Understanding Print Revenue Models

Circulation revenue and advertising revenue are the two main sources of revenue for newspapers and magazines. A third source is a syndication, however, it only accounts for a small amount of the total.

Circulation Revenue

It is the cover price at which readers buy a newspaper or a magazine. Circulation revenue for any newspaper can be calculated on the basis of its cover price. The cover price of a newspaper or magazine is much less than its production cost. Because of the low cover price, the circulation revenue hardly amounts to one-third of the total newspaper revenue.

Advertising Revenue

Advertisements form the biggest revenue head for any newspaper. They not only cover the production cost of the newspaper but also generate profits. The volume of advertising depends upon the readership of the newspaper or the magazine. A newspaper with a large readership attracts more advertising than a newspaper with a small readership base. This is because the newspaper with a large readership can carry the advertiser’s message to a comparatively larger audience. The composition of the readership also plays an important role in deciding advertisement revenues. Even if it has a small circulation base, a newspaper that is read by the elite and upmarket readers can charge high premium rates. As a result, any publication's marketing team approaches an advertiser with two sets of numbers:

Demographics and the Market Segmentation of its readership

Demographics can be described as the statistical study of populations. It encompasses attributes such as age, gender, race, marital status, annual income, educational level, and occupation of people. Market Segmentation brings out the socio-economic status as well as the purchasing power of the readers. It is used by marketers to target specific consumer segments based on their socio-economic status.

SOCIO-ECONOMIC CLASSIFICATION (SEC) OF THE READERS

The SEC system was developed in 1988 but was modified in 2011. It now classifies households on two variables: 1. Education of the chief earner of the family 2. A number of consumer durables, from a predefined list, are owned by the family. The list has 11 items, ranging from electricity connection to agricultural land to cars and air-conditioners The system, thus, classifies the households into 12 grades ranging from A1 to E3. The previous SEC system had different grades for Urban and Rural households and was based upon the education and occupation of the chief earner. The SEC data helps the advertising agencies and companies to select the publications to place their ads.

Syndication

The third revenue source is through content syndication. Syndication essentially means selling Intellectual Properties (IPs) such as photographs, images, cartoons, graphics, and articles to other publications as well as non-media organizations. In the age of multimedia, newspaper organizations can also earn by selling their audio clips, videos, and microfilms. The print organizations offer their content for syndication after it has been published on their own platforms. Cartoons, celebrity columns, national political reporting, etc are the most popular forms of content syndication. Content is sold to websites, corporates, consortiums, and institutions. The revenue earned from syndication is very small.