Benjamin Franklin helped write the Declaration of Independence and the Constitution. Yet Franklin's own publication, General Magazine, folded after just six issues. Magazines are tough business.
In fact, 9 out of 10 new magazines fail, according to Cheryl Woodward, publishing business consultant and author of Starting and Running a Successful Newsletter or Magazine.
Those stats didn't stop Simone Gold, a practicing emergency physician now making her mark on the publishing industry. As other doctors zipped through the hospital emergency room, Gold, 39, overheard frequent conversations about lifestyle issues such as technology, money and travel. That was when lightning struck the key. For two years, she mulled the idea of a lifestyle magazine for doctors. Once she began working on her publication, it took her only 13 months to launch her regional magazine,
MedicaLife , in the winter of 2005.
Gold isn't alone. Roughly 1,000 magazines are launched every year, says Samir "
Mr. Magazine " Husni, a magazine consultant and chair of the journalism department at the University of Mississippi. Nearly 20,000 consumer and trade publications exist in North America, according to the
National Directory of Magazines. So how can you launch a magazine that stands out?
Why Magazines?
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, average profit margins for magazine businesses range from 10 percent to 30 percent.
The survival statistics say "don't do it," but they don't tell the full story. "Big companies put a title on newsstands just to see what happens and then fold it within the same year," says Woodward, explaining that this skews the stats.
Husni says that of the magazines that fail, 70 percent never make it past their first issue. Starting a magazine is relatively cheap and easy--at least for the first issue. Woodward estimates you can put the first issue on newsstands for as little as $15,000.
Entrepreneurs who do their homework and plan well for the long haul have a much better chance of survival than the numbers indicate. "The most common mistake is not knowing the business--thinking that by just putting some ink on paper, you can create a magazine," says Husni.
For entrepreneurs who begin developing their magazines while still working other jobs, Gold recommends reading books about the industry and checking out websites, associations and professional gatherings. "Spend time at a newsstand, says Husni. "See what's out there and what you can provide that will be unique."
Once you've researched the field, put your business plan together. Your plan needs to cover your product, industry analysis, audience, competition, marketing strategy, management team and finances. "This takes an enormous amount of time," says Gold. "It's a preview of your commitment level."
After plugging information into the business plan, you'll quickly realize there are often no right or wrong answers--just calculated assumptions that require you to make decisions. For example, you can determine exactly how many magazines you'll have printed, but no one can tell you the number of copies readers will pick up (a 40 percent sell-through rate on the newsstands is considered excellent).
The magazine industry is unique in that some major facets depend on each other. "We're one of the few businesses where the story of the chicken and the egg is so essential," says Husni. "You need the circulation to get the advertising; you need the advertising money to build your circulation." Raising enough startup capital to get your venture off the ground is the best way to avoid being trapped in this vicious cycle.
In the end, the major choices you'll make in your business plan are how often your magazine will be published; whether your circulation is paid, controlled or a combination of the two (paid circulation comes from newsstand and subscription sales, while controlled circulation refers to copies given to a targeted audience for free); the total circulation number, including the copies you'll print and your projected sell-through rates; mechanical costs, including paper, printing and postage; subscription and single-copy sale prices; advertising rates; and your team members, whose strengths should complement your weaknesses.
Remember that a magazine is a business. Many magazines with great editorial content and design have failed because they weren't founded and executed on a sound business plan.
Finding the Money
Funding is arguably the toughest hurdle to jump. Jane Goldman, 51, was an editor for The Industry Standard, a magazine covering the dotcom industry, when it folded in August 2001. Goldman then launched her own magazine,Chow, a fun, casual food publication. Chow was named the best new magazine of 2005 by Amazon.com and received a favorable response from advertisers. Nevertheless, due to insufficient funding, Goldman decided to cease publication of her magazine after the November/December 2005 issue and focus exclusively on her website for the time being.
Still looking to get his first issue to print is Brett Garfinkel, founder of
JAQK , a magazine catering to the "no risk, no reward" mind-set of young, affluent men. Garfinkel, 34, who formed his business at the end of 2002, has developed a prototype and received verbal commitments from advertisers, but he's still hunting for the $7 million he calculates it will take to launch
JAQK and bring it to profitability.
Garfinkel plans to launch nationally with an estimated paid circulation of 300,000. Such high targets require a lot of money, but Garfinkel believes it will come. When approaching investors, "you can't be shy," he says. "You can't be afraid to hear no."
So where do you look for funding? Well, in another chicken-and-egg scenario, getting funding is a lot easier with a prototype (we'll get to that in a moment), but of course, a prototype requires money. To get started, it's best if you tap your own piggy bank. Husni stresses the three F's: family, friends and fools. "Are you willing to take the gamble of borrowing money from your grandma?" asks Husni.
