With 12 revenue models, which combinations work?

There are almost as many business models as there are media sectors, well beyond the first three most common: Advertising, Subscriptions, and Events.  Many have evolved over the years with their audience. This report looks into 12 revenue models, with examples, and additional criteria publishers should consider. 

What should be done and what can be done

Most entrepreneurial publishers have two criteria for developing a new revenue stream, whether or not it is explicitly stated.

A new revenue initiative has to 1. Add significantly to EBITDA,2. Improve the audience experience or both.   If the revenue model does both, it may be a home run.  But there are other criteria to consider.

Some highly successful niche media companies like Industry Dive decided to keep the revenue model simple and add publications, not new models.  That required funding, and ultimately raising capital by selling shares.

Other entrepreneurs would rather bootstrap and go deeper into their niche. Other choices remain: Add another title within the sector or a different sector, or expand the current publication schedule?  Start a digital service agency or add premium subscriptions? Why not just produce another event?

Typically, there are other factors, including what the founders are good at and interested in.

Here are some of the factors we’ve seen along the way:

• Will it leverage the core team, skills, and relationships? Franchising and custom publishing are ways to add revenues without investing in start-ups.  Adding publications leverages the central office. Digital services leverage the relationship with advertisers.
• Are these revenue products complementary?  Some business models have multiple revenue streams that are highly complimentary and thus work together more like a formula than distant products,  in a virtuous cycle.
• Does this meet the specialized needs of the niche audience? Products, services, and experiences that meet these needs can be sold directly to audiences, support content sales, or advertising sales. A niche audience with a solid need to access instructional formats or make in-person business contacts will provide different opportunities than ones with a heavy need for, say, things to do with the kids on the weekend.
• Will it leverage or distract leadership?   With limited resources, the presence of a superstar on the core team can shape the opportunity for new revenues. A stellar social media star at the top of the company may be enough for the media to reduce its print editions to focus on packaging the much larger online audiences obtained. Conversely, we’ve seen top business leaders like Sean Griffey, CEO of Industry Dive, turn down a revenue opportunity because “I’m not an events guy.” A technology developer in the C-suite, like Kenny KatzKrau, may design online products for their publication that other publishers could not – or would not.
• Building a hybrid business model. Many companies have evolved from one business model into media company. Examples are numerous. ILoveTheBerg, a popular blog site in St. Petersburg, FL, grew from scratch out of a local digital agency.  Broadtree,  an ad tech software company, bought the hyper local media in its area. Kondinkee,  a high-end watch e-commerce site, turned its website blog content into a magazine.  Western and Eastern Wear, on the other hand, was purchased by a content-marketing agency that quickly dropped agency services to focus on its niche publication. Later, it opened a custom-publishing channel, but typically, these hybrid companies’ business models are complementary.

In the “What Can be done” department,  if the revenue product is not complimentary – or works against other revenue models – and requires new skills,  staffing, and training, it’s better to leave well enough alone.

For those who want a “cut to the chase” understanding, of what models work well together, here is a fully digested summary:

• Sales of books and courses complement subscription models for specific niches when training  and how-to information is at the core of the mission

• Directories complement advertising sales. That is, where a directory creates a better user experience than Google for any reason, such as adding a decision tree, more credible options, or additional information.

• Press release distribution sales complements advertising sales and helps editorial. DIY software can make this turnkey.

• Events complement advertising, and can also support subscription sales by providing membership benefits via access or discounts.

• Affiliate sales can support subscription sales but only if the information is more convenient or valuable experience for the audience. However, they cannot be created on channels with ads in competing categories, or that support content marketing. If kept in separate channels, in one-off guides or review sites.

• Licensing software supports franchising models, and vice versa.

• Custom publishing complements magazine production by leveraging contacts and production teams.

• Non-profit and grant revenue supports the subscription model directly, and advertising indirectly. We consider it a revenue source, but in most cases, a grant is not a revenue model.

With this in mind, let’s walk through the  revenue models, with examples from the field.

1. Advertising: Selling audiences to advertisers

The significant sources of revenue for magazines and other niche media still come from some form of advertising – selling audiences to advertisers. However, as media migrated online,  advertising products have also evolved. Here  is a list of just a few:

• Content marketing
• Sponsorships 
• Webinars, podcasts, and video
• Email
• Premium ads

2. Events 

Events can be the ultimate complimentary product for a media company, leveraging the audience base to build the event, and leveraging the event to sell advertisers another, more personalized way to reach the audience, that can also drive revenues

 They tend to fall into two categories: Banquets and Expos/

Find more on events in this channel. 

