Should you launch your magazine independently or with a publisher?
by Bob Schustedt

Steve Cooper, in an Entrepreneur magazine article titled “Mags to Riches”  found in the June 2006 issue, writes, “People love magazines.  They’re personal, visually appealing, offer a unique voice and address subjects of individual interest.  Research institute MRI reports that 84 percent of adults read magazines.  Plus, magazines are an incredibly lucrative cash business once yours is profitable.  According to Husni (chair of the journalism department at the University of Mississippi), average profit margins for magazine businesses range from 10 percent to 30 percent.” 

As you have been going though the exciting process of preparing to launch your own magazine idea, you are probably asking the question, “Should I launch my magazine independently or work with a publisher?”  In this article, we will take a look at both options.

The importance of expertise
In Steve Cooper’s article, sited above, he further quotes Husni as saying, “The most common mistake is not knowing the business – thinking that by just putting some ink on paper, you can create a magazine.”  Unfortunately, this mistake results in a very high failure rate of new magazines.  In a special report on magazine startups, written by Pallavi Gogoi in the May 31, 2005 issue of BusinessWeek Online, Mr. Gogoi illustrates this very thing by telling the story of Tara Roberts, who launched Fierce magazine in the summer of 2003.   He writes, “…after learning the ropes and working at women’s magazines for a decade, Roberts poured her heart, soul, and cash into the launch of Fierce – a magazine with the tagline, ‘For women who are too bold for boundaries.’  In June 2004, after only four issues and burning through $175,000, Fierce published its last edition, unable to bring in enough ads to cover the costs.”  Mr. Gogoi continues, later in his article, “Like many entrepreneurs with big ideas, fledgling editors often don’t have the nuts-and bolts business acumen to run a magazine for the long term.  Fierce’s Roberts now admits that her lack of business skills was her Achilles’ heel.  ‘The next time around, I will definitely hire more businesspeople,’ she says.”

In the same article, Mr. Gogoi provides this sobering quote, “ ‘The rule of thumb is that 80% of the new magazines fail in the first two years,’ says Chip Smith, vice-president of Kable Distribution Services, a New York City-based company that delivers more than 650 titles to 130,000 outlets in the U.S.”  The bottom line is to surround yourself with experts who can give your new magazine the greatest chance of success.  An independent start-up magazine can do this by hiring experienced staff and consultants as well as outsourcing particular areas.  However, for many new magazines, finding a publisher to partner with that provides this high level of expertise is the easiest way to go.  In an article titled “Why Hire a Custom Publisher” on the Custom Publishing Council’s web site, they mention, “Companies turn to custom publishers for benefits ranging from improving quality to reducing costs to freeing up staff time.”  The article goes on to say, “Because custom publishers are in the publishing business, they have access to top creative talent…”   

Not only do these publishing companies have access to top creative talent and larger talent pools, but they also have better publishing tools and resources than what many new magazine companies can afford.  Tools like: sophisticated computer modeling software for projecting performance and shaping business plans; the best desktop publishing and photo manipulation software available; top quality photo, film and OCR scanners; high quality printers and proofing systems; and production management and ad management systems.   Plus, many publishers offer extra services that can help you expand your business, like the ability to do digital editions, website development, on-line stores, video streaming, market research and ancillary product development.   As a result of these resources, new magazines generally end up with a higher quality product, a more sophisticated business plan, and ancillary revenue streams that help stack the deck in favor of a new magazine’s success.

Cost Considerations
Certainly, if a magazine plans to start on a shoestring and doesn’t plan to pay for experienced staff and consultants, then the cost of working with a publisher will also be out of their reach.  If this has been your approach, I would encourage you to rethink your strategy, raise some capital, and pay for some expert help.  Your chances of success will climb exponentially.  Your first investment should be in creating a sound business plan (including financial and circulation projections) with the help of magazine industry experts.    If your plans include hiring expert staff and consultants, you may be surprised to discover that using a publisher could actually cost less.

In the corporate world, outsourcing magazines to custom publishers is becoming the trend.  In another article on the Custom Publishing Council’s web site, titled “Sitting Pretty” from September 9, 2004, Simon Kelly writes, “As a result (of rising staff costs and time), outsourcing has increased dramatically in the last few years in order to handle U.S. companies’ myriad custom publishing needs, which include everything from glossy customer magazines and newsletters to snappy websites, e-newsletters, and annual reports.  Publications Management found that 40 percent of leading companies now use external publishing agencies.”  Mr. Kelly sites examples such as Home Depot with Style Ideas magazine, Charles Schwab with Charles Schwab on Investing and Lexus with Lexus magazine. 

