If you love magazines, you probably hate reading the newspaper. Search for “magazine” on the New York Times website and the first result you’ll see is a December 2013 story, Long on Cutting Edge of Print, New York Magazine Cuts Back. Since 2008, newsstand sales of news magazines (The New Yorker, The Economist et al.) have dropped 43 per cent. Time’s operating profits have dropped 59 per cent in the last decade. Print advertising revenue is also declining, and sharp gains in digital account for just a fraction of magazine revenue.

As magazine lovers know, headlines don’t tell the whole story. The new ways people engage with storytelling and personal tech is creating a complex reality. It’s rooted in the ephemeral taste of the digital consumer and accepts the idiosyncrasies of online business. Startups, including the digital newsstand Next Issue, are testing new distribution channels. Publishers hope they work.

But is the digital age killing the magazine? Michele Gerard, owner of Halifax magazine store Atlantic News, asks a different question. “Did instant coffee kill coffee?”

It’s 2009. Before the corporate drama, before his nearly 20-year career with Time comes to an end, and before the once-tabbed heir apparent to the publisher’s top job leaves magazine for the e-learning industry. John Squires has an idea.

Five years later, turn on your TV. You’re bound to see an ad for a magazine app: Next Issue.

In those TV ads you’ll see a professional man or woman going to work, shackled to a cumbersome newsstand. Next Issue, the idea goes, breaks those shackles. Lifting from media success stories, Time Inc and Squires hoped to rethink the way people interact with magazine, getting the most content to the most readers. Its 2012 release hoped that what Netflix did for television, and Spotify for music, could translate to magazine. Netflix – with more than 45 million worldwide users and one-third of all Internet traffic during prime time hours – is on the forefront of a seismic shift in our relationship with television. Next Issue’s basic principle – a monthly flat-fee allowing all-you-can-read access to an expansive content library – follows the Netflix blueprint.

The magazine industry had treated the rise of the digital age with relative indifference – few of its leaders believed a palm-sized phone or a black and white e-reader couldn’t capture a reader like a print magazine.

This laissez-faire approach would change with the 2010 release of Apple’s iPad. Suddenly the hardware existed to capture what Squires calls the “elegance” of a magazine. It’s similar in size and shape to the traditional print model and showcases the most brilliant images publishers – and advertisers – can muster. Magazines took notice, upping digital content and publishing tablet-only editions. Readers responded, and online focus continued to grow. One concept remained elusive: making money.

Audience Mix By Platform |Create Infographics

First, Time needed stories. In an unconventional move, it approached its major competitors – Hearst, Conde Nast, Meredith, and News Corp – to form a joint venture. These publishers sell some of the most well-read magazines in the world, including Sports Illustrated, Vanity Fair and Rolling Stone. “We realized,” Squires said, “that what we could do on our own was a drop in the bucket compared to what we could do collectively.”

A Next Issue customer pays $10 a month (in Canada and the United States) for access to the digital editions of 130 monthly magazines, or $15 a month to include weeklies. The price is right for subscribers of multiple magazines; a Sports Illustrated subscription alone costs $40 a year. Though magazines may lose subscribers to the deal, they hope Next Issue widens the total revenue pie. According to Next Issue, the average magazine reader in the United States spends around $50 a year on subscriptions. They bet a monthly flat-fee can make readers spend up to $180 without noticing.

A growing number of readers do so on their phones and tablets. The New Yorker and Time have seen mobile users jump to one-third of their readership. That’s why Next Issue is only available as an app. Tablets and smartphones (with ever-growing screens) are a boon for magazine publishers for more than their size and shape. Statistics say mobile readers are increasingly likely to ditch Google for mainstream media because of apps.

Do a test. How many times do you Google-search a story on your phone?

Ken Doctor, a San Francisco-based media analyst who frequently writes for the Harvard Nieman Lab, sees opportunity. Doctor, known for his keen eye on the business of media, wrote in 2012 that Next Issue could be a “model-changing product. Today he still believes, “The idea of paying a single price per month and gaining complete access to a number of titles is a very fresh idea.”

In late 2009 Squires brought the idea to Time Inc. CEO Ann Morrow, who some believed he was positioned to succeed. The project was approved with a consortium of five publishers and $10 million in investment from the partners. Squires would leave Time to take over Next Issue Media on an interim basis. While guiding the initial stages, Squires would say he “hoped” to become CEO.

On June 15, 2010, the 10-person board of Next Issue Media chose Morgan Guenther, former president of TiVo, as CEO. The publishing execs reportedly wanted someone with a tech background. The seven-month selection process was an exhausting end to a perhaps exhausted relationship. Squires, the once-executive vice-president of Time, had already been sent to head up the business news unit during a major shake-up at the publisher. It was an important job, but a demotion.​

Today, he won’t talk about it.

The first ad to appear in an American magazine was for a ferry ride across the Potomac River. This was in 1741, the same year magazines debuted in the U.S. The magazine has always been a two-pronged business model – circulation and ad revenue. In 2013, 69 cents of every dollar across news mediums came from ads. Historically, advertisers loved magazines for targeting specific readers – a wading-boot company will spend its money more effectively in Fly Fishing magazine then the National Post. This faded with the rise of digital. Sites such as Facebook – with its crates of user-information – target consumers better than magazines do.


