Today, technology and the information age have begun to change the revenue model for magazine producers. With the increasing ease of production given today’s modern desktop publishing software, the cost to produce a magazine has dropped dramatically. With that drop has come a proliferation in the industry that has increased competition for a seemingly constant stream of consumer dollars. This is to say that there are more magazines today than there have ever been before, but the average magazine reader is not reading more. Hence, magazines today must compete for limited resources in an ever-crowding field.
Although this situation has not yet led to an active price war in between magazines, certain elements of such a war do exist, and the danger to the profitability of major players within the industry is very real. Magazines draw a significant amount of their revenue from their advertisers, and as such they have a great deal at stake in maintaining their circulation and readership rates. Thus since the cost to keep an existing reader or subscriber is a great deal lower than the cost to obtain new readers, many magazines will almost give issues away to existing readers who threaten to leave the magazine by allowing subscriptions to elapse. Thus today’s magazines are faced with new challenges: offer more to existing readers, control costs, and reach new readers cheaply. Whether they like it or not, the Internet is becoming a major way that all magazine producers are tackling this problem.
WHY ONLINE MAGAZINES?
In her article “Maximizing Profitable Growth,” Deborah A. House outlines five steps to surviving a price war :
• Have a plan
• Innovate
• Make it easier to do business with your company
• Focus on productivity
• Make decisions based on real time data
Of those five steps, the last four are significantly easier to accomplish via online publishing, and the first one is a necessity for all types of publishing, either print or online. Taking the last four one at a time, shows will explain some of the advantages of online publishing over print publishing.
Innovate: Innovation is a necessity for any business, but the Internet by definition requires innovation and makes innovation easier. First off, new systems are easier to implement online both because they can be implemented worldwide all at the same time and because the costs of electronic implementation are lower than the costs of world wide hard-system changes. Of course, some changes that are implemented electronically also force hard system changes, and those changes can still take time and money, but in all cases, the advent of information technology eases the transition. The Internet and the development of intra-office intranets aid in the dissemination of information; this makes the change easier to manage.
Make it easier to do business with you: One clear barrier to entry for any new customer is the difficulty of using a new system with a new service provider. In the magazine industry, this can be seen in the challenge of getting one’s product to retailers and of managing one’s fulfillment systems. By using online methods, magazine producers can bypass middlemen and go straight to their customers. This makes it easier for the customers to use the magazine, and provided that the online magazine is well designed, it can allow the magazine publisher to more carefully focus the reader’s attention on what the producer wants the reader to see first. Also, by doing business electronically, the system of payments and inventory is managed easier, to better benefit for both producer and consumer.
Focus on productivity: As has been stated, in today’s environment, magazine producers need to do more with less because they are competing for limited resources. In a world with less income, producers must therefore cut their costs. Working online allows producers to avoid their printing and distribution costs while theoretically allowing them to maintain their ad revenue and their subscription base. This is not to say that online magazines are the only, or even the best, way to reach all consumers, but having a good online magazine is an excellent way to drive traffic to the print magazine and to make maximum use of the content that has already been purchased or created.
Make decisions with real time data: This is perhaps the best argument in favor of online magazines because online data is more complete, more accurate, cheaper, and faster than data from traditional distribution/circulation sources. Online data is available in near real time. Magazine producers can use it to make changes instantly once they fully understand the nature of their actions on the marketplace.
ONLINE BUSINESS MODELS
Having looked at these four factors, it becomes clear that online magazines are at least a big part of the future of the magazine industry. They may never eclipse real paper magazines, but they will definitely play a big part of the magazine experience for future generations of magazine readers. Thus, it is important for all magazine producers to understand how to maximize online magazine revenue. To do this, one must have a clear grasp of the business models currently in place in the online magazine industry and then understand what tricks can allow publishers to squeeze extra profits from their online subsidiaries.
There are at least five separate business models for online magazines: Daily, weekly or monthly searchable, PDF download and/or email distribution, paid subscriptions to magazine web sites, and magazines available via micro-payments.
Dailies: Most magazines are produced on either a weekly, monthly, or quarterly basis, but since building traffic at a web site is largely a function of building habits into readers, many editors today ask their journalists to think in “daily” terms rather than in terms of weekly or monthly deadlines . This can mean many things: releasing some content every day, releasing all content on the same day but using a Flash application to rotate what readers see as the top story, or simply having journalists check in on the comments left on their stories so that they are forced to interact daily with their readers. In all cases, however, the idea is to make the online magazine site a daily stop for readers, and thus it must also be a daily stop for at least some contributors as well. In this business model, revenue is generated primarily through search-driven ads, such as those utilized by Google, so that traffic on the site is the primary revenue driver.
Weekly or monthly searchable: This model is similar to the daily model, but all of the content is released at the same time in a searchable format. The magazine then uses an internal search engine in order to make it easier for readers to search for their specific articles.
Revenue for this business model is oftentimes similar to the daily model, and indeed this model can be combined with many elements of the daily model as well in order to create an easy-to-navigate, required reading magazine. However, the downside of both of these business models is that the reader is not required to flip through the pages of the magazine or otherwise explore issues in which he might not have been naturally interested. This is a poor use of the full resources of the magazine and also lessens the potential effectiveness of the magazines advertising because there is no casual glancing involved on the part of the reader.
