Magazines
The next thing in magazine circulation
By Diego Vasquez
Oct 31, 2007 - 1:10:12 AM

If the nineties were a flush time for magazines, it was in large part because of the so-called stampsheet houses like Publishers Clearing House, which lowered the cost of building circulation by luring in new subscribers at little cost to publishers.

Titles got larger and fatter.

That ended in the late nineties when state attorneys general went after PCH and others for their hyped-up promotions, substantially closing them down and leaving a slew of magazines with huge rate bases that suddenly got very expensive to maintain, never mind the rise of the internet, increased postal costs and all the other ills that beset magazines in the years that followed.

Come next fall, what could be the next big new thing in magazine circulation is set to debut. It's called Maghound, and while it doesn't promise to return magazines to the lush era of the stampsheet houses, it's sure to be among the smarter ideas since that era.

It could have a dramatic effect on how magazines attract new subscribers.

A unit of Time Inc., Maghound aims to be the Netflix of magazines as an online service where, for a monthly fee, subscribers will be able to sign up for a portfolio of magazines at a reduced cost and also be able to change the titles in that portfolio at will.

They won't be just Time Inc. titles, either. Maghound is aiming to offer subscribers a range of titles from competing publishing houses.

Say a subscriber's portfolio contains Time Inc.'s Real Simple and Hearst's Good Housekeeping. The subscriber would be able to swap in Meredith's Ladies' Home Journal in place of either. Or dump all three in favor of Martha Stewart Living, Redbook and House & Garden.

Why Maghound? Why now?

“We looked at how the public consumes media, and there have been big changes in behavior over the last five to seven years,” says Dave Ventresca, president of Maghound Enterprises. “Netflix, iTunes, TiVo--all of these brands have changed the paradigm to give people more control. But magazines haven’t really followed suit.”

Maghound's goal is to become the on-demand distribution vehicle for magazines. A web site, now under construction, features the tagline: "The magazine lover's best friend."

“All those brands raised consumer expectations,” Ventresca says. “With this, what we’re trying to do is be much more customer-centric and let them manage their subscriptions in a much more proactive way.”

Here’s how it will work: Maghound subscribers will get three titles for a monthly $4.95 fee, five for $7.95 a month or seven for $9.95, well below cover price and what they would pay to subscribe to the titles individually.

But there will be a premium tier of titles as well, representing about 20 percent of the magazines.

“For more expensive magazines we will most likely charge a premium fee,” says Ventresca. “It’s like in the cable TV world, if you want HBO, or Showtime, you pay extra for it.”

A key advantage, he says, is that Maghound with be able to collect and share data on its subscribers. "We can talk about the demographic profile of a Maghound member. We feel confident that a member will be younger, have a higher yearly income, and be more likely to be married than the general population."

Media people think Maghound sounds promising.

“It’s a good idea,” says Steve Greenberger, executive vice president and media director at SLG Advertising in Greenwich, Conn. “As a consumer, my tastes change, interests change. Just as people like to program their TV viewing, this is a way for people to program their magazine reading.”

“It’s sort of interesting,” says industry analyst Marty Walker of Walker Communications. It delivers attractive pricing to consumers, which is important to preserving perceived value, while stopping well short of the trend in Europe of totally free magazines. Publishers will still generate revenue from the subscriptions. Says Walker: “At least you’re getting a dollar and change per copy.”

Ventresca agrees that preserving the paid model is important. “It’s part of the advertising sales story. A sales person can say, ‘Look at how much money these readers are paying for my magazine.’ If that circ revenue goes away, that ad sales person loses their argument, especially with mass titles.”

Ventresca isn’t saying how many or which publishers are already on board, just that there will be hundreds of titles by the time the service rolls out next September.

The appeal to competing publishers is pretty straightforward: the opportunity to generate additional circulation revenue on top of existing direct-mail and online efforts.

“If this looks like an artificial push for Time Inc. titles, consumers will see through that,” says Ventresca. “The goal is to increase readership across the board. If there’s a competitive title that’s more popular than one of our existing titles, then that outside title will get featured higher on the web site."