Replacing Irreantum: Financial Models

This is a continuation of my analysis of the barriers involved in replacing Irreantum, the now defunct literary journal of the Association for Mormon Letters.

Other installments: Scope/Positioning | Staffing/Production | Generating Submissions | Financial Models | Starting Up

FINANCIAL MODELS

Any replacement to Irreantum is going to have to have a viable financial model. By viable, I mean one that allows for the continued production of the publication. There a variety of ways that continuity can happen. Technically I’m mainly going to talk about generating revenue so this post should perhaps be named revenue models, but how much and what types of revenue generation is required for a lit mag/journal to continue to put out issues is driven by the financial model of the team behind it. In brief: the financial model can either be for-profit or not-for-profit. The legal structures (assuming that this is a U.S.-based publication) can be anything from a sole proprietorship to an LLC, LLP or S corporation to a cooperative (informal or legal), 501(c)(3) nonprofit, or private foundation. While the underlying legal structure matters, it doesn’t change the essential financial imperative of any publication: covering the costs of producing each issue. Here then are what I see as the range of revenue models for a lit mag/journal. Note that these can be combined and configured in many different ways.

Benefactor: The advantage of having a benefactor fund the successor to Irreantum is obvious: there’s immediate start up money and (often) money to fund on-going operations. The major disadvantage is that one is almost impossible to find. But let’s say that one could be found. There are very few benefactors who are willing to be completely hands off. Even if they are hands off at first, eventually they want some say in where there money is going (as well they should). In addition, they also usually expect that the organization raise as much money as possible in other ways, which means you still have to undertake some or all of the below. As far as I know (and I don’t know much), there are no major benefactors (note the term major; there have been some minor ones: see the next section) out there who would be willing to fund a Mormon lit mag/journal.

Grants: Arts grants are often hard to come by, usually small and have a tendency to dry up. Irreantum was able to receive some Utah Arts Council grants over the years. And the Irreantum fiction and personal essay contests were funded by grants from the Eugene England Foundation and the poetry contest by a gift from Mary Ann Taylor. They almost could be considered benefactors since the grants were ongoing and they are from individuals rather than government organizations or nonprofit foundations (technically the Eugene England Foundation is a foundation, but it’s a very small one [albeit a very important one to Mormon culture]). I’m not dismissing grants as a source of revenue, but, unfortunately, grants are too often used to keep a struggling arts enterprise just enough alive that the people running the enterprise don’t make the hard decisions and/or experiment with new options that could pull the publication out of permanent on-the-verge-of-crisis mode.

Co-operative: usually run as a nonprofit, a co-operative is an entity that pools resources in order to fund projects of value to the group of people in the co-op. Each member is required to contribute a certain amount of resources (cash, goods, labor) in order to be part of the co-op. The co-op method can be combined with other sources of revenue. It doesn’t necessarily need to be a legal U.S. co-op in order to function, but there are downsides to not having a legal structure in place, especially if revenues take off.

Subscriptions: this is the classic way to fund a lit magazine/journal. It’s also hard to rely on subscriptions alone. Most publications don’t. The success of subscriptions also relies heavily on the mode in which the publication is delivered and how subscriptions are paid for and renewed. A print version is expensive and comes with mailing costs. An app is expensive to develop, especially if it’s going to be cross-platform. Amazon Kindle and iBookstore subscriptions are difficult to develop for (and, in fact, I don’t think Amazon’s system is available any more to small publications). WordPress (or other CMS) delivery systems are much cheaper to implement but clunky (see for example Dialogue’s). Proprietary magazine subscription software tools are expensive and, in my experience, clunky.

Memberships: although Irreantum offered standalone subscriptions, much of its readership came from those who paid for membership to the Association for Mormon Letters. The problem with offering a membership instead of a subscription is that the value of the membership has to be perceived as greater than that of a subscription alone, but delivering on that value needs to cost less than how much more revenue the membership over what the subscription is (or would be) otherwise you don’t come out ahead in terms of revenue. Generally with a literary magazine a membership provides early and/or exclusive access to bonus and/or behind-the-scenes content. A variation on the membership model would be the NPR model where membership is simply a way of identifying those who donate and rewarded with a token gift or discounts on other offerings, etc.

