Five of the largest magazine publishers — Time Inc., Condé… (Mel Melcon, Los Angeles…)
Left limping by years of declining print sales, the magazine industry is hoping a new plan for tablet users will give it legs to leap into digital profits.
Five of the largest magazine publishers —Time Inc., Condé Nast, Hearst Corp., News Corp. and Meredith Corp. — jointly released a tablet computer application Wednesday that offers owners of Android-based tablets unlimited access to 32 of the nation's most popular glossy titles for $14.99 a month.
Publishers compare the new plan to the all-access model that Netflix Inc. gives to movie subscribers. An app for iPads is expected within two months.
"You have a pay model that encourages people to pay once and forget it," media analyst Ken Doctor said. "It's a very simple model that's already working in the marketplace."
Among the magazines packaged for the single price are Time, Sports Illustrated, People, the New Yorker, Better Homes and Gardens, Car and Driver, Esquire, Fortune, Popular Mechanics and Entertainment Weekly.
Digital magazine sales have grown to only about 1% of paid circulation since Apple Inc. introduced the original iPad two years ago, according to figures from the Audit Bureau of Circulations.
Still, industry observers point to studies showing that consumers widely prefer to read magazines on tablets rather than on their PCs and that they tend to read more articles and spend more time with tablet editions.
At the same time, more consumers are buying tablet computers, with some researchers estimating that nearly one-third of the U.S. population will own one of the devices by 2016.
Digital magazine sales have been slow, analysts and industry officials said, largely because they rely on an unwieldy system in which readers must pay for and download a separate application for each magazine.
But the new, all-you-can-read system, called Next Issue, lets tablet readers pay for a single subscription and keep all their magazines in a single app.
Doctor, who writes the Newsonomics blog, called the application "transformative" and noted that the newspaper industry, which also is struggling to make money from digital readers, will probably watch the experiment closely.
One hole in the magazines' strategy is that the app is not yet available on the two most popular tablets, Apple's iPad and Amazon's Kindle Fire.
Analysts said Next Issue Media, the Palo Alto joint venture of the five magazine companies, might have wanted to test the software on the less popular Android tablets to work out the kinks before offering it on the more dominant devices.
Next Issue Media said it hopes to submit an iPad version to Apple in six to eight weeks.
The company is offering a less expensive $9.99 monthly subscription that allows users access to 27 titles, including Better Homes and Gardens, Car and Driver, Esquire, Fortune and Popular Mechanics. For the additional $5 a month, readers also get the New Yorker, Time, Sports Illustrated, People and Entertainment Weekly.
Next Issue Media Chief Executive Morgan Guenther, formerly president of TiVo Inc., said the firm's strategy was to start with the largest number of marquee titles it could. Next Issue's 32 magazines have a combined readership of 350 million, he said, and attract about $8 billion a year in print advertising.
"The idea is, let's go where the readers are, to start with. These are great brands that people are all familiar with," Guenther said.
Some are not seeing significant digital sales yet, he said, "so let's give them the opportunity to do that."
The group plans to court more publishers and expand to as many as 100 titles by the end of the year. Users can download as many issues as they like to read at the moment or later if they're away from an Internet connection. They also can access back issues from this year.
The publishers will divvy up the subscription revenue based on which titles users are reading. If a reader spends half his time on the app with Sports Illustrated and half with the New Yorker, the revenue will be roughly divided between Time Inc. and Conde Nast, the respective publishers of those titles.
As the sophistication of tablet advertising technology ramps up in the coming months, Next Issue hopes to allow publishers to share advertising revenues as well. An auto company, for instance, could buy digital ad space in both Popular Mechanics and Fitness magazine, and the proceeds would be split between the magazines' publishers.
John Loughlin, executive vice president of Hearst Magazines, said the tablet's ability to deliver high-definition color photographs, video and interactive software to readers could be a turning point for the magazine industry. But, he said, publishers still had plenty to learn.
"I would characterize our work at this point as study and experiment," said Loughlin, who noted that Hearst magazines have more than 600,000 paid digital subscribers and that the number is growing about 10% a month.
"We're near the front of the class," he said, "but we're also just graduating from first grade."