Dollars by Source | Create Infographics

A lack of statistics also complicated the advertiser-magazine relationship. Statistics existed, just not the right statistics. Newsstand numbers are unable to measure digital engagement, while subscriptions are kept artificially high by renewal discounts. Magazine Media 360, a service launched in September 2014 by the Association of Magazine Media, tracks how else people read magazines. By comparing platforms, the industry advocacy group hopes to gain a more accurate representation of readership. “It’s a buyer awareness tool,” said Eric John, the Association’s senior vice-president. If advertisers understand what devices readers use, he said, they can spend their money more effectively. Michael Sebastian, who writes for the online media magazine Advertising Age, said this addresses the “enormous and painful” gap between the cost of a print and digital ad. “Digital publishers are being squeezed,” he said.

Despite this, does Sebastian think digital ads will suddenly jump in price? “No.”

Advertisers, meanwhile, are starting to exchange page clicks for watch ticks. New “attention metrics” focus on time spent on content, and offer more useful information than their page-click counterparts. The longer a reader stays on a page, the more money that page is worth. This is one reason magazines are pouring resources into video content. The Atlantic, consistently on the forefront of digital news, has an online video series including Economics in Plain English and Advice to a Younger Me. The New York Times Magazine, meanwhile, publishes click-friendly videos including What Happens When Second Graders are Treated to a Seven-Course, $220 Tasting Meal. If the video is good enough, readers will watch the ad before the video.

Next Issue doesn’t take a cut of a magazine’s advertising revenue. Still, ads are central to its strategy. The partner publishers want new ways to boost ad revenue by increasing exposure. If Next Issue can offer that, the money will come.

What Next Issue has: great content, a trendy and practical platform and the right price. What it doesn’t have: subscribers. The company doesn’t release statistics often – usually a bad sign – but in late 2013 its subscriber number was less than 100,000. Its goal is one million users. So what’s not working?

caption Publishers think the tablet offers the same look and feel as a print magazine, the question is how consumers react.
Nathaniel Basen

The term is skeuomorphism. It’s used to describe the replication of a physical thing (the newsstand) into its digital form. In the tech world, it’s usually an insult. Matthew Ingram, media analyst with the tech blog GigaOm, applies it to Next Issue. The app, he said, doesn’t consider the differences in how digital readers interact with content. Unlike Netflix, Next Issue does not integrate social media recommendations or the ability to flip between stories in separate magazines. Ingram, who once led the Globe and Mail’s foray into social media, calls it “half-hearted.” When readers open Next Issue they don’t want a print magazine replicated on a tablet. They want a multimedia experience.

Next Issue releases updates – in October 2014 users’ magazines were grouped by favourites and topics instead of alphabetically – and it promises more discovery tools in the future. What that means is unclear. Grouping individual stories is a strong but unlikely idea – publishers are historically tight-fisted with content.

Ken Doctor, the San Francisco-based analyst, thinks Next Issue is just too hard to find. “Socially driven discovery,” he says, “is the future of so much audience growth.” Nearly one-fifth of all time spent on mobile devices is on Facebook. He points to Vox Media and Buzzfeed, which rely almost entirely on the social web to find readers. Vox is a rapidly emerging network of online publications, notably SBNation for sports and The Verge for tech. “Vox I know doesn’t spend one cent on marketing,” Doctor said.

Digital stories find their readers: think of a Facebook link to a Buzzfeed article accompanied by “OMG you would love this.” Next Issue tells readers to come to it.

Steven Brill is especially pessimistic about the app. Brill is the founder of Press+, now owned by Piano Media. Press+ sets up metered paywalls for news organizations, including Postmedia. According to Brill, the best way to market magazines is to focus on their brand – not an unfamiliar app. “Nobody says ‘I’m going to that newsstand’,” he says. “They say I’m getting Sports Illustrated.”

Next Issue is fighting this. In September 2014 it hired San Francisco-based creative agency Eleven to launch an advertising campaign, set to kick off by the end of the year. Eleven, armed by experience with Apple and Virgin America, will play a pivotal role in Next Issue’s development. The app must attract new digital readers.

Squires hasn’t been involved with Next Issue since he was not offered the position of CEO.

Four years since its initial announcement, Next Issue has squandered much of the goodwill it won with its “Netflix for magazine” tagline. Little user growth has left analysts like Ingram impatient, almost ready to forget it. They would have already, if it weren’t so intriguing.

The app’s clean design highlights magazines, turning the newsstand into art. Its interface is intuitive, and its selection is great. That’s a strong place to start. So strong that startups, including Readly, from Sweden, are mimicking the concept. Readly should first look at Next Issue’s subscriber numbers.

From her office above the storeroom floor, Michele Gerard has seen the magazine adapt from the front line. She’s owned Atlantic News in downtown Halifax for nearly 20 years, and the only constant has been change. Mobile reading offers a particularly tough test. That the tablet offers a similar experience to the print magazine could be bad for business.

Still, the magazine, she’s sure, is safe. Her store’s 41 years at Morris and Queen St. have taught her one inalienable truth. “People love magazines,” she says. “Simple as that.”

Editor's Note

This story was reported and written by Oct. 17, 2014.

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