Millions of people are more than willing to pay for steady access to streaming content. Netflix counts 50 million subscribers to its online video library, and Spotify has 12.5 million listeners ponying up a monthly fee for a massive buffet of music. For magazines, however, the idea of paying a flat fee for unlimited access hasn't caught on.
The idea of banding together into a Netflix of magazines isn't untested, just unpopular. Several major magazine publishers joined forces in 2011 to launch Next Issue Media, a company that charges $15 per month for access to about 140 magazines, or $10 for a more limited selection. Even under the most optimistic assessment, the project has so far only been a decent proof of concept. “No one has heard of us,” acknowledges Morgan Guenther, the company’s chief executive officer. He puts the number of subscribers at "well into the hundreds of thousands."
But maybe 2015 will be different. Next Issue just raised $50 million from private equity firm KKR and is preparing for its first big marketing push. "It's the last great white space in streaming media,” says Guenther. “Everyone else has made the jump.” And starting today, there will be a second player vying for the virtual magazine market. Magzter, a startup that offers a newsstand of digital apps, is launching a competing service on Jan. 19 that offers access to 2,000 magazines—including Maxim, ESPN the Magazine, and Fast Company—although not to any of the 25 most popular magazines at U.S. newsstands.
Magzter, which will cost $10 per month, thinks it can gain traction where Next Issue hasn't by offering a larger selection of more obscure titles and by selling subscriptions internationally. Girish Ramdas, CEO of the company, says he's been trying to persuade publishers to participate in a Netflix-like service for several years. Most magazine executives have been wary about undercutting their ability to draw subscribers to their own apps, even though there are only three titles, Game Informer, Shape, and Star, with more than 200,000 app-based subscribers.
Things changed last year, Ramdas says, because of the success of subscription services in other areas. “The economics of selling your own single copies are always better,” he says. “But the user adoption for that is much lower.” Of the 5,000 magazine publishers using Magzter's app as a way to sell standalone issues, only 2,000 have agreed to take part in the all-access subscription service.