Advertising: selling advertising in a magazine is selling your readership to companies who want to sell things to your readership. The problem is that advertisers usually want either the most eyeballs possible or very desirable demographics or a combination of both. It seems unlikely that this could be a major source of revenue for any successor to Irreantum.

Anthologies: this has already mentioned by Lee Allred and Jonathan Langford, but one way to generate revenue is to package stories that have appeared in serial publication into anthologies and sell them. This is a model used by some SF/F/H mags where they will offer all stories for free on their website, but then anthologize a group of them and sell them in ebook and print form. This is something that I think Irreantum should have done. Even if a publication doesn’t offer its content for free, collecting it by form (fiction, poetry, personal essay) or theme/topic provides a way for someone who has particular interests to still provide revenue to the publication without subscribing. It also could drive subscriptions if a reader enjoys one of the anthologies and decides to subscribe. The downside is that anthologies often don’t sell all that well.

Merchandise: merchandise can be a nice stream of revenue if the merchandise offered is reasonably priced and cool enough. Requires an initial investment in order to produce and store the merchandise unless you go with a print on demand store (like Cafepress or Spreadshirt) in which case the merchandise ends up being pricey and limited. Another alternative would be to crowdsource production (more on that in the Start Up post). Either way in order to have truly cool merchandise, you need good graphic design, and that’s either going to have to be donated or paid for.

Affiliate Fees: this is where you provide links and/or display ads that direct readers to an online shopping site and you get a cut of whatever the consumer purchases during the shopping session that came out of the click from your site. AMV used to use Amazon affiliate links. We generated a total of $80 or so over two years (if I remember correctly) and that’s without doing much to promote and maximize their use. By the way, I’m happy for that $80 — it helped pay for web hosting costs, but I removed the affiliate links because I didn’t feel comfortable with them, especially once I began using the AMV web hosting plan for my personal author site. I would suggest, however, that depending on what other revenue models are in place, that any successor to Irreantum not be squeamish about using affiliate links, although, of course, that needs to be done in a transparent way (because it’s the responsible thing to do but also because of FCC regulations).

Donations: many lit publications ask for donations above the cost of a subscription or membership. The problem with asking for donations is that you’re tapping the same base of people who are supporting you through subscriptions or by buying merchandise or using your affiliate links. On the other hand, it is a way to unlock revenue from your core group of readers without providing anything (or much) in return. In other words, it increases revenue without tying up resources. Of course, in order to get donations of a significant amount, you would need to organize as a nonprofit and gain 501(c)(3) status so that your U.S. donors can itemize their gifts on their tax returns.

Services/Events: in the Mormon market, Sunstone does this the best, but it’s something other publications do as well. If you can get a paid attendance, events can generate decent revenue. In essence, a publication is leveraging its relationships to bring in people who can draw a crowd (or who want to hang out together as a crowd). It’s a risky proposition because you would need to book a location and major guests before you can sell tickets to the event. And, of course, one issue with events is that they are limited to those who can travel to the location (I suppose that technically you could sell tickets to an online event, but that might be a hard sell). Related would be to sell donated or reduced rate services (such as editing, illustration or layout). The issue there is finding customers for those services as well as lining up the people to provide those services (people who are often already putting in a lot of uncompensated time on producing the publication). Although sometimes services can be bundled into a donation or memberships model and/or you can recruit people to provide services who can’t commit to an ongoing relationship with the publication but want to support it.

Any successor to Irreantum is going to have to do a better job than it did of bringing in revenue as well as operating under a financial model that maximizes the use of that revenue. Irreantum operated by using a combination of memberships, subscriptions and grants to produce a print journal that didn’t pay contributors (except for the winners of the writing contests) or editorial staff (although I believe it did pay for layout of the journal [as it should]). There is room for improvement on that model, but there are also significant challenges in generating the revenue that would be required to keep the publication going. Even the genre fiction magazines, which have a much larger potential audience than a Mormon lit mag/journal would have, struggle to keep the lights on. However, no one has actually tried to launch a Mormon lit mag using modern models of production, distribution and revenue generation so I see a slight glimmer of hope there.

Let’s say someone wants to tackle that — how would you start? In the next post I will briefly cover what it would take to Start Up a successor to Irreantum then I’ll end with a discussion on the most important aspect to this whole series: Readership.