3. Directories and listings 

Directories and listings have some unique features that distinguish them from advertising. These include that they are: 

• Organized for search. That is, to be easily found via two-click navigation-based categories – rather than disrupting content- on the website.
• Informational.  While coupons and a value proposition may be stated, the primary purpose of a directory is an informative summary, for visitors searching for a particular vendor or experience.
• DIY purchasing by advertisers is more evolved. Most  – but not all – directory listings are claimed or have some form of self-serve inputting and payment.
• They are complimentary, rather than primary revenue products in some – but not all – cases.   Directories often serve as a source of leads for other products, with a relationship established in the onboarding process.

When directories work well:

• Directories are especially relevant in categories where a simple Google search does not do the job, either because the vendors are hard to find, or because there are too many.
• By listing certain companies, the halo of the media’s credibility, values, and mission,  transfers to companies in the directory, as Angie proved with its directory of home contractors.
• Provide an lead for an advertising upsell.

B2C Examples

OneBoat, a software company, built an all-in-one directory software for visitor guides, such as Utah.com, and  TotalLocal, which publishes local guides and marries them with a directory.

B2B examples include Wells Media’s directory.

4. Books and courses 

For some niches,  e-books and webinars don’t just capture email or sell sponsorships; they are revenue streams in and of themselves.  

This is most likely to be true for niches in which:

• Professions that require certifications and continual education, such as real estate or law.
• Professions that need to train people into positions.
• Categories whose mission contains a “how to” do something.

Examples

Wells Media and  The Taunton Press, which have full-scale e-commerce channels for physical and electronic books and courses sold independently and/or used to support premium membership. 

5. Subscriptions and memberships

Selling content to audiences is a fundamental business model in some niches. So when is this an appropriate choice?

First, a definition: Subscriptions are recurring payments for content and/or other access. So subscriptions may be appropriate when: 

• The information is unique and essential enough to pay for.  If the information is easy to find in a Google search, the advertiser may still want your audience, but the audience will not pay.
• The audience is large enough to sustain a subscription model. Major advertisers typically want to see at least 10,000 emails and a dominant position in the niche.
• Subscription sales will not affect advertisers by limiting the audience. Publishers who launch subscriptions too soon, or without establishing this leadership, may find themselves in a chicken/egg situation, where one revenue stream works against the other one.
• The company has the staff to support the model.

Example

One successful subscription play is VegNews, which offers a physical magazine with the promise of timely information they can’t get anywhere.

5. Memberships

One level up from subscriptions are memberships, which we consider the addition of access to honest services, such as AAA, rather than sending a tote bag or ball cap to new subscribers.

Associations that publish magazines and newsletters have created this hybrid business model. In fact, in some cities, the local Chamber of Commerce publications compete with the business journal, the city magazine, and the local glossy visitor guide. 

Other niche media that may consider this model include those who:

• Have an educational or “how to” do it component in their mission statement
• Have built-in relationships to leverage to supply discounts, services and event passes
• Have the internal infrastructure to sustain a model that requires more services. In this case, the subscription manager may become a membership services person.

Examples

Florida Real Estate, a glossy magazine published by the Florida Real Estate Association for the state’s red-hot real estate industry,  is an example, of a hybrid model.  The association provides various membership-style benefits,  access to MLS, certification courses, networking events, and other tools while selling its valuable membership of real estate agents to advertisers in the magazine.

In other niches, associations have not succeeded: they tend not to focus on hard news, leaving that niche for an outside publisher  – Rental Housing  Journal comes to mind –  to provide much-needed information, as well as to partner with them. 

As noted,  Wells Media and The Taunton Press not only sell courses and books as “one-offs” but also package them into membership content. Threads Magazine does not. However, Fine Woodworking does.

5. E-commerce – Direct sales of Merchandise 

Some niche media also upsell “Plaques” for “Best of” winners and other banquet-style awards via a private link; this is again primarily for promotional purposes and an extra “add-on” if the winners are asked to purchase ads. 

However, there are a few media that provide direct sales of merchandise.

• Niche media that have started as, or with e-commerce play with an editorial component.
• Niche media can create a needed marketplace for a tiny niche that does not have one.

Examples

Magnifissance, is one of a few magazine publishers that also power a merchandise store.

Another example is Kondinkee, which started as an e-commerce store for high-end vintage watches with an editorial component that evolved into magazines and books, with only one or two editions a year.

6. Affiliate sales & review sites

We have mixed feelings about affiliate sales, which have gained a scammy reputation from their association with paid influencers.

However, smaller niche media can get in the game as well, simply by joining affiliate programs such as Amazon or B2B marketplaces and placing links into existing content.

