How Do Magazines Make Money?
Think of any topic you would like to know more about and there is probably a magazine dedicated to that topic (see Resources below). From sports to gardening to localities to beauty, many magazines exist that provide information on just that subject. How are these magazines able to provide this information to you month after month and make a profit to boot? There is really no secret to it, magazines are a business and like any business, they must generate revenue and stay profitable. The three main ways that magazines make money are circulation and subscription, classified advertising and print advertising.
When you go to the newsstand and buy your favorite magazine, the profit from that sale makes money for the magazine. However, there is very little profit in this type of sale, called single copy sale, once you factor in the price it costs to make the magazine, the cost to transport it to the newsstand and the commission the magazine company must pay the newsstand company for providing space to sell its magazine. Magazines make far more money from subscriptions since they cut out at least one of the intermediaries and get their product directly to the consumer. Magazine companies also have your address so they can make a pitch to renew your magazine subscription when it comes due, as well as pitch any other magazines they may produce that they think could be of interest to you.
When you open any magazine and flip to the back pages, you will see a classified section with want ads. Magazines sell want ads by the word or the line, and the ads can be quite expensive in popular magazines with a large circulation. Even moderate magazines with smaller circulations command large prices for their want ads if they target a specific area or group of people. For example, a magazine on life in Chicago would fetch a good price for want ads that target most of Chicago since the advertiser would know that the people likely to take advantage of his product would read his ad.
The single best way that a magazine makes money is by allowing advertisers to use its unused space throughout the magazine, including the covers and inside front and back cover. It is normal for a full-page back cover ad to run several thousand dollars or more in popular magazines with national coverage. Not only does the magazine make money with this form of advertising, it also fills up the pages by placing ads in space on pages around the story lines. The magazine looks better and its revenue increases.