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Print publishing business model primer

Print publishing  makes money from copy sales and advertising. Some publishers rely on advertising, others on copy sales. Newspapers and magazines make money from a mix of the two.

The balance between advertising and copy sales is important. Ad-driven publishers approach their business in a different way to copy sales-driven publishers.

Copy Sales

In print publishing, the publisher rarely keeps all copy sales revenue. Newspapers, magazines and books usually sell through newsagents, bookstores or other retailers. Shops keep between 30 and 40 percent of the cover price.

Sometimes distributors take a slice of copy sales. They may charge a fixed fee per copy delivered.

Retailers rarely sell all the copies they get. Publishers talk of sell-through rates – the percentage sold.

Many publishers, particularly those chasing ad sales regard a sell-out as a failure. It means they didn’t maximise their circulation. They sell a high circulation to advertisers.

Popular, frequent titles have better sell-through rates. New or irregular ones don’t do as well.

Revenue lags sales

Publishers wait months to get copy sales revenue. It trickles back from readers, through the retailer and distributor.

Printers often want payment – or a guarantee to pay before they print. This means a publisher must carry the costs of three editions before seeing any sales revenue. The investment is more in the case of weeklies. It is less for bi-monthlies and quarterly publications.

Subscriptions

Revenue lag explains why print publishing is keen on selling direct to readers through subscriptions.

Publishers get subscription money before printing. Subscribers usually pay a year in advance. Some publications offer two-year and even three-year subscriptions. That’s money in the bank.

Publishers keep all subscription revenue.

Advertising

Publishers sell space in their titles to earn advertising sales revenue.

Most publishers set aside pages for advertisers. They have an advertising ratio.

Paid-for publications usually have a lower advertising ratio than free publications. Although this is not always true.

There are different types of advertising. Display advertising means larger and more colourful ads. They often have creative text and images. Classified advertising is often text only. It doesn’t often include graphics.

Magazines sell advertising by the page. Although they also offer double-page spreads, half pages and other formats. Newspapers will sell pages, but they also sell column centimetres (or column inches).

The more print publishing you buy the cheaper it gets

The more an advertiser buys, the cheaper the rate per column centimetre (or magazine pages).

A full-page is cheaper than two half pages and so on. Publishers offer advertisers discounts if they commit to buying a series of advertising over time. Booking a year’s worth of advertisements in a monthly magazine is cheaper than 12 single advertisements.

Some advertising positions attract a premium rate. On newspapers this is the front page. It can also be the front pages of newspaper sections such as business.

Magazines charge extra for the back cover and possibly the inside front cover. Successful titles charge a premium for early right-hand pages or other attractive sites.

Agencies and commission

Specialist media buying companies buy most advertising. They develop strategies for their clients and negotiate with publishers. Publishers pay media buyers a commission. This might be 10 to 20 percent of the booking’s value. In return for a commission, media buyer agrees to pay invoices on a set date.

We call advertisers who buy their own space direct clients. They often haggle over prices. Unless they are large-scale buyers, they have less clout than agencies. Collecting money from direct clients can be harder.

Publishers issue rate cards. Historically they used a card. Now they are usually available online. Rate card prices are often negotiable.

Advertorial

Advertorial is when publishers offer advertising linked to editorial features. In some cases editorial integrity is up for sale.

Advertorial deals come in different flavours. Many publications are advertorial thoughout. If an advertiser pays for space they have a say over the publication’s editorial content.

More credible titles wall off areas of content for advertorial. Editors mark these with terms like “advertising supplement” or “advertising feature”. This isn’t always obvious to readers.

Some publishers run editorial-style material provided by advertisers and charge for it. Others allow advertisers to send the copy for inclusion next to advertisements.

Publishers may or may not allow advertisers control over advertorial content. Some publishers have journalists write advertiser-friendly copy for these sections. Others keep a strict demarcation between editorial and advertising.

Print publishing business model

Free titles are more likely to run advertorial. The might compromise editorial integrity more often than paid-for titles.

Paid titles are less likely to take this approach. Some have little in the way of advertising and charge a hefty premium for quality editorial content. This works best if they can manage a high circulation.

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