Alternative Revenue Models for Digital Editions

The obvious strategy for making money off of digital editions is to parallel print models. In other words, support the production and distribution through advertising and subscriptions. Yet, publishers have primarily chosen to offer digital editions as free supplements and advertisers, for the most part, are either still too reticent or are “sold” into them as a value-add with hopes that they’ll eventually clue in to the robust accountability features. There are, however, ways to make some cold, hard cash—from custom editions to back issues sales to hybrid advertising-subscription models.

An Ad and Subscription Sales Hybrid

Viv Magazine, a 350,000 circ, digital-only luxury and fashion magazine for women, has devised a plan to increase circ by bring smaller advertisers into the fold. Called Viv Marketplace, it’s not unlike a traditional marketplace section in a print magazine that collects smaller-spec ads into one location. However, Viv has added an interesting twist.

Certain advertisers can buy a 1/8 ad position at a tenth of the normal rate and receive a special discount subscription code to offer to their own network of customers. The advertiser agrees to “sell” a preset number of subscriptions to qualify for the discounted ad.

According to Jeanniey Mullen, Viv magazine’s CMO, the ideal advertiser for this program is one that shows a desire to advertise, but can’t afford the normal rates, and has a community of customers that matches Viv’s demographics—affluent, entrepreneurial women who, importantly, are power networkers.

The model places a premium on the $36 subscription price rather than the ad sale. A test event at an LA Sports Club with a women’s group called Step Up Women’s Network yielded a solid lead list of 200 names. “At this event, 180 have already subscribed and 60 are interested in outreach,” said Mullen, who added that a September launch has the first 10 marketplace slots accounted for.

An initial concern, says Mullen, is Viv will have an over-abundance of small marketplace ads, especially given a digital edition’s virtually unlimited capacity for content, but the potential is exciting. “If each of them is going to bring in 25 subscriptions at $36 per, it turns the ad revenue model on its ear.”

Back Issue Sales

Hachette Filipacchi Media US is leveraging its digital edition platform into a steady stream of back issue sales. According to Phil Ketonis, VP consumer marketing, print copies had slowed to worrisome levels. To counteract the eroding pipeline, Ketonis introduced five-year’s worth of digital back issues available for 99 cents each.

The revenue is nice, but “not a lot,” yet the value of the program goes beyond incremental sales. While the digital back issue program reignited sale levels to 5-to-10 times print-copy levels Ketonis says it also strengthens his subscriber loyalty base by putting him back in touch with his hard-core readers. These are readers that are literally replacing years of Road & Track and Car and Driver issues stored in their garages with digital copies. Yet the real value comes from the email addresses, which can be used for ancillary product promotions and opt-in programs for advertisers.

The challenge now, says Ketonis, is to boost the number of sales. He also plans to test different pricing levels and sees particular promise in premium-priced special editions.

Custom Publishing

Publishers have long been leveraging their sales, editorial and production skills into custom publishing services for their marketing clients. Expanding that into digital edition production is a natural progression. Adam Dennison, vice president of sales at IDG’s CIO magazine, says digital magazines often become the centerpiece of a custom program.

The sale is a consultative one, he says, but there’s much to offer—especially the tracking and analytics features. “There’s proof in the pudding right now. There’s a lot of tracking and over time they’re going to be able to have real-time tracking. It can give you immediate feedback on how it’s performing.”

The custom sale is typically an integrated package—co-branded emails, market research, microsites, print collateral—but one that usually comes with a commitment minimum of one year. “Some say there’s a 5 to 7-year lifespan to corporate magazines, but I’d say typically it’s an annual commitment and within that it’s a quarterly or two to three times per year [frequency].”

Pricing a custom digital edition is hard to pin down, especially since each package has a wide variety of options, but depending on page count, artwork, editorial costs, and circulation, publishers can charge $75,000 to $200,000.

Distribution can lead to more revenue as well, says Dennison. “If we use our database, then it’s based on cost-per-thousand, plus any premium filters they want to put on it. There are also frequency discounts if the commit to four issues per year versus two, for example.”

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