Each month we pose a question to the amazing Peter Houston, co-host of the Media Voices podcast, and magazine consultant extraordinaire, who will answer in his fabulously inimitable way. This month’s question came from Kitty Finstad, Editorial Content Director and Founding Partner at The Good Vikings.
Housty, we have a problem
“Housty, I have a great idea for a magazine. Should I self publish or seek an investor?”
Congratulations!
There’s nothing more satisfying than having a new magazine concept take shape in your head. It’s a beautiful thing.
Now, that was the easy bit, the investor thing is more difficult.
You need to decide what it is you’re trying to do with this magazine. If you’re just wanting to change the world then maybe you don’t need an investor. If you want to get rich, you probably do.
Most indie magazines are passion projects, centred solidly in a deep interest or a cause that is crucial to you. The mission for these magazines is to gather what Seth Godin calls a Tribe. If you’re OK with a slow build, working steadily to reach the 1,000 true fans you’ll need to make the thing sustainable, then you should probably forget asking anyone else for their money.
Or, if you really need the cash to get printing done or pay writers, illustrators and photographers (and you really should pay writers, illustrators and photographers) then why not ask everyone for cash. Crowdfunding is a perfect way for new magazines to get seed capital and begin building a fan base.
There are loads of stories of magazines that have started, or kept going, through crowdfunding efforts. Simon Brew at Film Stories told us a couple of years ago that the secret is being honest about what you’re doing and then delivering. Interestingly, Simon has just gone through a successful second round on Kickstarter to launch Film Stories Junior so, clearly crowdfunding can work.
Money makes money
But if you are truly looking to take over the world, you’re going to need an investor. To make real money in magazines, you need scale and reaching scale takes time and costs money.
When I was first working in magazines the rule of thumb was ‘three years to profitability’ at least for a newsstand title. I’m guessing there are few magazine publishers willing to wait that long for a return these days, but even to last a year without profit, you’ll need help.
At this point you need to ask yourself how much of your new magazine you’re willing to give up.
That sounds like a depressing prospect, but it doesn’t have to be. We all know you get nothing for nothing; but flip that and you get something for something. Yes, having an investor means you will keep less of the profits and probably have to accept another point of view into your business, but in return you’ll get security and a second pair of eyes.
Over the last decade, Agribriefing has grown to be a global agricultural information business with a £30 million turnover and 200 staff. The firm grew out of the 150-year old Farmers’ Guardian, a weekly industry paper based in Preston, and it wouldn’t exist without investors. CEO Rory Brown told us that he took a conscious decision to trade 100% of a small business to own a much smaller percentage of a larger business.
Rory said that to secure funding you’ll need to be able to show where you’re going and that the market you are targeting has real value. Then you need to execute on the plan you put in place; investors will be much more willing to let you get on with it, staying out of your day-to-day decisions, but providing guidance on longer term strategies.
The bottom line (literally) on whether you take on an investor or not is what do you need the money for? If you’re looking to fund operating costs for your first issue, giving up control probably isn’t necessary – hit your savings or crowdfund. If you think you’re going to need a crack publishing team to produce, market and distribute your new magazine, you better get some backing.
Peter Houston is one third of the Media Voices podcast, a magazine publishing consultant and trainer, and a freelance writer.
Follow him on Twitter or connect on LinkedIn.