Gray Allen wrote in a December 1989 article for Communication World titled “Custom Publishing: Is It Cost-Effective?, “For some, the way out of the shrinking staff syndrome has been to look to specialized organizations that can deliver turn-key services for such time- and talent – consuming projects as company magazines.  As it turns out, the benefits of this approach often go beyond simply saving dollars and manpower.  Editors we talked to claim a better product, more frequent and timely publication, wider distribution and more.”   As Mr. Allen interviewed Dan Jankowski of Unisys, he received this response, “Could staff have done it cheaper? ‘No, no way,’ Jankowski said. ‘I would have to hire three high-quality writers, an art director, and assistant art director and a production manager.  And I’d still need a full network of freelancers.  Salaries for the staff would eat up the money I now spend on the contract and then I’d still have to buy the paper, ink, photography and everything else.  The arrangement I have provides a savings versus bringing it in-house.”

Another interview by Mr. Allen revealed, “ ‘It would be much more expensive to hire people on staff,’ said Thomas Bracken, editor of Uplink, a slick, 24-page quarterly news and feature magazine from Hughes Communications, Inc., a subsidiary of Hughes Aircraft Company based in Los Angeles, Calif.  Uplink is distributed to customers, government officials and Fortune 500 executives. ‘It would absolutely cost more to staff up, and we would have to go out for a lot of services anyway,’ he said. ‘We are a small company – 350 people – and it is very difficult to get all of the kinds of talent that you would need in-house.’”  In the interview, Thomas Bracken went on to say, “It was a good match up.  We have a planning meeting at the beginning of each editorial cycle.  Then I talk with them at least three times a week about design and editorial ideas and to approve copy and art.  Even though they are in Troy (Mich.) and we are in Los Angeles, it goes smoothly.”

Furthermore, many custom publishers are also able to generate additional savings for their clients on printing, paper, subscription fulfillment and other services because they often buy in bulk or are able to contract with vendors for lower prices because of higher volumes.   For a new magazine, a custom publisher also gives it a jump-start because staff doesn’t have to be hired and systems put in place.  Think about what the lost opportunity cost is to a new magazine if it has to take at least a year to staff up, get systems in place, develop industry connections and go through a magazine publishing learning curve.  In addition, when you spend thousands of dollars on items like printing, postage and subscription marketing, mistakes and inexperience can be costly. 

How to find a publisher
Most custom publishers will provide you with as much help or as little help as you want.  The first thing you should do is write out clear objectives in working with a publisher.  Perhaps you want complete editorial control -- working with writers and editing each article.  Maybe you even want to be involved in acquiring the artwork and photos for each issue.  You should clearly define your role and the role you desire the publisher to play.   In addition, if you have completed a business plan, you should include general financial objectives and circulation objectives along with objectives related to page counts, ad sales and any auxiliary business like web development, ancillary product sales, events, and digital editions.   All of this should be put into a Request For Proposal (RFP) that can be submitted to potential publishers, allowing for an ‘apples to apples’ comparison of each one. 

A good place to look for a list of publishers to contact is under the Resources area of magazinelaunch.com’s website.  Before submitting the RFP, call a number of them and try to narrow your selection down to three or four by asking them questions to determine which publishers best fit with your objectives and magazine’s market.  Some publishers specialize in business to business publications while others specialize in consumer publications.  Even within those categories, you may find publishers specialize in just technology publications or specific industries.  Here are a few things to ask these publishers:

• Who are some of your clients?
• Can you provide samples of some of your work?
• Do you specialize in a particular category of publications?
• Do you restrict your clients to a minimum circulation size or marketing budget?
• Are you flexible to provide only the particular services that we need?
• Do you provide all of the following services?
 - Strategic Planning/Computer Modeling
 - Market Research
 - Editorial Management
 - Production Management
 - Art Direction/Design
 - Circulation Management
 - Subscription Marketing
 - Subscription Fulfillment Management
 - Newsstand Distribution Management
 - Advertising Sales
 - Web Site Development
 - Digital Editions
 - Ancillary Product Development
• How long have you been in business?
• Can you provide me with references to contact?

Once you’ve narrowed your choice to three or four publishers and have sent each of them your RFP, compare each publisher’s pricing and services in light of your objectives.  After you’ve checked their references, you may then want to arrange a face to face meeting with the top one or two in order to further assess whether there’s a good match.

Launching a new magazine can be a very exciting venture.  Hooking up with the right publisher can be a giant step towards ensuring that your magazine becomes a success story.

Bob Schustedt has been in magazine publishing for 19 years and makes his home in Colorado Springs.  He is the president of Publishing Support, a company that provides full-service magazine custom publishing and consulting services.  For more information on Publishing Support’s services, go to www.publishing-support.com or call them at 719-484-0280.