For the price of a 3-cent stamp, Mertz could send an envelope containing a reply form and a small brochure describing the magazines available. Now he could canvass an entire city from the comfort of his basement. The real genius of Mertz’s idea, though, was to offer magazines from multiple publishers – about 20 titles in all – making his company, Publishers Clearing House (PCH), a one-stop shop for an entire family’s reading entertainment.
Much like the door-to-door salesman that PCH replaced, the company made money by earning a commission from every subscription sold. As its power in the industry grew, PCH could demand the publisher’s lowest subscription rate, all while taking a bigger and bigger commission. By the 1990s, PCH sold about eight million subscriptions annually, with commission rates between 74% and 90%. But PCH increased circulation so effectively that the deep commission was worth it, because it meant a publisher could charge more for advertising space in the magazine.
So that's the secret! But what's even more interesting is the story of how PCH became a household name in big-money sweepstakes. You can read the entire story at mental_floss. Link