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Has anyone done the maths? VAT and the membership magazine

Adrian Porter Head of Strategic Research

Those of you familiar with our recent report Membership Organisations: Big challenges, Digital Answers and our accompanying seminar series will know that one of the actions we propose is to digitally enrich the membership magazine.

Our recommendations seek to make organisations think of ways, other than pdf and page turning software, of making the membership missive more interactive, content rich and accessible, as well as easier to distribute.

In our seminar in June, Michelle Richmond (IET Membership Director) told a story about how the IET had decided to distribute its magazine electronically in India as a means of streamlining delivery in order to circumvent a notoriously inefficient and costly postal method. This was a short lived venture since the IET managed to upset their young Indian members who like to leave the magazine ‘lying around for their parents to find’ as a means of demonstrating their membership of a respected international professional body.

Of course the IET were unaware of this self-promotional use of their printed magazine, but their motivations were clear; reduce print and distribution costs and increase efficiencies.

At the same seminar Michelle also revealed that the IET had developed a trial iPad version of its magazine. This provoked debate among delegates around the merits and demerits of the associated cost savings, or otherwise of digital magazine production.

Now I don’t profess to fully understand the economics of producing a digital magazine, but I do understand that VAT is payable in the UK on digital magazines unlike printed versions (see this article for an explanation of the inequities around this situation).

I also understand that on the positive side, print and distribution costs must be dramatically reduced if uptake of a digital magazine reaches a critical mass, but that this must be balanced with the potential loss of ad revenue.

So my questions are: how would digital distribution impact on the membership fee, if at all? Wouldn’t the VAT expense and ad revenue income be easily recouped in print and postage savings? What else needs to be considered? In short, has anyone done the maths?

If you have done the maths, or have any thoughts or experience in this matter then please contribute below.

In the meantime I encourage you to distribute this link to all your friends and contacts and sign the government e-petition calling for the abolition of VAT on e-books.