Alternative Revenue Models for Digital Editions
Publishers are devising successful, out-of-the-box ideas to make money now.
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 âsoldâ into them as a value-add with hopes that theyâll eventually clue in to the robust accountability features. There are, however, ways to make some cold, hard cashâfrom 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, itâs 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 âsellâ a preset number of subscriptions to qualify for the discounted ad.
According to Jeanniey Mullen, Viv magazineâs CMO, the ideal advertiser for this program is one that shows a desire to advertise, but canât afford the normal rates, and has a community of customers that matches Vivâs demographicsâaffluent, 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 womenâs group called Step Up Womenâs Network yielded a solid lead list of 200 names. âAt this event, 180 have already subscribed and 60 are interested in outreach,â 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 editionâs virtually unlimited capacity for content, but the potential is exciting. âIf each of them is going to bring in 25 subscriptions at $36 per, it turns the ad revenue model on its ear.â
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-yearâs worth of digital back issues available for 99 cents each.
The revenue is nice, but ânot a lot,â 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.
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 IDGâs CIO magazine, says digital magazines often become the centerpiece of a custom program.
The sale is a consultative one, he says, but thereâs much to offerâespecially the tracking and analytics features. âThereâs proof in the pudding right now. Thereâs a lot of tracking and over time theyâre going to be able to have real-time tracking. It can give you immediate feedback on how itâs performing.â
The custom sale is typically an integrated packageâco-branded emails, market research, microsites, print collateralâbut one that usually comes with a commitment minimum of one year. âSome say thereâs a 5 to 7-year lifespan to corporate magazines, but Iâd say typically itâs an annual commitment and within that itâs a quarterly or two to three times per year [frequency].â
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. âIf we use our database, then itâs 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.â
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