Publishing business models: Where the money comes from

Publishers are experimenting with new online business models. So I’m starting a series putting newspaper pay walls, electronic books and other strategies in context. My plan is to show how old-school publishers made and continue to make money, then use this to examine their digital strategies.

This is a basic look at the print publishing business model. You may consider it oversimplified, but the big picture is more important than the details.

Revenue

Historically print publishers earned revenue from copy sales and advertising. Some publishers, mainly in the trade press, rely solely on advertising. Others, such as book publishers, rely solely on copy sales. Most newspapers and magazines make money from a mix of the two.

The balance between advertising and copy sales revenue usually determines a title’s editorial strategy.

The revenue part of a publication’s business model is simple:

Revenue = copy sales + advertising sales

Publishers who rely mainly on copy sales for their income typically spend more on producing quality editorial to attract readers. Advertising-focused publishers often put less emphasis on editorial. In extreme cases, they do away with editorial all together producing publications which closely resemble catalogues.

In part 2, we’ll look at print copy sales.

This post is deliberately short and simple. In future I’ll ask readers have I missed anything here? Do you have any questions about how this works?

Please add your comments and questions below or get in touch through my contact page.

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