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Do Consumers Need a Hulu/Netflix for Magazines?

Posted by Sheila Shayon on April 5, 2012 05:01 PM

Next Issue Media, a consortium of five of the world’s largest publishers—Condé Nast, Hearst, Meredith, Time Inc. and News Corp—is betting consumers will download "the world's greatest magazines" from their digital newsstand. It's a big bet.

Almost a year ago the publishers launched the first iteration of the "Hulu-Meets-Magazine" app on the Galaxy Tab and since then consumer resistance to pay-per-issue or per-subscription offerings has grown.

Now, 32 magazines will be on offer for tablets running Android 3.0 software and higher in an ‘all-you-can-read’ subscription including The New Yorker, Time, Vanity Fair, Better Homes and Gardens, Elle, Esquire, Wired, Fortune, People, Real Simple and Sports Illustrated.

Price points for the app are $9.99 for an unlimited subscription to all monthly titles, or $14.99 for all monthly and weekly magazines and revenue will be distributed among publishers according to readership.

Advertising at present remains ads from the physical magazines, until subscriptions grow to support tablet-specific ad programs. For now, each magazine will carry its own advertisements and marketers cannot make multi-publication buys, according to Morgan Guenther, CEO of Next Issue Media and former president of TiVo.

Changing the basic subscription proposition is promising and experimental. “No one has done this before, and there are lots of practical reasons for that,” says Hearst’s John Loughlin, who manages the publisher’s tablet initiatives. “Anybody that tells you that they have the answer, or that their model is the model that would be successful 5 years from now — they’d be suspect,” Loughlin adds. “We’re very much in a learning mode.”

Next Issue currently has tens of thousands of customers reading on average two magazine titles, and with the launch of its digital app, the company expects to grow to about 75 “premium, mass-market titles,” said Guenther. “We’re taking a big, fat, short-tail content approach to this and going where the readers are.”

"You download the Next Issue Media reader once, and all the magazines will be presented there in single format," said Guenther. "We think we'll have a compelling proposition."

Gizmodo goes on to question how compelling that proposition is, “NIM requires an app to run—an app only available on Android tablets running Honeycomb. That nobody thought to port this to—much less not build it specifically for—the iPad and its spiffy new Retina display is an inauspicious way to kick off a publishing platform.”

The iPad, celebrating its second anniversary continues to dominate the tablet market. Guenther said his company will submit the app for Apple approval soon, and “Pending completion of that process, expect an iPad version of Next Issue to be available later this year.”

While some publishers have resisted developing iPad apps due to the cost of doing business with Apple and a dearth of user data, eMarketer analyst, Paul Verna, told the Times, “You need to follow the consumer. What the consumer is telling you is they love the iPad.”

Guenther recognizes there are problems in the magazine-to-tablet model which eliminates the actual newsstand experience of browsing a rack of titles. “It’s like if I walked into Barnes & Noble and wanted to browse magazines, and I was led into a room with you windows where I can read Fortune. And then I say, ‘Okay, I want to read Wired,’ and they send me to another room. When I walk in, there’s a big sign on the front door saying, ‘Here are your instructions for reading the magazine.’”

Other collaborations between major publishers include Ongo, with funding from The New York Times, Washington Post, and Gannett, free digital newsreaders like Flipboard and Pulse, and of course, there’s Apple's own Newsstand.

Guenther is bullish on the imminent success of Next Issue, which some observers have been referring to as a Netflix for magazines. “We’re focused on premium content,” he said, “content that’s not available for free on the web.” The big question, of course: will consumers care?

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