Just about 2 years ago, publishing consultant Thad McIlroy wrote, “Advertising revenue (much more than circulation revenue) seals the fate of most consumer magazines—the shift of ad dollars to the web is the biggest problem facing broad-circulation magazines today.” My, how things have changed. 

In 2012, the Pew Research Center’s Journalism Project noted, “The good news for magazine publishers is that the newest mobile devices, particularly tablets, may provide a particularly good environment for magazines. Research shows that people read more long-form content on the new devices and that they spend more time on magazine apps specifically than with those of other media. … The bad news for magazine publishers is that the number of platforms they must compete on is proliferating. Keeping up with the rapidly growing array of new technologies that consumers are adopting will require large investments, even as revenues show little or no growth. While many magazine publishers believe tablet ads will eventually prove a lucrative replacement for print ads, it is far from clear when that will occur.” Today, however, there are initiatives that are creating a market—and a lively competitive environment.

Looking for ‘The Netflix of Magazines’

The problem with digital magazines isn’t device-based—it’s the nature of the industry today. Adweek notes that magazine publishers are clearly discouraged from greater digital migration and innovation. “The Alliance for Audited Media (formerly the Audit Bureau of Circulations), the gatekeeper of magazine sales data, actually encourages the replica model by requiring that digital magazines include, at a minimum, the same editorial content as print editions if they’re to be counted as part of a title’s total paid circulation. Because ads are sold against that total paid circ number, nearly all magazines follow the AAM’s strictures.”

Denis Wilson, editor-in-chief of Publishing Executive, a magazine that covers the magazine industry, advises, “I do think there is a place in the market for subscription services for magazines. I think all these services have had trouble getting consumer exposure and adoption, but the winners will be those that can offer the most extensive selection of titles and the best user experience.”

Although the iPad and other devices offer users wonderful interactive experiences, for years, magazines have lacked both visibility (finding them at the Google Play Store, the Apple App Store’s Newsstand, and other general app/content sites has been challenging) and compelling experiences, especially any that allow for interaction and engagement. “After the industry overcame the first major hurdle, which was trying to work across different screen sizes for mobile devices (Adobe DPS [Digital Publishing Suite] did fantastic work in creating a once-and-done platform that let publishers create the single file and it would seamlessly convert for any mobile screen size),” says Mercy Pilkington, a senior editor for Good e-Reader. She believes that “the next big understanding is that a print magazine and a digital magazine aren’t the same thing, so why are you trying to replicate it on the screen? A digital edition can do so much more and be so much more, even down to the information on the cover, so publishers are starting to understand that replicating the print is a waste of time and money.”

Last year, two magazine platforms launched in Europe: Readly (which offers more than 900 titles to global subscribers) and Blendle (a service for newspapers and magazines in the Netherlands that plans to enter markets in other countries soon). Blendle recently received nearly $4 million U.S. in investment funds from Axel Springer Digital Ventures GmbH and The New York Times Co. to help develop its global marketing. Readly offers unlimited reading for a monthly fee; Blendle has a pay-by-the-article model. 

And both suffer from the fact that many publications still work off of pinch-and-zoom PDF files. Blendle has incorporated some interesting social functionality, and the app feels more like iTunes in operation. Flipping Pages Media founder Peter Houston notes, “The whole idea of social sharing is definitely an issue for magazines. Think how much social is driving content discovery and consumption—without social, these apps potentially shut off a big chunk of potential readership.”

Three Companies Vie for a Growing U.S. Market

The Google Play Store, the Apple App Store’s Newsstand, and other vendor- or publisher-based systems continue to operate in this sector, but three magazine-focused startup companies are providing leadership and innovation in the North American market.

Magzter, founded in 2011, provides a cross-platform, self-service subscription offering of magazines and a variety of books from across the globe. (After starting out with magazines, the company added books in 2013.) It operates on a revenue-share model with publishers on the sales of magazines. The company claims to have “24 million digital consumers, more than 5000 magazines and 1000s of books and comic titles from over 2000 publishers.” Its content comes from nearly 50 countries and is in 30-plus languages. In second-round funding from 2013, it raised $10 million, and in January 2015 it added a Magzter Gold program that offers unlimited access to magazines for $9.99 per month.

Next Issue Media is a joint venture of companies such as Condé Nast, Hearst Corp., Time, Inc., and News Corp. “This partnership is a validation for how they see content moving to a digital platform,” reveals John Kerner, VP of marketing at Next Issue Media. He continues:

Next Issue is one component of their mobile strategy and offers a unique value proposition and user experience given the quality and popularity of the combined catalog. Looking forward, we expect to offer an increasingly personalized experience. Subscribers can easily find content that matches their passions and interests by quickly finding great stories not only from their familiar favorites, but also by discovering new titles that they otherwise may not have considered. Next Issue understands how readers want to receive and interact with digital magazine content which drives more time spent in each issue, discovery of new and unexpected content, and the ability to share and extend the experience to friends.

The company recently announced a $50 million investment from global investment firm KKR that “will support further development of Next Issue’s innovative digital magazine platform and will help deliver Next Issue’s exclusive all-you-can-eat content to a broader audience.”

Similar to Magzter’s model, the Next Issue interface offers instant, on-demand access to 140-plus current issues of popular magazines, as well as to back issues and digital-only extras such as videos, extended photo galleries, Twitter feeds, and live hyperlinks, for $9.99 per month. 

Its goal is to create a system that balances “the interests of readers, publishers, and advertisers alike,” Richard Sarnoff, managing director and head of the media and communications industry group for KKR’s Private Equity platform in the Americas, notes in the investment announcement.