MPA study shows few making profits online

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The Business of Online Publishing, a study conducted for the Magazine Publishers of America, found fewer than 20 percent of the publishing companies participating in the study are realizing financial profits from their online activities.

The study, conducted by Ernst & Young, analyzed the technology, organizational structure, financial status and strategic objectives of more than 45 publishing companies that produce 175 online magazines. More than 90 percent of these electronic editions are extensions of their owners traditional print publications. Their online presence, according to 75 percent of the survey respondents, is primarily for the promotion of these printed publications.

The study also revealed that advertising generated 53 percent of magazine publishers' online revenues. Online production services for advertisers or customers created 22 percent of online revenues. Subscription fees are expected to have accounted for only five percent of online income. The remaining revenue came from transaction charges and usage fees.

"The overwhelming majority of magazine publishers participating in the study-82 percent-already have an online presence," said Donald Kummerfeld, MPA president. "On average they're investing more than $2.5 million a year for technical and editorial staff. This is a dramatic change from two years ago when fewer than five percent of these magazines had an online presence."

For more on the study go to Ernst & Young's Web site.

Copyright April 1997, Crain Communications Inc.

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