I tend to mindlessly watch these shows late at night in an effort to
fall asleep and I can't help but wonder how they make money.

Are they paying my local TV station / cable company for the air time,
or is the local tv/cable company getting commission for the sales? Or
none of the above?

Hi Glln --

Infomercial air time is bought from the local stations, even if it is
part of a bundled 'media package' put together for that particular
advertiser.  Home Shopping Network operates a bit differently and
negotiates their contracts with the particular company offering a
product for sale on Home Shopping Network. Their FAQ answers that
question here:
 - http://view.hsn.net/content/NewBusiness.asp 

As a bonus, I found some interesting facts about the effectiveness of
infomercials and Home Shopping Network.

One of the biggest growing markets, even in our slow economy, are for
those products demonstrated in infomercials and those products on home
shopping networks.

** Infomercials ..

Industry-wide, revenues from infomercials rose from a mere $10 million
in 1984 to over $2.2 billion in 2002 (which doesn't include the retail
sales of the product, estimated at 3 or 4 for every one sold during
the infomercial).

Source:
 - Hawthorne Direct
    http://www.hawthornedirect.com/drtv_inf_revenue.html
 - Response Magazine
    http://www.responsemag.com/responsemag/

Whereas the average cost for a half hour imfomercial has decresed
slightly from $879 in 1995 to $837 in 2001. After the costs of
producing the infomercial (which can be relatively inexpensive for a
half hour production), and the airing costs (which vary per market
share and time of viewing), infomercials can be an extremely
cost-effective form of advertising.


** Home Shopping Network ..

Demographically speaking, Home Shopping Network's core customer is
female, age 40+ with an average annual income of $63,000. All in all,
this is NOT too bad a market to be targeting.
 - Source: Home Shopping Network
    http://view.hsn.net/content/NewBusiness.asp
  
The cover story on this month's edition of Response Magazine about
Adrien Arpel seems almost a rags-to-riches fairy story. But appearing
on the Home Shopping Network for more than a decade, Adrien Arpel has
generated more than $500 million in sales.

And while other advertising revenues are down, television advertising
revenues in the form of informercials and presenting products on the
Home Shopping Network are up for 2002 (Source Adage.com)

 - http://www.responsemag.com/responsemag/article/articleDetail.jsp?id=54063

There is a LOT of information about Direct Response TV and Home
Shopping Network contained in Response Magazine. Lest you tink it's
all industry hype, they run the gamut of audited industry figures,
including records and comparitive figures.

While you and I may not be buying, it's obvious someone is, and that
the results are lucrative for both the media and the advertiser.


Search strategies 
 - infomercial revenues
 - infomercial expenses
 - home shopping network revenues
 - QVC revenues
 - comparitive advertising revenues/expenses

Hope this helps,
Serenata

I think my first purchase will be that vacuum cleaning robot :)