Since I have been writing articles related to small business for years and recently codified many of them into books, I began to think about the differences between the revenue sources and expenses of a magazine vs. that of a book. While they both are based on the content produced by a writer to deliver their end product, the Business ROI (Return On Investment) for the writer and the publisher are at two ends of the spectrum.
While the underlining ability to write content that people want to buy is the same for both a magazine and a book publisher, the design considerations mirror many of the same issues entrepreneurs go through when they try to define their business and economic models.
Business ROI – Publishers Prospective
First, let’s consider the business ROI perspective for the publishers.
A book generally only has one or two authors. In contrast, a magazine buys content from many authors who are constantly changing.
A book is a fixed piece of work that has to be sold to the masses. A magazine is a fluid and evolving piece of work that is sold as a subscription.
With the changing content of a magazine, the goal is to create material that people see as valuable. The consumer makes a conscious decision to opt-in by buying a subscription. The cost of the subscription is validated when the customer sees the value and is willing to exchange money for content.
By providing valuable content, the magazine publisher sells advertising based on their target audience. For example, I subscribe to Bow Hunter Magazine. I enjoy the articles as much as I enjoy the ads since they are targeted to me as a bow hunter and give me ideas for products I may want to buy.
By subscribing to a magazine, the reader is saying that they are eager to come back time and time again. Therefore, they give the magazine publication permission to solicit them from time to time in what is called “personal relationship permission marketing.”
When you write a book, the publisher in charge of marketing has to promote the book. Perhaps the publisher is you or a company like McGraw Hill or Harper Collins. To make sales, the publisher has to convince the consumer to buy the book, and they often have no other choice but to use interruption marketing techniques.
The book publisher has a high customer acquisition cost, which justifies their 85% to 92% cut of the revenue generated from a book sale.
In contrast, a magazine publication buys articles at perhaps $.25 a word, but since its readers have opted in, customer acquisition costs are distributed across a lifetime value of the subscription. Readers come back time and time again and because of the permission marketing relationship, the reader has agreed to a certain amount of solicitation.
Business ROI – Writers Prospective
Now let’s consider the business ROI from the perspective of the writers.
The writer is the engine just like an employee is the engine of a business.
Writers of magazine articles write an article and get paid for their effort generally on either an hourly basis for a staff writer or by the word in the case of a freelance writer.
The writer of magazine articles sits on the left side of Robert Kiyosaki, Cash Flow Quadrant. Employees and self-employed freelance writers only get paid for the work they produce. If they don’t work, they do not get paid. This is not very scalable, but there is little risk, and remember, risk has a reward.
The book author, in contrast, sits on the right side of the Cash Flow Quadrant. The author spends weeks, months, or even years writing a book that they hope will sell. The writer invests their time and energy writing a book and once the book is written any income is passive.
Writing a book is like the investment that an entrepreneur makes designing an building a product. Once completed, it is time to market the product to the masses and hope for the best. If they are successful, they might make a small fortune selling the book, or they may barely cover direct costs. Writing a book is infinitely scalable so the reward is high but there is a high degree of risk.
When a book author uses a publisher the author’s work is done. In fact, the book may produce a revenue stream for only a few months if the information is timely such as a book about a current event. On the other hand, it may produce revenue for many years if the book’s topic is timeless, also known as evergreen content. For example, the book “Getting to Yes” by Patton, Ficher, and Ury is timeless content even though it was written 35 years ago.
Conclusions
For the magazine writer, little chunks of work for a specific audience as defined by the publication and get a little check. No work means no pay. Being a magazine writer is like being an hourly employee or being self-employed.
Book authors, in contrast, create income from book sales and target a more mass-market. The business ROI from a book is scalable, however, it needs a marketing campaign to make sales. Being a book author is more like being a business owner or investor.
If you are a freelancer that sells your labor or a content creator like the magazine publisher that outsources its labor and uses permission marketing, it is a safe play.
On the other hand, you can make an investment in a product or service that is scalable like the book author or the book publisher and potentially make a high return, but also risk losing it all.
Is your business more like the magazine publisher or book publisher? Is your labor more like the freelance writer or the book author?