The revenue share must be disclosed somewhere on the page, but it raises a question mark about the motivation of the editorial, even if placed later by a separate team.

We’ve had this argument many times with a top consultant who argues that affiliate sales, if done correctly, are more convenient for the users – fitting into that category of serving the unique needs of niche audiences- and simple to add without new employees. Adam Riemer advises that publishers should consider this revenue stream if they: 

 a. Stay true to the niche

b. Only provide links that are more valuable to the reader

c. Have an understanding of which keywords perform best in Google searches to assess a few products to start with

 c. Stay away from content sponsors and advertisers.

Reimer has a genius at finding these spots: a list of where to buy hurricane supplies mentioned in an article about prepping for hurricane season, or hotels mentioned in a “stay-cation” article. Why not take the extra dollars, he argues?

 This may not be the right option for publishers fussy about trust, and we are one of them. However, there are more efficient ways to separate an affiliate-based guide from editorial content, short of a full-blown review site.

Examples

However, review sites that power affiliate sales  – links from editorial content to an online store where the media company receives a revenue share, are now a part of almost all the most prominent magazines and media. Forbes, Inc., the New York Times, Chicago Tribune, Town& Country, and even CNN all have “product review channels” linked to affiliate sales. In fact, large brands and the PR firms they hire are demanding these kinds of placements. 

7. Licensing software

Only a few innovative media companies have built their software – or just pieces – and licensed it, instead sticking to their core model and relying on third-party technology.  

Examples:

A few notable exceptions include AdvanceLocal, which grew Subtext, a mass-texting software that now empowers other media and businesses. TownePost built and licensed its own CMS, which now underpins a franchising model. Congress In Your Pocket, which considers itself an information company rather than a media company, currently has licensed its software to Deleware, a service provider for the UK Parliament.

8. Franchising

Numerous media are now building on the franchising model, in which they leverage their formula and centralized operations to make money from selling to other companies and sharing the revenue, rather than needing to finance the start-up themselves.

Examples

TownePost is an example, as noted in “Franchising comes to Niche Pubishing.”

Franchising requires some legal support and disclosures but is helpful for small magazines with a well-developed model and the ability to leverage the formula and centralized operations to support additional publishers without investing money and attention in a start-up. 

Stroll, which recently rebranded from N2 Publishing, is another example.

9. Custom publishing 

Another way to leverage the team within the company is through adding one-off publications and Custom publishing – publishing magazines for other entities.

Examples

The founder of Western and Eastern Wear acquired a contract with the city to publish its own monthly magazine.

Group Travel Journal promotes its custom publishing division on its home page:

 

10. Adding special publications and issues

A Faces magazine has yielded enormous revenues for some publications. A case study on this initiative at Spotlight Magazine is here.

Best of issues have also been a hit where ever they have been published, along with variations, that are often combined with events. Here are a few options from niche publishers around the country:

• Anniversary issues. 20 or 30 years in business is a great time to product a special issue. Some special effects including a poster inside the issue.

• Champions Issue rewarding a company that contributed the most to a non-profit cause

• Top 20 to 100  – Women, Under 40, Over 50, take your pick

• Guides to Beaches, Kids Activities, B2B venders

Any of these could be simply a cover story. What makes it an additional issue, is the aspect of more revenues from advertisers community good will.

11. Digital Agency and Services 

As a logical extension, several digital agencies have formed media companies and vice versa. A new generation of digital natives is taking over B2B marketing decisions in both B2B and B2B markets. 

Examples

In fact, many niche media, such as Redbankgreen, Western. & Eastern Wear and Rental Housing Journal,  were founded or acquired by digital agencies. 

Because of lower margins, this model is primarily helpful for media who are already using digital strategies to expand their audience; adding the service seems a logical extension. The digital services offered cover the gamut from programmatic targeting to SEO. Niches that should consider launching digital services, however, should meet the following criteria: 

• They are advertising-based
• Skillsets for some of the services are already inside the company, such as social media posting that could be leveraged into a service for other companies.
• Advertisers are asking for services that can be leveraged. 
• Leadership has a clear idea of which products have the most demand and the strengths and weaknesses of the competitors providing them

Examples

Spotlight Media has successfully integrated a digital agency along with the publication of four magazines.

ActiveNorcal combines social media expertise into all digital packages. 

12. Non-profit funding

As financial pressures on local media, many have turned to non-profit funding.  LocalMediaAssociation, Local Indpendent Online News Association (LION), and KnightRidder stay up-to-date on the list of grants and sources.  

While non-profit funding has been critical to the survival of many small local media, and a few large ones, critics warn that the shift of focus away from other revenue models puts media at risk when the money dries up for whatever reason.