Does Digital Delivery Save Costs?
That Argument May be Won.
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 savingâ€”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 publisherâ€™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 magazineâ€™s of the file. EHâ€™s cost to produce one print magazine averages about $1; itâ€™s cost for a digital send, about 15 cents. â€śEvery new digital subscriber saves money for us,â€ť 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.
â€śDigital saves more than $50,000 per year for CE Pro alone,â€ť Crews says. â€śThatâ€™s huge!â€ť 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 publisherâ€™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. â€śThe break-even point for digital has always been pretty low,â€ť says Texterityâ€™s Cimarron Buser. â€śDelivering 1,000 digital copies is usually more than enough to pay for our services.â€ť
Â 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 doesnâ€™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 Mediaâ€™s Steve Sutton reminds publishers that they must always evaluate their costs (and possible cost-savings) in relation to their overall profitability pictureâ€”â€śespecially 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.â€ť
The real consideration should be the strategic advantage of publishing a digital edition, according to Buser. â€śIn addition to saving costs weâ€™re trying to help publishers understand that making digital a part of their strategy can increase their circulation, expand their circulation, and increase revenueâ€”important benefits as we all deal with the current economic crisis.â€ť
Thatâ€™s the way ITEM Publicationsâ€™ Graham Kilshaw has always approached digital delivery. â€śI donâ€™t look at digital as an exercise in saving money on print,â€ť he says. â€śI 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.â€ť
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