Ken Doctor has a very interesting report for the Nieman Journalism Lab on the new consortium called Next Issue Media that’s ramping up to offer all-you-can-eat digital subscription access to major magazines.
This looks like a magazine lover’s dream. It’s also a major venture, and it’s one that could continue to transform the prospects for paid content.
The inconvenience and impracticality of micropayments has been one of the fundamental hurdles in coming up with new digital subscription models. The way we read news now, via a large number of publications means noone is going to take out their credit card and pay at each site. And card-processing fees more than eat up the small amount people might be willing to pay to read a single story.
Nobody’s going to pull out their checkbook or credit card to pay for each of the fifty or so cable channels you might want, either. Cable companies have a blunt way of fixing that problem. If you want one channel, you’ve got to pay for a hundred, and your provider aggregates the revenue and parcels out the proceeds to individual networks based on what they can command. This is good for content providers, who get money for their product, but bad for consumers, who basically are told to take-it-or-leave-it. You can’t buy HBO a la carte for $15 a month. You’ve got to pay $100 or so to get the right to buy HBO and wade through all the other crap that comes with it.
While Next Issue Media by no means includes all the magazines you might want to read, it’s got quite the stable of titles at startup. That’s because five major magazine publishers, including Condé Nast, Hearst, and Time Incorporated, put it together. And it’s one way to solve the micropayment problem.
It works like this: For $15 a month you get unlimited access on your tablet computer to thirty-two magazines (at launch), including major ones like Vanity Fair, Sports Illustrated, Fortune, Time, and The New Yorker (there’s also a $10 option with fewer of the elite mags). Next Issue Media then divvies up your $15 a month according to how much you read individual magazines (or “engage” as Next Issue’s jargon-loving CEO says). You may read fifty different stories in April. But there’s just one payment for Visa and Mastercard (and Apple, potentially) to take a cut of, not fifty.
And, crucially, unlike in the cable-industry monopoly, you can still buy these magazines a la carte through Next Issue, online, on the newsstand, or through the mail. You don’t have to pay $15 a month if you just want to read The New Yorker, say, on your tablet.
Doctor interviews Next Issue CEO Morgan Guenther, who says newspapers could join the fold at some point. Even if they don’t, if this model succeeds for magazines, it’s one the newspaper industry could eye on its own.
It’s an experiment well worth watching, particularly since ads seem to be much more effective on tablets than on the Web, as Doctor reports:
“Tablet ads continues to fetch rates (mainly for national publishers) five times or more greater than web ads.”
And presumably, Next Issue and the publishers will control the consumer data or much of it, anyway, which will make them that much more valuable to advertisers.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.