Robert Jeffrey Jr. and his wife, Minty, founded ColorsNW, a Northwest regional magazine covering multiculturalism, in April 2001. They were able to raise roughly $170,000 through a personal investment of $90,000, a $50,000 loan and $30,000 from friends and family. None of them turned out to be fools, as ColorsNW is profitable with sales of just under $1 million in 2005 and projected sales of $1.2 million in 2006.
Regional magazines can be launched for about $100,000, while national magazines require closer to $1 million to make it through a year of publishing. These figures, of course, depend on the publication frequency and circulation. Traditionally, the largest expenses are printing, paper and postage.
When deciding on the amount of funding you'll need, cash flow is key. Once a magazine hits newsstands, Husni warns it may take six months to a year before the publisher sees any cash returns. New magazine publishers often fail because they haven't anticipated how long it will take to put money in the bank.
Put Together a Prototype
Creating your prototype--a mock-up of how the actual magazine will look--helps express your brainchild to potential advertisers and investors. It doesn't have to be elaborate, but it should convey the design, structure and substance of your magazine.
A prototype, like a business plan, conveys a level of commitment. For many ad agencies, prototypes are essential. Garfinkel received verbal pledges from advertisers based on his prototype.
Cynthia Good, 46, and Genevieve Bos, 41, founded
Pink , an Atlanta-based magazine for professional women, and give credit to their prototype for helping secure their national distribution deal with Kable News Co. "We showed them a prototype, gave them our resumes and talked to them about our vision," says Bos.
Pink, which launched in June 2005, now boasts a national circulation of 110,000 and projects 2006 sales in the seven figures.
Attracting Advertisers
The bread and butter of most publications is advertising. In 2004, industry ad revenues totaled over $18 billion in the top 12 advertising categories, according to the Publishers Information Bureau. But getting advertising isn't always as easy as it should be.
Woodward tells a classic industry story of an infant Runner's World having to wait several years before Nike committed to buying ads in the magazine. The founders must have thought this would be a no-brainer for Nike, an endemic advertiser. Endemic advertisers are those whose products or services directly address your audience, like running shoes in a runner's magazine. Nonendemic advertisers seek a broad demographic, like a car company targeting affluent males.
To land big advertisers, you first have to find them. Most national advertisers use ad agencies and can be found in "Advertising Red Books," which are available in libraries. For the most part, you can contact regional advertisers directly. But Gold warns that when you make your phone calls, you should be ready for someone to say yes. Have all your materials--including your prototype and a media kit--ready for your sales pitch.
Healthy Circulation
Not every magazine aspires to or is even built to put out a million copies. The Audit Bureau of Circulations states that more than two-thirds of magazines have circulations under 500,000. For example, Jeffrey launched his magazine only in the Northwest with a circulation of 10,000.
For startups, Woodward recommends the regional approach because it's more cost-effective, and you are appealing to advertisers by delivering a niche audience--in Jeffrey's case, readers of color in the Northwest. Jeffrey, 36, has since increased circulation to 25,000.
Launching a magazine regionally doesn't preclude you from eventually distributing nationally. Gold launched MedicaLife regionally in Southern California with a circulation of 50,000 and plans to expand nationally this year with an estimated 2006 circulation of 100,000. She projects 2006 sales of nearly $200,000.
If you do plan to launch a magazine nationally, Husni recommends a minimum circulation of 100,000 to get the attention of national advertisers. "If you don't have 100,000, don't even think of it," says Husni. The ultimate goal, regardless of regional or national status, says Husni, is reaching 10 percent of your target population.
The Internet and Beyond
Any new magazine needs a website to offer media kits, drive subscriptions, generate ads and host content. Even though
Chow needs more funding to get back on newsstands, Goldman recognized the importance of her website and has gotten investments to relaunch a new, more extensive version of the site next month.
Jeffrey has extended his brand and web presence by launching a job portal site in addition to his
magazine's website . "I finally woke up to the potential of the internet," says Jeffrey.
Husni adds that new media hasn't replaced older media, but rather that the two are complementary. Research company Roper Public Affairs supports this, identifying magazines as having the most influence over how consumers get information and services on the internet. "You can't exist in just one medium anymore," says Husni. "You have to be on the internet, too."
Going to Print
After you've figured out all these elements, you can finally go to print. For most magazine entrepreneurs, funding will be the final sticking point. Should you wait until you have all the money you'll need, or launch with what you can get and hope for the best?
Goldman chose to go for it, launching Chow with $1 million and an understanding that future backing would be needed. "You have to jump in and hope the swimming pool fills up before you hit the bottom," says Goldman.
The water got pretty shallow for Goldman, but Jeffrey and Gold are still afloat. So are you ready to put on your swimsuit
?
