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Does Digital Delivery Save Costs?

That Argument May be Won.



By Jane E. Zarem
04/03/2009

Paper, printing, and postage costs for delivering a print copy of a magazine average about $1 per unit. Delivering that same content digitally can easily result in a 75 percent cost saving—as low as 15 cents a unit, depending on the size of the issue, the number of pages, and supplier negotiations. Everyone is trying to squeeze a penny these days, and instituting a digital edition or increasing the number of digital readers can result in significant cash left in the publisher’s pocket.

A year ago, EH Publishing launched a digital edition of CE Pro, a controlled-circulation b-to-b publication with 50,000 subscribers. Today, the number of digital-only subscribers is approaching 10 percent of the magazine’s of the file. EH’s cost to produce one print magazine averages about $1; it’s cost for a digital send, about 15 cents. “Every new digital subscriber saves money for us,” says Elizabeth Crews, circulation director. And she has done the math:

$1.00 per print copy times 5,000 subscribers equals $5,000 per issue or $60,000 per year.

15 cents per digital copy times 5,000 subscribers equals $750 per issue or $9,000 per year.

“Digital saves more than $50,000 per year for CE Pro alone,” Crews says. “That’s huge!” The potential savings would be even greater for magazines whose cost of delivering print and/or the number of subscribers are higher.

In general, the total cost associated with delivering a digital edition usually amounts to no more than $1,000 to $1,500 per issue and often less, depending on the size of the publication and publisher’s preferences. The pricing models are usually based on frequency, the number of pages, and extra features rather than on the number of copies served. “The break-even point for digital has always been pretty low,” says Texterity’s Cimarron Buser. “Delivering 1,000 digital copies is usually more than enough to pay for our services.”

 In addition, digital requires zero physical inventory, so overprinting and waste are eliminated. The publisher that ordinarily has a 30 percent newsstand sell-through rate for its print magazine doesn’t have to swallow or recycle that 70 percent of unsold paper.

While certainly agreeing that digital distribution is significantly less expensive than paper distribution, Ziff Davis Media’s Steve Sutton reminds publishers that they must always evaluate their costs (and possible cost-savings) in relation to their overall profitability picture—“especially in terms of the advertising support that the magazine can expect. That may make a difference in the level [of digital involvement] you want to support.”

The real consideration should be the strategic advantage of publishing a digital edition, according to Buser. “In addition to saving costs we’re trying to help publishers understand that making digital a part of their strategy can increase their circulation, expand their circulation, and increase revenue—important benefits as we all deal with the current economic crisis.”

That’s the way ITEM Publications’ Graham Kilshaw has always approached digital delivery. “I don’t look at digital as an exercise in saving money on print,” he says. “I see it as a different product and as an exercise in high-margin publishing. If we can achieve a 35 percent margin on print, we can achieve a 60-70 percent margin on digital publications.”


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By Jane E. Zarem
04/03/2009







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