Short answer: Simple. The magazine is paid for by advertising.

Long answer: Model Railroad Hobbyist is completely funded by advertising. The open source software movement has shown that you can make money with "free" stuff as long as you also offer a service someone is willing to pay for.

In the case of MRH, the service we're offering our advertisers is the opportunity to (eventually) reach every model railroader on the planet who is online. Since MRH is a quality publication that's completely free, we expect word of mouth to do it's job well and most model railroaders on the web will download most issues - and why not, since the magazine's free!