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1) Magazines do not survive on the strength of book store sales and magazine racks, they generate income from selling advertising in their pages.
2) They base their ad rates on the number of their subscribers. That's why they are willing to let people subscribe for $0.50 an issue -- it increases their subscription number, and they can charge more. A lot of publications will even let you subscribe for free, because it leads to better ad rates and makes it a profitable situation for them.
3) Not sure why you've never seen anyone buy the New Yorker. Lots of people I know buy it regularly, some of them have lifetime subscriptions. Personally, I consider it one of the best-written magazines available.
Hope that helps.
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