We’re embarking on some serious partnering, so we had to write some preliminary documents before creating a formal business plan. Now, I said I’d be as transparent as possible, and if putting this online doesn’t make our organization transparent, I don’t know what does.
Business Overview: Chicago Art Machine
We currently have the following magazines:
- Chicago Art Magazine
- Chicago Art Collection (art trade magazine)
- Chicago DIY Film
- Chicago Performance (theatre)
- TINC Magazine (tech)
- Chicago Art Map (software/database) for gallery exhibits
Currently the dollar amount coming in is increasing slightly each month, and is based on how many hours the sales force is working. Basic operational staff is about $1800/mo. The reps are commission-based. We and we have only $53.99 in fixed costs each month, the rest of the budget is for the writers.
The cost of content is as follows
Content per magazine, per month (average):
|Magazine||Number of times it posts content per week||Cost of each article, average||Total costs for writers each mont|
|Chicago Art Magazine||5||$25||$562|
|Chicago Art Collector||2||$35||$315|
So the mathematical breakdown is as follows:
|Total||$3721 per month|
Income and Potential Income
One sales rep can sell out all the spots (8) on one magazine by working 10-15 hours a week.( It takes about 3 months to build up to that point). So currently, we generally sell out the following spots
Chicago Art Map - $150/mo, sold out for the next 2 years
Chicago Art Collector – $250/mo – one “slide show” is sold out for the next year
Chicago Art Magazine – $3,600/mo
Q1-Q3 2011 Revenue
This fall we launched theatre and film sites. But like art, cultural institutions are crunched for cash, so ramping up has been slow, as expected.
Selling software – We’ve had inquiries to selling the Chicago Art Map software. That would retail for $800. For $5,000 we can build a clone of Chicago Art Magazine for another region (e.g. Atlanta Art Magazine).
Film – we have no sales staff for this site currently – brings in just $200 or so each month. This will change in Feb. Once sold out it could garner $3600
Theatre – brings in about $400 mo. Expected to increase in Feb. Could also garner $3600/mo
TINC- we let every magazine run for a month before we begin sales. But again, lack of sales force continues to be the issue. That site, however, could be $8,100
Total as sales revenue (minus commission) if all sites are sold out = $19,300/mo
$231,000 per year (gross)
- $93,000 (costs)
What’s special about a company that doesn’t even make $200,000 profit a year? One answer: scalability.
Due to the huge amount of sales force needed to sell all these spots, its unlikely we will be selling 100% of all the spots out in 2011. However, with a cash infusion and sales reps making hourly wages, that forecast could change.
Also ad prices are based on demand. Our motto, “as soon as we turn away a customer because the site is sold out, we raise the price”. So ads, which sold for $75 in 11/2009 are now $400-$600. Technology ads are more expensive.
However, what this franchise has in its favor is that it is, at core, scalable. The name Chicago Art Machine came to be because we were able to:
- Quickly build an editorial focus for an unfamiliar subject
- build websites for under $100
- create formulas for content (see quick content production, and subject-matter-expert web),
- take the guesswork out of growing traffic
- optimize and automate our processes at an ever-increasing rate
- continually cut costs
With our gross revenue and profits being so modest, the question is not of this current business as is, but the possible expansion and why our product and process is unique. Below is a problem with other blog/online magazines that we “compete” with.
What Blogs and Online Journals Do Wrong, and We Do Right
|What Blogs and Online Journals Do Wrong, and We Do Right|
|The Other Sites||Chicago Art Machine|
|The content is badly written||We hire out-of-work professional writers, and each piece is edited.|
|Lack of research or new information (pundits simply re-blogging)||Although we use some short pieces, the majority of each site’s content is based on researched information (based on phone interviews)|
|Content is not frequent enough||We post 5x’s a week on our “main” sites – a total of 18 pieces a week across the franchise. A mix of “evergreen content” and “breaking news”|
|Content is not optimized for the skimming “online audience”. Articles are too long and appear as “walls of text”||We put at least 4 images in each post, and paragraphs are often broken up by headers.|
|The content lacks focus – local sites repeat national news, go off-topic , reference themselves and use the platform to air personal grievances||Local art on the art site, etc. No exceptions. Our writing sticks to business, and comments are heavily moderated.|
|They have no revenue model other than investors, grants or partners||We offer integrated marketing, marketing services (we help write the sponsored post) and social media at prices clients could afford during the recession.|
|They don’t have a writing staff. All the content is based on one or two writers||We have worked with 100 writers in the last 18 months. Our posting schedule is not dependent on any one person, so we never take an unscheduled break.|
|They don’t promote the site (in general)||Operational staff is separate from the writing team, and they are focused on growing traffic and improving the site. We do mailings, regular press releases, and targeted PR efforts.|
|They don’t utilize the social networks||We are on about 15 social networking systems.|
|Don’t “push” out individual articles||Every article is manually aggregated to 5 sites beyond our own domains.|
|Don’t aggressively work to grow their number of followers on Facebook, Twiiter and aggregator sites||We spend 3 hours a week manually beefing up our social network following, a total of over 200 hours in the last 18 months.|
|Don’t know how to “game” the system of social networking||SEO and social networks aim to connect people, not help businesses, so you have to push the rules a bit.|
|Don’t have a phone sales team (which, sadly, is still how sales is done)||We thought we could sell ads online, but switched gears a year ago to phone sales.|
|They consider their site a hobby, and when it starts feeling like work for too long, they stop||This has always been about re-defining a publishing business model that could work, as we watched the media industry collapse (founder had contract with Trib during bankruptcy)|