terrific for advertisers to know 
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the reader will be paying more, 
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said Michael Drexler, national media director at Bozell Inc. ad agency.
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 A few drops in circulation are of no consequence.
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 It's not a show of weakness; 
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they are improving the quality of circulation 
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while insuring their profits.
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 Mr. Heinemann said 
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the changes represent a new focus in the magazine industry: 
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a magazine's net revenue per subscriber, or the actual revenue from subscribers 
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after discounts and the cost of premiums have been stripped away.
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 The question is how much are we getting from each reader, 
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said Mr. Heinemann. 
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 Time's rivals news-weeklies, Washington Post Co. 's Newsweek and U.S. News & World Report, are less reliant on electronic giveaways, 
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and in recent years both have been increasing their circulation rate bases.
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 Both magazines are expected to announce their ad rates and circulation levels for 1990 within a month.
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