On the upside, however, this format makes sense when the magazine has a vast amount of data and wants to be known as the subject matter expert in its field. For example, Wired Magazine utilizes a searchable format because it wants to be the one-stop-shop for all computer-related consumer product information. Search technology greatly helps its usability in this respect, especially since the magazine already processes a vast amount of data.
PDF download or email delivery: Download or email delivery is most useful in either business-to-business (B2B) applications or in the case of inflexible reader demand. In this case, users either receive a magazine online via email or are required to go to a web site to download the entire magazine at once via PDF. The upside to this format is that it forces casual browsing, maximizing the advertising opportunities per reader. However, the downside is that it requires more work for readers. It is likely to appeal to fans or non-casual business users more than casual Internet surfers. Download or email delivery is most effective in B2B situations where users need the information in the magazine. This makes them prime targets for focused magazine advertising.
Paid Subscriptions: Many online magazines sites offer paid subscriptions to their premium content, but this business model has proven relatively ineffective over time for most companies. The simple reality is that with the proliferation of magazines, potential users will often go elsewhere for similar information before they will pay for a specific magazine online. Internet search technology makes this easy to do. Of course, there are certain exceptions to this rule such as Consumer Reports or the Wall Street Journal online (technically an online newspaper), but in both of those cases, the information contained is widely considered to be the best in the world in its specific class, and the companies’ owners have done a very thorough job of integrating online with paper-copy information. Moreover, even in the case of the Wall Street Journal, online subscriptions have not successfully replaced revenue lost over the past five years to Internet news sources.
Micropayments: Some small magazines are distributed via micropayments for individual issues. This system is neither widely used nor widely successful in any case, but it does offer a means for effective distribution in the case of small groups that need minimal revenue to cover costs and which already have a devoted following. For example, a church newsletter can be successfully distributed via micropayments so long as its readers know that they are paying for the basic costs of production via their micropayments. However, as a general rule, micropayments are not a way to make money online.
ENHANCING REVENUE
Even given all of these business models, there is still no clear consensus on the right way to publish a magazine online. However there are some emerging lessons for online publishers. Perhaps the most important is to think in terms of producing information rather than in terms of producing issues. Publishing online is inherently different in many respects to publishing in print. The weekly, monthly, or quarterly model does not always make sense. Thus online magazines today must find ways to make their readers repeat customers. Once they have their readers hooked, online magazines need to leverage their relationships to get the most out of each reader. They can do this by encouraging repeat visits and my finding ways to repackage or enhance existing information that the reader has shown himself interested in so that he will go deeper into the subject matter and spend more money. Even if this deeper relationship leads to little more than more advertising revenue per reader, that is still an important victory.
Moreover, Internet technology makes it easier than ever to generate content specific to specific readers. Using modern click-stream tracking technology, online magazine companies can determine what their readers are interested in and use that to target specific follow-on publications and targeted advertising to their existing readers. This too allows magazines to develop brand extensions with an idea already in place of who their specific readers are going to be for those brand extensions. This technique is not terribly different from the technology that Google employs in its search ads, but here online magazines can go deeper. They can target their brand extensions to specific users based on their reading habits, and they can utilize their customer knowledge to make follow-on sales. That is how revenue is maximized per customer or per reader, and it is the key to surviving in a world where the number of customers is constant but the number competitors in the field is growing.
One final thing to consider in enhancing revenue is that oftentimes online ads can be used as content or to supplement content. An example of this in the paper magazine world is the magazine Lucky. Lucky is a magazine about shopping; as such there is virtually no difference between its content and its advertising, and indeed, some of its content is almost certainly driven by paid-placements. However, readers looking for information about shopping know this and buy the magazine because it informs them about products in which they have interest. This type of business synergy is also possible in online magazines, and given the resource constraints in the modern marketplace, many experts argue that it is becoming a necessity for survival. For example, an online magazine about movies would be well served to have movie trailers as advertising on the website. These trailers would be paid advertising that would also serve as looked-for content by movie enthusiasts. By placing prominently on the site and promoting them, the online movie magazine is maximizing revenue in a way that also pleases readers. That is the goal.
SUMMARY
While it is not a foregone conclusion that online magazines are the wave of the future for everyone, one can certainly speculate that they are a big part of the future for most readers. The advantages of online magazine production are too great for it to be ignored, and more to the point, readers are turning to the Internet for all types of information – including magazine information – whether producers like it or not. So the smart magazine producer must know how to maximize his online revenue to survive. Fortunately there are a few good ways to do that. By finding ways to repackage information for multiple projects, exploit existing consumer relationships to make follow-on sales, extend successful brands to existing consumers, and use advertising as content, online magazine producers can maximize their revenue per reader and therefore survive during a time when there are many magazines but few readers.
Craig Willis is an associate staff writer. Upon graduation, he started a career in writing research papers and has been providing quality term papers and custom essays. His specialty subject is Anthropology term papers