Last fall, Marco Arment launched a general interest magazine. It's called, aptly enough, The Magazine. Writers are paid $800 per article. There are no ads. Until recently, it was available only via iPhones and iPads. Astonishingly, it's already turning a profit.

Arment walked me through the numbers. He has 25,000 subscribers who pay $1.99 a month. Apple takes a 30 percent cut, leaving Arment about $35,000 a month.

This cost of putting out the magazine is a bit over $20,000 per month. It comes out every two weeks, and each issue costs about $10,000. Roughly $4,000 goes to writers. The rest goes mostly to copy editors, illustrators, photographers and editors.

Arment had an advantage in getting his magazine off the ground: He's a well known guy in the tech world who created Instapaper, was the lead developer at Tumblr and now has his own blog and podcast.

Then again, given all that, why go to the trouble of creating a magazine?

"I don't really know why I started it," Arment told me yesterday. Then he listed off a bunch of reasons why he started it.

He knew lots of good bloggers who weren't doing any magazine writing. He wanted a magazine that he wanted to read. ("General interest, with a geeky slant.") And, weirdly, the business case for a magazine was really compelling.

"What I saw was a fluke in app store pricing," he told me. "If you have an app, you can charge, realistically, about $3 these days." Somebody buys the app, and that's it. But for a magazine, you can charge $1.99 every month.

Of course, when you're publishing the magazine, you do have to pay for a new issue every two weeks. And if you're a publisher with no full-time staff, you're pretty much locked in.

"With Instapaper, I can take a few months off," Arment said. "I can't stop publishing The Magazine for two months and work on something else."

QUESTIONS :

Remember: Economic Profit = Accounting Profit - Opportunity Cost

1-Based on the numbers provided in the article what is the monthly total revenue of The Magazine?

2-Based on the cost estimate provided, calculate the monthly accounting profit for The Magazine. What does that workout to in terms of annual profit?

3-What costs are not included in this figure? (Hint: Think opportunity cost.)

4-Marco Arment stopped publication of The Magazine after just 28 months. What does that tell you about the economic profit at The Magazine?